SBI Ready for Acquisition Financing, ECL Transition; Plans UPI-Based Lending Expansion
State Bank of India (SBI) is well prepared to take on acquisition financing, following the Reserve Bank of India’s (RBI) recent approval allowing banks to...
State Bank of India (SBI) is well prepared to take on acquisition financing, following the Reserve Bank of India’s (RBI) recent approval allowing banks to fund corporate acquisitions. SBI Chairman C.S. Setty said on Wednesday that India’s largest lender has the expertise and technological capability to manage this new line of business.
“We have experience in outbound merger and acquisition financing for Indian corporates acquiring overseas entities. Banks like SBI are well versed in acquisition financing,” Setty said during the annual Global Fintech Fest (GFF).
ECL Transition to Have Limited Balance Sheet Impact
Setty also addressed the RBI’s shift to an expected credit loss (ECL)-based provisioning system, noting that the extended five-year transition period will limit any significant impact on banks’ balance sheets.
“Our systems are technologically ready for ECL models, although some adjustments may still be needed. Given the long transition period, we expect a limited impact,” he added.
The move to ECL accounting, replacing post-loss provisioning, is scheduled to begin in FY27, with banks given five years for full adoption.
Expanding Lending Through UPI and Digital Platforms
Highlighting the potential of digital payment systems, Setty said Unified Payments Interface (UPI) presents opportunities for lending, particularly for merchants and farmers. SBI is developing a receivables-based vendor financing product for UPI users and exploring farm loan disbursement through Kisan Credit Cards linked to RuPay UPI credit solutions.
Currently, SBI subsidiary SBI Cards issues 34% of outstanding RuPay UPI credit cards, which account for 16% of UPI credit spending.
Leveraging PM Jan Dhan Accounts and Women’s Participation
SBI has onboarded 150 million customers under the PM Jan Dhan Yojana, with over 99% of accounts holding balances, averaging ₹4,000 per account. These accounts process 35 lakh transactions daily, with women holding 56% of the accounts. Setty emphasized the potential of the business correspondent network to extend credit through these accounts.
Next-Generation Yono App
Setty also outlined plans for the upcoming version of SBI’s Yono app, which will have the capacity to onboard 20 crore customers on day one. The app, developed in collaboration with 12 fintech partners, aims to reduce onboarding time from one hour to just 15 minutes, while offering services beyond traditional mobile banking.
“We are also working with the government and regulators to simplify KYC compliance, making banking more accessible to all,” Setty added.