Large public sector banks, such as State Bank of India, Punjab National Bank, Canara Bank and others are looking at expanding their corporate loan books, especially in sectors such as infrastructure, energy and others.
For example, State Bank of India’s corporate loan book grew by 18.35% year-on-year in the September quarter and it is anticipating 14-16% loan growth for FY25, supported by a corporate pipeline worth about Rs 6 lakh crore. Similarly, Canara bank is looking at a 10% growth in the loan book
“Large banks like us has to participate in project finance. We have the largest working capital and depending on the opportunities we will be lending,” said CS Setty, chairman and managing director, SBI in a post earnings conference.
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Bank of India’s corporate book grew by 9.16% for the quarter ended September. The bank’s management said that it anticipating a healthy growth in the book on strong demand to grow energy sector. “We are one of the largest public sector banks. If we reduce our infra loan book, the country’s infrastructure will have an adverse impact,” said MD & CEO Rajneesh Karnataka.
Another major public sector bank, Punjab National Bank, is also keen on expanding its corporate book size by the end of the current financial year.
With rising thrust on growing renewable energy sector, leading renewable energy (RE) project developers, manufacturing companies, banks, and financial institutions committed close to $386 billion or around Rs 32.45 trillion to the development of RE projects by 2030. Among the banks, SBI has made the largest announcement with Rs 5 trillion of investment undertakings, followed by PNB with Rs 79,000 crore.
PNB MD and CEO, Atul Kumar Goel said that number of solar projects are in the pipeline along with other infrastructure loans. However, the bank is selective in choosing companies whom to lend. In addition, Bank of Baroda targets to grow their corporate loan book at 10-11%, leading to overall advances growth of 12-14% in the FY25.
Despite RBI’s draft guidelines of project finance, which recommended an increased standard asset provisioning of up to 5% on loans, the infra loan book of banks has maintained substantial growth on both yearly and quarterly basis.
