State Bank of India is sharpening its focus on cash-flow-based lending as India's new-age sectors expand and conventional asset-backed credit becomes harder to apply, a senior executive said on Tuesday. The shift reflects a broader challenge facing banks: many of the country's most promising growth businesses, especially in electric vehicles, mobility services and other technology-led ventures, do not yet possess the fixed assets or operating history that traditional lenders typically rely on.
Lending Beyond Collateral
Ashwini Kumar Tewari, managing director at SBI, said the bank is actively studying how cash-flow-based lending can support sectors where collateral is limited but business potential is significant. In such models, lenders assess the borrower's expected future cash generation rather than depending primarily on land, machinery or other tangible security. For banks, that requires a more nuanced understanding of the business itself, including how the technology works, how demand is likely to evolve and when revenue can realistically be expected.
The approach is gaining relevance as India's industrial landscape changes. Start-ups and growth companies in areas such as EV manufacturing, battery supply chains, charging infrastructure, mobility platforms and related services often operate with capital-intensive plans but limited hard assets in the early stages. Traditional project finance structures can struggle to fit these businesses, particularly when revenue is still ramping up or depends on adoption curves that are difficult to forecast.
Tewari's comments underscore a broader recalibration underway in Indian banking. As the economy diversifies, lenders are being pushed to move beyond familiar credit templates and develop frameworks that can evaluate intangible value, recurring revenue and business scalability. That is especially important in sectors where the balance sheet may not yet reflect the underlying commercial opportunity.
Technology Risk, Revenue Visibility
The central difficulty for banks is not simply the absence of collateral, but the uncertainty around future earnings. Innovative projects often have long gestation periods, evolving unit economics and dependence on regulatory, consumer and supply-chain conditions. For a lender, that makes it difficult to determine whether projected cash flows are robust enough to service debt over time.
This is where sector knowledge becomes critical. Banks must understand the technology stack, the competitive landscape and the assumptions behind revenue projections before extending credit. In EVs and mobility, for instance, a lender must assess whether demand is driven by fleet economics, consumer adoption, charging availability, battery costs or policy incentives. Each of these variables can materially affect repayment capacity.
SBI's interest in the model also reflects the growing recognition that India's next phase of industrial growth will require more flexible financing tools. New-age sectors are expected to be central to job creation, manufacturing expansion and the country's energy transition, but they often need funding structures that are better aligned with their operating realities. Cash-flow lending can fill that gap if underwriting standards are strong enough to manage risk.
Banking For New Industries
For large public-sector lenders such as SBI, the move is significant because it could influence how mainstream banking supports innovation-led businesses at scale. If successful, cash-flow-based lending could widen access to credit for companies that are otherwise underbanked due to a lack of conventional security. It could also help banks participate earlier in the growth cycle of promising firms, rather than waiting until they have accumulated substantial physical assets.
At the same time, the model demands more sophisticated risk management. Banks will need better data, sharper monitoring and closer engagement with borrowers to track whether actual performance matches projections. That may involve deeper due diligence, more frequent covenant checks and a stronger emphasis on industry-specific expertise within lending teams.
The direction of travel is clear: as India's new-age sectors mature, financing models will need to evolve with them. SBI's assessment suggests that cash-flow-based lending is no longer a niche concept, but a potentially important pillar of credit delivery for businesses built on technology, innovation and future earnings rather than legacy assets.