SBI uses AI to underwrite nearly ₹1 lakh cr in MSME loans in FY26
BusinessLine 2 hrs ago·12 Aug 2026, 8:54 am
State Bank of India (SBI) is leveraging artificial intelligence to significantly boost its lending capabilities. The bank's Managing Director has revealed that AI tools, including Large Language Models, are now being used to underwrite nearly ₹1 lakh crore in Micro, Small, and Medium Enterprise (MSME) loans for the fiscal year 2025-26. This initiative also extends to automating the processing of small-value cheques, potentially reducing manual errors and speeding up transactions.
This move is important for investors as it highlights a major Indian bank's commitment to digital transformation and operational efficiency. By reducing the time and cost associated with manual processing, AI can improve the bank's profit margins and reduce non-performing assets. For the broader market, this signals a growing trend of financial institutions adopting advanced technology to modernize their infrastructure and compete more effectively in the digital economy.
Investors should watch for the actual performance of these new systems over the coming quarters. Key metrics to monitor include the reduction in processing times, the quality of the loans underwritten by AI, and the overall impact on the bank's cost-to-income ratio. Success in these areas could reinforce confidence in the bank's digital strategy and its ability to navigate a competitive lending environment.
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