50 per cent of the home loans it has given out were obtained by non-salaried borrowers, whose livelihoods were severely affected by the pandemic. This meant that the bank’s outstanding mortgage portfolio escalated to ₹5.05 trillion by the end of June, while bad loans also rose by 59 basis point (bps).
“[…] many of the SME borrowers also would be the ones to avail home loans. I think essential stress seen in this book is on account of disruption in cash flows for the SMEs,” SBI’s chairman Dinesh Khara said. “Our home loans are to first-time buyers. So, there will be all efforts and endeavour on their part to honour their obligations, he added.
However, the SBI is not the only bank experiencing the effects of the stress reported from the small business segment. For instance, as of 30 June, out of Punjab National Bank’s aggregate micro, small and medium enterprise (MSME) loans 23.23 per cent were classified as non-performing, while at the Bank of Baroda this figure stood at 16.7 per cent.
Meanwhile, the Reserve Bank of India says it is closely observing the situation in the MSMEs and retail loans segments, and is aware of the issues although it is not alarmed. “Yes, there is a visibility on a little bit of stress from the past data, but definitely it’s not alarming. We are constantly engaged with the regulated entities, particularly the outlier banks and the outlier NBFCs (non-banking financial companies) and we also conduct stress tests,” Deputy Governor of the RBI, Mahesh Kumar Jain, said.
