SBI Bank: SBI uses technology to multiply its personal loan portfolio by 2.5 in less than 3 years

Mumbai: The State Bank of India (SBI) has finally cracked the code for retail lending, hitherto considered the domain of private sector banks. Data analysis and a targeted penetration of government payroll accounts led to a two-and-a-half-fold increase in its unsecured personal loan portfolio in less than three years.

India’s largest lender, long known for business loans, has now built a 2.40 lakh crore personal loan portfolio called Xpress Credit with just 0.60% non-performing assets (NPA), making made the second largest individual lending segment for the bank behind home loans, and from ₹1.04 crore lakh at the end of March 2019.

SBI’s extensive network of 23,000 branches, data-driven processes along with strong demand for these loans have made the bank confident of growing this pound to over ₹3 crore lakh by December 2022, a said Saloni Narayan, Deputy General Manager – Retail, in an interview.


She estimates that the personal market in India is currently worth ₹7,000,000, growing at 20% annually.

“We took advantage of the disruptions caused by the pandemic to set up a retail loan management software system (RLMS), which uses customer data from various sources and credit bureaus to give an on-site assessment in eight minutes. During the pandemic, since many of our employees were working from home, they received a list of potential customers using this analysis, which also played a big role in this growth,” Narayan said.

The SBI has 17.5 million corporate payroll accounts, 90% of which are employees of state, central government, defense or public sector companies, jobs considered secure and where cuts wages are rare.

Narayan said customers took out these loans to meet short-term consumption needs during and after the pandemic. The high demand for these loans has also led to an increase in note sizes to more than ₹5 lakh currently from less than ₹3 lakh a few years ago.

“It is now a priority product in retail banking due to its higher profitability. We are increasing the maximum loan amount to ₹35 lakh from ₹20 lakh to meet the ever-increasing demand. “Analysis and our collection mechanisms have improved as we have processed more of these loans. We expect the pace of growth to continue,” Narayan said.

Admittedly, the bank’s NPAs fell from 0.37% in March 2021 to 0.71% in December 2021, mainly due to Covid-related borrower deaths and irregular salary credits in some accounts, but Narayan has said the bank had been able to reduce the NPA to end the current tax at 0.60%.

“We’ve realized that regular reminders and phone calls if we see an account with delinquent patterns go a long way in reducing NPAs and making regular payments. In fact, the majority of customers repay these loans within three years, which usually have a term of five years, making them eligible for larger loans in the future. All of these observations make us more and more confident about this product,” Narayan said.

The sharp increase in these loans has also led to an increase in the retail share of SBI’s loan portfolio to 42% of total loans, from 32.5% in March 2019. Real estate loans, however, continue to be the largest retail segment at ₹5.38 lakh crore.

Narayan said improving business and economic environment, youthful population and rising wages will ensure Xpress Credit’s portfolio continues to grow.


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