SBI Underwrites Nearly Rs 1 Lakh Crore In MSME Loans Using AI In FY26

New Delhi, Aug 13 (KNN) State Bank of India (SBI) used artificial intelligence (AI) to underwrite nearly Rs 1 lakh crore worth of MSME loans of up to Rs 5 crore each during 2025-26, a senior bank official said on Wednesday.

SBI Managing Director Rama Mohan Rao Amara said the bank used AI-based underwriting for both new-to-bank and existing customers during FY26, reported PTI.

The bank is also deploying AI, including large language models (LLMs), to automate processing of cheques of up to Rs 10,000. Such cheques account for around 25 percent of SBI’s total cheque volumes.

AI Streamlines MSME Loan Underwriting

The use of AI-based underwriting has enabled SBI to process nearly Rs 1 lakh crore in MSME loans during FY26, covering both new and existing customers.

The technology is being used to support credit assessment and streamline preliminary processes, allowing the bank to handle larger volumes while reducing the manual workload for relationship managers.

AI Automates Cheque Processing

Under the system, AI reads cheques and verifies mandatory fields and compliance requirements before processing them through a straight-through processing (STP) system, with minimal human intervention.

The bank has retained a control mechanism under which a dedicated risk control unit reviews a sample of AI-processed cheques to identify errors and assess whether the models require further training.

Amara said the adoption of AI has helped free relationship managers from data collection and preliminary analysis, allowing them to focus on other customer-facing activities.

SBI Expands AI Use Across Banking Operations

SBI is deploying AI across the customer lifecycle, including credit underwriting, portfolio management, fraud risk management and customer service.

The bank is also using AI-based early warning signals to identify vulnerable loan exposures before they become delinquent. These systems analyse sector-specific, market and other publicly available information to identify potential risks.

Amara said it would take time to quantify the impact of AI in terms of a specific reduction in the cost-to-income ratio. However, the bank is already seeing benefits through improved customer satisfaction and greater employee bandwidth.

(KNN Bureau)