SBI eyes over Rs 10K-crore credit pipeline for health infrastructure

State Bank of India (SBI), the country’s largest lender, expects over a Rs 10,000-crore credit pipeline for large and medium health care firms for augmenting infrastructure and capacities.

Ashwani Bhatia, managing director, SBI, said the bank had held discussions with firms that needed funds for building hospital infrastructure. On a conservative basis, the bank can lend Rs 10,000-15,000 crore.

The loans will fructify only in the medium to long term as players would look to assess demand over a period beyond immediate requirements emerging from the pandemic.

The Reserve Bank of India (RBI) will provide on-tap liquidity of Rs 50,000 crore with tenors of up to three years at the repo rate till March 31, 2022.

The purpose of this window is to boost provisions for immediate liquidity for ramping up pandemic-related health care infrastructure and services in the country.

Large pharma companies have huge resources and are not likely to seek bank funds for expansion and growth.

Bhatia said the RBI had given health “priority sector” status. 

It sees deficiency in physical infrastructure in the country and is willing to support efforts to improve the state of affairs.

Health infrastructure is short in the country. Each taluka and tehesil needs an oxygen plant. Investment would be Rs 40-50 lakh (per plant). This will spur activity in logistics and transportation chains, which has been found lacking, he added.

CRISIL’s assessment is that about 354 companies rated by it, predominantly pharmaceutical firms and hospitals, with an aggregate bank exposure of Rs 40,000 crore, will be eligible for Covid loans from lenders under the RBI’s liquidity facility.

Though pharmaceutical firms account for 68 per cent of rated bank exposure, hospitals (about 24 per cent of the rated exposure) are likely to avail themselves of most of the funding available. The borrowing cost of hospitals rated by CRISIL is 10.5-11 per cent. The new loans taken for expansion under this RBI scheme could be 300-350 basis points cheaper, leading to substantial interest savings for hospitals.

Broadly, the debt to equity ratio for hospitals is 1:1. This would mean for Rs 25,000 crore of bank credit, and the owners/promoters and investors in the hospital will have to chip in with an equal amount for capital expenditure to expand.