On March 1, 2020, State Bank of India (SBI) has switched to “Cash Budget Based Assessment (CBBA)” from “Projected Balance Sheet (PBS)” method of Fund Based Working Capital (FBWC) limits for assessment of the working capital requirement for corporates or large advances. CBBA of limits has been initiated for assessment of the FBWC limits for units with total FBWC exposure of more than ₹50 crore from the banking system.Reason behind this Shift:
-SBI bids to achieve minimum 11.50% year-on-year (Y-O-Y) growth in whole bank advances in FY2021, so it intends to focus on refinancing better rated corporates.
-Also, due to increase in the number of the digital transactions, the monitoring of transactions/assets of the borrowers has become a major challenge; therefore, CBBA will provide of the borrower’s cash requirements and enforce financial discipline.
-SBI is seeking more business from personal segment products, home loans and risk-mitigated products in the new financial year beginning April 1, 2020.
-The whole bank advances of SBI grew by 6.79% year-on-year (yoy) to ₹23.01-lakh crore as of December-end 2019 against ₹21.55-lakh crore as of December-end 2018.
-SBI has started Risk Intel, an email service, advising the business units of rating actions in respect of units it has funded.
-It also plans to focus on refinancing “AAA/AA” rated corporates, where cash flows are on expected lines, for funding their completed projects to boost quality credit.
-The bank also intends to step up focus on risk mitigated loan products in the agriculture sector such as multi-purpose gold loan, asset backed agriculture loan (ABAL), big-ticket loans, etc. to attain growth in the agriculture segment.
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