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BANGALORE, July 12

IN the wake of a series of international accounting scandals, the State Bank of India (SBI) has tightened due diligence procedures on corporate borrowers.

Briefing reporters here on Friday, the SBI Managing Director, Mr S. Govindarajan, said, "We are insisting on greater compliance with statutory requirements and transparency." But he also hastened to add that since the value systems in place within the country would prevent the large scale accounting scandals as prevalent in the US.

Tightening would be aimed at the larger corporate houses in the country. "For the smaller corporates, we do not foresee much of a problem," he added.

SBI, he said, expected an increase in credit offtake by at least 20 per cent during the current financial year. Last year, the bank had faced difficulties especially since the bulk of the bank's customers belong to the manufacturing sector. But, despite the poor credit offtake, the bank was still able to end with a profit close of Rs 2,450 crore last year, a 52 per cent increase over the previous year.

This year, credit growth has been good, he said and expected the offtake to accelerate during the peak season, which was likely to reflect in better profitability.

This credit growth would be lead by retail lending, mostly housing loans. SBI has targeted housing loan disbursements of at least Rs 9,000 crore over the next two years and hoped to become the largest home financier, by displacing its nearest competitor, he said.

This year alone, the bank has targeted Rs 4,500 crore and has already disbursed Rs 800 crore. This included buying out housing loan portfolios of other banks, he added.

This focus on long-term assets, was also unlikely to lead to any asset liability mismatch within the bank, in view of the pool of long-term resources available with it.

The bank, Mr Govindarajan said, had already carried out an internal analysis and had concluded that it was in a position to expand its housing loan portfolio without any risk of asset-liability mismatches.

The bank was investing in technology. These included treasury and ALM solutions. The bank through these investments hoped to network at least 500 branches during the current year and extend it up to 1,000 branches during the course of the next financial year.

Referring to credit cards, he said that SBI's credit subsidiary had already broken even. It had so far issued about 50,000 cards. The bank had also launched a specialised credit for small-scale business enterprises. This card would allow entrepreneurs an automatic credit limit of Rs 5 lakh. But he said, depending on the success of this card, the limit would be further enhanced to Rs 25 lakh.

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