State Bank of India (SBI) has reached a massive milestone in digital banking. The bank used Artificial Intelligence (AI) to underwrite (process and approve) nearly ₹1 lakh crore in MSME loans during the 2025-26 financial year. These loans were given to both new and existing customers, with individual loan amounts going up to ₹5 crore. SBI Managing Director Rama Mohan Rao Amara shared these details at the annual FIBAC event.

AI is not just for loans anymore at SBI. The bank is also using Large Language Models (LLMs), which are smart computer programs that understand text, to handle cheque processing. Specifically, the bank has automated the clearing of cheques up to ₹10,000. These small-value cheques make up about 25% of the total volume that the bank handles daily.

The bank is using a system called Straight-Through Processing (STP). This means the AI reads the cheque, checks all the mandatory fields, and ensures compliance without a human having to touch it. However, the bank is staying cautious. They have a dedicated control risk unit that checks samples of these automated transactions to ensure the AI is not making mistakes or needs more training.

For bank officers, this is a big relief for their daily workload. Previously, relationship managers spent a lot of time collecting data and doing basic analysis. Now, the AI handles the preliminary work, freeing up employees to focus on more important tasks and better customer service. The bank believes this will improve employee productivity significantly over time.

SBI is also using AI for portfolio management and fraud risk management. One of the most important tools is the 'Early Warning Signal' system. The AI looks at market data and sector-specific information to find 'vulnerable exposures' (loans that might become bad). This helps the bank identify potential NPAs (Non-Performing Assets) before the customer actually misses a payment.

While the bank says it is too early to calculate exactly how much money this will save in terms of the cost-to-income ratio, the benefits are clear. Customers are getting faster service, and staff members are no longer bogged down by repetitive paperwork. In the coming months, we should watch how SBI expands these AI tools to even larger loan segments and other banking operations.