Is SBI being too cheerful even as a $36-bn blow from shadow lenders looms?

The big chill will come if SBI's $36 bn in advances to small and midsize enterprises are stressed, which may well happen if shadow lenders are forced to cut back their own exposure to these borrowers

State Bank of India Chairman Rajnish Kumar wants to assure investors he’s in complete control of the “demon” of soured loans. Not so fast, Aladdin.

The bank’s first quarterly profit in 12 months is no doubt an encouraging sign, though net income of $129 million on a $284 billion loan book is hardly worth celebrating. Besides, it’s premature for India’s largest lender to sound the all-clear on asset quality when it has a $20 billion exposure to shadow financiers facing a liquidity squeeze.

So far, investors’ attention has been on state-run Indian banks’ loans to big companies, which have been largely responsible