SBI buys loans worth Rs 27,000 cr from non-banking financial cos in FY19

Flush with funds, SBI in October 2018 had tripled its target to buy good quality retail asset portfolio from finance companies to Rs 450 billion from earlier target of Rs 150 billion

State Bank of India has acquired retail loans worth Rs 27,000 crore including Rs 10,000 crore worth of micro-finance loans from non-banking finance entities in 2018-19.

India's largest lender SBI in October 2018 had indicated it would acquire up to Rs 45,000 crore from finance companies that are facing a liquidity crunch after IL&FS group entities defaulted on repayments. This provided much-needed funding support to finance companies. 

P K Gupta, managing director (digital and retail banking) said the bank has sanctioned  Rs 27,000 crore of loans which were to be bought from finance companies. Of this, work for over Rs 19,500 crore has already has been done. The processing for over Rs 6,000 crore is underway. 

These assets comprising mortgage loans and microfinance credit etc have been acquired through the direct assignment route. They would be part of the loans book, unlike securitization where banks invest in the pass through certificates for underlying loans.  

 SBI got an opportunity to expand its loan book by purchasing good quality portfolio assets at attractive rates.

The yield on loan portfolio ranges between 8.75 per cent to 10.5 per cent depending on the profile of the asset pool and competition, SBI executives said.

The loan purchase was for expanding the book but not at the cost of the growing balance sheet organically through branch network, SBI chairman Rajnish Kumar had said.

The credit to deposit ratio of SBI stood at around 68.67 per cent at end of December 2018. Gross Advances at the Whole Bank level registered a growth of 11.99 per cent from Rs 19.24 trillion as on December 2017 to Rs 21.55 trillion as on December 2018.

Bank deposits increased  6.76 per cent from Rs 26.51 trillion in December 2017 to Rs 28.30 trillion in December 2018.