State Bank of India (SBI),
the country's largest bank, on Tuesday launched its SBI Composite Index which
will predict the direction of Index of Industrial Production (IIP) at least two
months in advance based on the growth of bank's loan book along with other
indicators like exchange rates, financial markets, commodity prices, exports
and imports and inflation, among others.
With a loan book of over Rs
10 lakh crore, SBI controls about 70% of the credit market which is diversified
to reflect the growth in the economy.
Performance of SBI Composite
Index over a large period of 10 years shows that it followed the trend and
variance in the IIP manufacturing index. In fact, in some months, the IIP has
followed the direction of the SBI Index.
Arundhati Bhattacharya,
chairman, SBI, said that it is a forward looking indicator."SBI internal loan
portfolio mirrors the credit demand in the country as we control 70% of the
loan market. We will identify the turning points in the manufacturing
cycle."The index will analyse data
from both manufacturing and services industries to determine expansion or
contraction in the economy.
"The SBI Composite Index
will help policymakers, market participants and the likes to identify the
turning points in the manufacturing cycles in advance and adjust their
investment or marketing strategy."
