Page 6 - Banking Finance August 2025

BANK UPDATE

misused for investments, and routed expressed regret for not insuring the CICs Urged to Move To-
via manipulated sales invoices. bank's microfinance (MFI) portfolio
The bank also revealed plans to report earlier, as the sector continues to face ward Real-Time Credit Re-
RCom and its former promoter-direc- cyclical stress every 5-8 years. In the porting
tor, Anil Ambani, to the Reserve Bank bank's FY25 annual report, he said in- Reserve Bank of India Deputy Gover-
of India (RBI) for further regulatory surance could have cushioned nearly nor M Rajeshwar Rao has called on
action. The move signals stringent 72% of recent losses caused by de- Credit Information Companies (CICs) to
measures by public sector banks to faults. upgrade their systems for real-time or
address large-scale non-performing "Events like those in Andhra Pradesh, near real-time credit data updates,
assets (NPAs) and hold defaulters ac- Assam, or Tamil Nadu floods repeat- moving beyond the current fortnightly
countable. edly impact this segment. Going for- cycle.
This development adds to RCom's ongo- ward, we will fully insure the portfolio Speaking at TransUnion CIBIL's Credit
ing financial troubles, as the company and monitor it more closely," Conference in Mumbai, Rao stressed
continues to navigate insolvency pro- Vaidyanathan stated.
that this transformation would en-
ceedings. The classification as fraud is From January 2024, the bank began
likely to escalate legal scrutiny and could covering its MFI disbursements under hance underwriting accuracy, allow
impact the promoter's future business the Credit Guarantee Fund for Micro timely reflection of borrower activities
engagements. SBI's action highlights Units (CGFMU). Currently, 66% of the like repayments and closures, and im-
increasing regulatory focus on corporate MFI portfolio is insured. However, the prove the overall consumer experi-
governance and financial transparency bank reported a steep 48% drop in net ence. Achieving this goal would require
in high-value loan exposures. profit to Rs. 1,525 crore in FY25 due significant investment in technology,
to elevated provisions of Rs. 5,515 operational restructuring, and change
IDFC First Bank CEO Re- crore, mainly from MFI stress. management, but the benefits - im-
proved transparency, efficiency, and
grets Uninsured MFI Port- Overleveraging in the sector has trig- trust - outweigh the costs.
folio Amid Sharp Profit gered rising defaults and curbed dis- Rao also emphasized the critical role
bursements. Consequently, IDFC First's
Drop MFI book shrank 28% year-on-year to of data quality in responsible lending
IDFC First Bank CEO V Vaidyanathan Rs. 9,571 crore. and noted that CICs are now required
to issue a monthly data quality index
SBI Plans Record Rs. 25,000 Crore Share Sale via QIP score to Credit Institutions (CIs). This
index will serve as a benchmark for
The State Bank of India (SBI) is preparing to raise up to Rs. 25,000 crore institutions to improve the reliability of
($2.9 billion) through a qualified institutional placement (QIP), potentially the credit data they submit. These
launching the sale next week, sources revealed. If fully subscribed, this would changes form part of a broader effort
become India's largest-ever QIP, surpassing Coal India's Rs. 22,560 crore
to strengthen the foundation of India's
issue in 2015.
lending ecosystem.
The sale, approved by SBI's board in May, is intended to bolster the bank's
capital base, support future loan growth, and meet regulatory norms. It SBI Celebrates 70 Years as
marks SBI's return to the equity markets after eight years, with the last
QIP conducted in 2017. India's Most Profitable
SBI has shortlisted six investment banks to manage the offering: Citigroup Bank
India, HSBC India, ICICI Securities, Kotak Investment Banking, Morgan As it marks 70 years of operations, the
Stanley India, and SBI Capital Markets. While the deal structure is yet to be
State Bank of India (SBI) continues to
finalised, it reflects the bank's strategic focus on enhancing financial strength
top the charts as the most profitable
amid expanding credit demand.
Indian company for the third consecu-
SBI, the country's largest lender, is majority-owned by the Indian govern- tive year. According to SBI Research,
ment. the bank's profits surged from Rs 1.36

6 | 2025 | AUGUST | BANKING FINANCE