According to reports from The Economic Times and Business Standard, Ashwini Kumar Tewari, Managing Director at State Bank of India, emphasized that cash-flow-based lending will become increasingly important for financing new-age industries. Speaking at a financial market conclave hosted by BCC&I in Mumbai, Tewari stated that banks need to develop new lending models as emerging businesses may not have the traditional collateral required for bank finance. As reported by The Economic Times, he noted that banks necessarily need to move from just collateral of security to fund these new businesses effectively.
As reported by The Economic Times and Business Standard, SBI is already implementing cash-flow-based lending models and applying such approaches to emerging sectors. Tewari revealed that the bank has developed a comprehensive framework called 'CHAKRA' to address these funding challenges. According to the reports, CHAKRA is described as a very big device because it is very emergent in the world of technology, focusing on sectors like data centres, static conductors, solar manufacturing chain and other emerging technologies. The initiative represents SBI's strategic response to the funding needs of new-age industries.
According to The Economic Times and Business Standard reports, Tewari highlighted that banks need to understand the technology, revenue potential, economics and cash-flow generation of new-age businesses before extending finance. He provided specific examples, stating that in the case of solar projects, SBI found that there is a lot of technology which is outdated. As reported by The Economic Times, Tewari explained that different technologies have different power-generation economics, making it difficult for banks to fund such projects unless they understand these technical aspects. This comprehensive approach is essential for banks to establish the revenue, economics and cash flow generation necessary for proper financing decisions.
As reported by The Economic Times and Business Standard, the shift toward cash-flow-based lending addresses the funding challenges faced by emerging sectors such as data centres, solar manufacturing and technology-driven businesses. The initiative represents SBI's proactive approach to serving industries that traditionally lack tangible security for conventional bank financing. According to the reports, this strategic pivot reflects the bank's commitment to supporting India's technological advancement and new-age industry growth through innovative lending models that align with the evolving business landscape.
