SBI turns selective on fresh loan proposals

The bank is unwilling to consider risky proposals and is turning down requests from corporates with a rating of BB and below. “The objective is clear and it (SBI) doesn’t want to take on any fresh surprises from here on,” said a highly placed source.

“The only thing when we do underwriting is we should see that it should suit our appetite. Appetite is not in terms of how much NPA we can have; it should rather be how much lower NPA we should have,” said Dinesh Khara, Chairman, SBI, while addressing the media on November 5.

“We should identify the risk and have the mitigations in place. And as long as we’re in a position to do that, we will not like to touch the credit which is not in line with our risk appetite,” he added.

Meanwhile, the bank is also tightening its noose on some of its existing corporate loan exposures. Sources said companies seeking refinancing or credit limit enhancements aren’t having it easy with the bank, that too if their credit rating is BBB or lower.

“A lot of questions are being asked as to why these companies are seeking additional credit enhancement and if they are due for a rating upgrade, SBI prefers to see if the upgrade is coming through before it can increase its exposure to such accounts,” said a senior banker aware of the matter.