After Indian banks wrote off a huge amount of bad loans — more than Rs 10 lakh crore — in the last five years, lending by banks has become much better and much more informed, with different banks at different stages strengthening their risk management and underwriting practices, said the SBI Chairman.

Rajan’s AQR had initially come under criticism by some economists in the government for having slowed down economic growth and, later, for underestimating the extent of bad loans.

Over the last five years, the gross non-performing assets (NPAs) of banks have dropped by almost 46 per cent — from Rs 10.21 lakh crore in fiscal year (FY) 2017-2018 to Rs 5.55 lakh crore by March 2023.

Khara said the Indian economy is in a golden phase with economic activity picking up in the agriculture sector in the second half, FMCG data showing a positive trend and practically all sectors firing. “I would say that perhaps it (the economy) is in a golden phase. In agriculture, where, in the first half, there were little concerns, but in the second half we have started seeing economic activity picking up even in the agricultural sector. When we look at FMCG data as well, the second-half very clearly is showing a positive trend. I think to that extent, practically all sectors are firing, if I may say so. It’s a very positive sign,” Khara said.

“Also, when we look around the globe, the Indian economy is doing its very best,” he said. “A significant portion of our GDP is our domestic economy. International markets have challenges and to that extent, that eventually shows up in our international trade.”

Khara said SBI was ready to finance a higher economic growth rate. “Even with the current capital, we can support the asset growth of Rs 7 lakh crore-plus. So, Rs 7 lakh crore kind of growth on a base of Rs 35 lakh crore is more than 20 per cent. So, that’s the kind of situation we are in. We are fully geared up,” he said.

He said in the last two years itself, SBI has added about Rs 65,000 crore of profit to the capital. This year (FY’24) in the first half, it has already earned more than Rs 31,000 crore in profit. “We would be ploughing back a significant portion of the year-end profit also,” he said.

SBI’s total loan book size is Rs 35 lakh crore. The retail book is Rs 12 lakh crore, of which Rs 7 lakh crore is mortgage. MSME book would be about Rs 3.8 lakh crore and agriculture is around Rs 2.8 lakh crore. Mid-corporate book is around Rs 5 lakh crore and large corporate is Rs 4.5 lakh crore.

On economic activity in the country, Khara said: “Our exposure is so broadly dispersed that we get to see activity everywhere. Somewhere it would be in retail, somewhere is SME and somewhere it would be in agri.” Practically the whole country is looking at the growth of ambition, he said.

SBI shares Friday (December 15) rose 4 per cent to Rs 648.40 on the BSE. When Khara assumed office in October 2020, the SBI stock was at Rs 117 apiece. He said: “I work for my stakeholders… I don’t look at this number. Yes, once in a while I must look at it. People have got apprehensions in their minds which are unfounded. See, there is a capital constraint… if at all, you tell me which bank has ploughed back Rs 65,000 crore in two years’ time, adding to the capital.”