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

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 We found that there is a lot of technology which is outdated...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