Dinesh Khara,Chairman of State Bank of India had commented that the bank will accelerate retail loans. The bank is expecting most of the lenders to post stronger-than-expected earnings as the economy revives faster than anticipated.
Khara who took charge as head of the country’s largest lender in October has added that they strengthened their risk management very significantly because they expected a worse situation. So they are expected to see much better results than at the beginning of the COVID-19. The bad loan ratio of SBI fell to 5.28% at the end of September. The ratio was 5.44% in June 2020 quarter. The bank has already warned that they expect another Rs 20,000 cr ($2.7 billion) of loans over the next six months as the COVID-19 harmed borrowers. The major challenge that the bank appears from declining cash flows for the industry and extended working capital cycles.
The bank was not in a hurry to divest its stake in its application Yono. Yono was the home-grown digital application of SBI. The application has 28.5 million registered users. The former chairman of SBI Rajnish Kumar had estimated that it could be worth $40 billion a few months ago. Through the application, SBI has raised $900 million of deposits. The bank provided $400 million of loans also through the app. The loan slippages of SBI in the first half of FY21 is around Rs 6,393 crore. The bank has stated that the additional proforma slippages stand at Rs 14,388 crore in the second quarter of FY 2020-21
In consonance with the bank’s latest investor presentation, Yono contributed ₹200 crores to the bank’s profit as of July 2020. The bank is expecting that the application will add 10 billion rupees for the full financial year. Last day on Sensex, SBI stock closed at Rs. 269.70 per piece up 2.37%. The price touched an intraday high of Rs. 271.35 per piece. SBI share marched up in the second half after the Khara’s optimistic outlook for the bank and the industry. The Reserve Bank of India has recommended banks to spend more on the technology as customers are shifting to digital platforms during the pandemic.
