The enhanced cash management efficiency of government and corporates could lead to a further moderation in banks’ low-cost current account and savings account (CASA) ratio, State Bank of India (SBI) Chairman, C.S. Setty, said.

“The pre Covid-19 level of CASA ratio was 40 per cent, whereas it rose to 45 per cent post pandemic. Obviously, it is going back to 40 per cent, and it may go down further if the efficiency of government cash management comes into picture,” he said at an event organised by the Bengal Chamber of Commerce and Industry.

SBI’s CASA ratio moderated to 41 per cent as on June 2024 from 43 per cent a year ago. While savers are becoming investors in the equity markets, depositors too are moving their surplus funds from low-cost CASA to higher yielding term deposits.

However, Setty said SBI’s CASA ratio will be protected at the current level. While traditional and conventional sources of current account accretion will change, the bank will generate such accounts from the large and untapped retail market, and also by offering superior customer support services and innovative products.

The Chairman said as household savings are increasingly getting diversified into pension funds, insurance funds and mutual funds, these financial services players can play a large role in corporate financing and deepening of the corporate bond market.

Credit growth

Setty said banks are now more comfortable lending to the micro, small and medium enterprises (MSME) sector due to formalisation of the segment and as more data points related to entities - apart from bureau scores - are available to access.

For MSME loans up to ₹5 crore, SBI has now moved towards cash flow or data-based lending. This has lowered the sanction timeline for MSME loans. While small value loans are showing stress, due partly to the nature of borrower being new to credit, the Reserve Bank of India’s (RBI) move reducing the frequency of reporting borrowers’ credit information to credit information companies (CIC) every 15 days from the previous monthly intervals, has made data-based lending much easier, he said.

Separately, SBI today raised . ₹7,500 crore at a coupon rate of 7.33 per cent through its second tier-2 bond issuance for the current financial year. The bonds are issued for a tenor of 15 years, with call option after 10 years and each anniversary date thereafter, and are rated AAA with stable outlook by CRISIL Ratings Ltd and CARE Ratings Ltd.

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