The momentum is expected to continue, he said, adding opening up of the economy has reduced the need for a fresh stimulus package and the current momentum appears sustainable.
Thus, for the bank, it is imperative that the business keeps adapting to the new operating environment, he said in his letter to shareholders published in the annual report for FY22.
“The time is, therefore, opportune to undertake the much-needed transformation of the Bank with an eye on emerging trends in banking, especially in India. Your Bank will thus continue to accelerate its digital agenda both in front and back offices. The scope and reach of SBI YONO will be expanded further and with enhanced user experience,” he said.
In business operations, the bank will leverage advanced analytics for deeper insights on internal data and its best possible usage, he said, adding that mutually beneficial partnerships with fintech firms and NBFCs will be explored further to increase the penetration and reach of the bank.
Observing that a panoramic view of the bank’s financial performance over the last few years shows discernible improvement in all parameters, he said despite the challenges posed by the operating environment, the bank today has a better loss-absorbing capability.
The bank’s risk management practices have delivered better results, especially in containing the slippages, and it is comfortably placed in terms of growth capital in the current year, Khara noted.
Opportunities for lending in promising spaces such as sectors identified under Production Linked Incentive (PLI) scheme and renewables as well as electric mobility will be explored to diversify the portfolio, he added.
Talking about challenges, Khara said, the CPI inflation remains a worry even though the projected average is below 6 per cent in FY2023 by the Reserve Bank.
The risks could emanate from a further hardening of global crude and other commodity prices due to geopolitical tensions, longer supply chain disruptions, a larger pass-through of input cost pressures and volatility in the global financial markets induced by an affirmative normalisation of monetary policy by the advanced economies.
An early end to supply chain disruptions, a muted pass-through to output prices, correction in global commodity prices and an easing of geopolitical tensions would help in containing inflation within the projected levels, he added.
Khara also said that there is uncertainty on how the demand will pick up during this financial year.
Private final consumption is still below the pre-pandemic year and may see some erosion in the current year due to higher inflation.
However, he said, investment demand has picked up gradually and there has been a substantial increase in new investment announcements amounting to Rs 19 lakh crore in FY22.
Going forward, he said, the bank’s business will depend upon the evolving geopolitical situation and its impact on global commodity prices and logistics.