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Banking & NBFCs · Daily brief

Cash-Flow-Based Lending Crucial for New-Age Sectors: SBI MD Ashwini Kumar Tewari Details "CHAKRA" Framework

For generations, Indian corporate lending operated under a straightforward doctrine: credit limits were directly anchored to the liquidation value of physical collateral—land, buildings, and industrial machinery.

1-BIG CHANGECHAKRA

FINSAMUDRA DESK · 19 Sept 2026, 1:14 pm IST · 2 MIN

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Speaking at a financial market conclave hosted by the Bengal Chamber of Commerce and Industry (BCC&I) in Mumbai, Ashwini Kumar Tewari, Managing Director of State Bank of India (SBI), declared that commercial banks must structurally transition from tangible asset security to cash-flow-based lending.


Inside SBI’s "CHAKRA" Initiative

To navigate this transition, the country’s largest lender has already institutionalized specialized underwriting mechanisms.

Tewari revealed that SBI is actively deploying a cash-flow-focused framework termed "CHAKRA" to evaluate high-growth emergent industries:

  • Target Sectors: Hyperscale data centres, semiconductor assembly and testing units, static conductor fabrication, solar component manufacturing, and specialty biotech.
  • The Valuation Disconnect: In modern technology infrastructure, intellectual property, long-term master service agreements (MSAs), and power-purchase agreements (PPAs) represent the core enterprise value. Traditional collateral charges on brick-and-mortar structures offer minimal downside protection if the underlying operating business fails.

The Underwriting Dilemma: Technological Obsolescence

While cash-flow lending unlocks vital liquidity for capital-heavy sectors, Tewari warned that it introduces acute credit assessment hurdles—most notably technological obsolescence.

Using solar manufacturing as a prime case study, Tewari explained that loan tenors often outlast the competitive lifespan of underlying machinery:

"In the case of solar, we started getting into detail. We found that there is a lot of technology which is outdated... different technologies have different power-generation economics and banks would find it difficult to fund such projects unless they understand these aspects. There is still a difficulty in establishing the revenue, to establish the economics and the cash flow generation, et cetera."

If an energy manufacturer invests in photovoltaic cell fabrication using older-generation silicon technology, a sudden efficiency breakthrough by competitors can destroy projected operating margins overnight, jeopardizing debt servicing even if production runs at full capacity.


Traditional Collateral vs. Cash-Flow Lending in New-Age Sectors

Credit DimensionTraditional Collateral-Based LendingCash-Flow-Based Lending ("CHAKRA")

Primary Security

Pledges on real estate, plant, and physical machinery

Escrow accounts, receivables, and contractual off-take agreements

Core Metric

Loan-to-Value (LTV) and distress sale liquidation valuation

Debt Service Coverage Ratio (DSCR) and free cash flow generation

Sector Suitability

Steel, cement, textile spinning, real estate developers

Data centres, solar modules, semiconductor fabs, SaaS, advanced pharma

Primary Risk Factor

Collateral encumbrance, property title disputes, illiquidity

Technological obsolescence, tariff cuts, and client off-take cancellations

Banker Skillset

Asset appraisers, civil valuers, legal auditors

Domain engineers, techno-economic analysts, contract structure specialists


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