State Bank of India has integrated artificial intelligence into its core credit and operational functions, underwriting nearly ₹1 lakh crore in MSME loans in FY26 and automating cheque processing, signalling a mainstream shift towards digital banking.
State Bank of India has turned artificial intelligence into a practical lending tool, using it to underwrite nearly ₹1 lakh crore in micro, small and medium enterprise loans of up to ₹5 crore each in FY26, a senior executive said at the FIBAC conference on Wednesday. The bank said the system now covers both new-to-bank borrowers and existing clients, marking one of the clearest signs yet that India’s largest lender is moving AI from pilot projects into mainstream credit operations.
Rama Mohan Rao Amara, SBI’s managing director, said the technology has also been extended to cheque processing, with large language models helping automate cheques of up to ₹10,000. That segment accounts for about a quarter of the bank’s cheque volumes, and SBI says the process now runs through straight-through processing with almost no human involvement. A control risk unit still samples transactions to check for mistakes and decide whether the models need further training.
The bank says the wider benefit has been operational rather than purely financial for now. AI is being used across the customer journey, including credit underwriting, portfolio management, fraud monitoring and customer service. SBI is also deploying early warning signals that scan sector-specific trends, market indicators and other public information to flag exposures that may weaken before repayment problems emerge. The bank has said it is too early to put a precise figure on the impact on its cost-to-income ratio, but it is already seeing gains in customer satisfaction and employee productivity.
The push fits into a broader digital drive at SBI. Business Standard reported earlier this year that the lender introduced AI-powered features on its YONO platform, along with digital account opening and mobile trade finance services. The bank’s chairman, C S Setty, has repeatedly framed artificial intelligence and digital tools as central to simplifying banking, while other reports have said SBI has also been expanding in-house generative AI systems for staff support and back-office work. Together, those moves suggest the lender is building a technology-led model that reaches well beyond loan underwriting.
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