SBI chairman Dinesh Kumar Khara on Tuesday said poor risk assessment is the root of asset quality concerns on the unsecured lending front.
In comments that come amid increased regulatory discomfort and efforts to dissuade banks from increasing exposures to segments such as credit cards and personal loans, the chairman of the country's largest lender said there is no challenge if a bank is able to manage risk.
"The unsecured lending becomes a problem if the assessment is not done properly," he told reporters on the sidelines of an event where the bank's credit card subsidiary SBI Cards launched a travel segment-focused card.
It can be noted that late last year, the RBI increased the risk weights on unsecured lending to dissuade the lenders from undertaking more exposures to such riskier products which come without any collateral.
Khara asserted that the 25-year-old SBI Cards has been able to manage the asset quality well because of its focus on risk assessment.
The company has amassed the largest database of users and their patterns which helps it, he said.
It launched the new offering christened SBI Card Miles for travel enthusiasts, and the company's managing director and chief executive Abhijit Chakravorty said in the first nine months of the fiscal year 2023-24, nearly a fourth of the spending was on travel, hospitality and entertainment.
The card comes with a slew of features aimed at travel enthusiasts and the lowest variant comes at a joining and annual fee of Rs 1,499 excluding taxes.
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