In September 2021, Khara had highlighted the issue of mispricing in the corporate loan market when interest rates were significantly low. In August, he said mispricing has somewhat declined.

"The learnings which we have from the past decade, where the last infrastructure story got unwounded and a lot of growth happened in the power plants, was the time when perhaps the equity was nothing but hybrid debt," said Khara, speaking at SBI economic conclave here.

For the fortnight ended 21 October, non-food credit rose 18.3% from a year earlier against a deposit growth of around 9.5%, showed data from the Reserve Bank of India (RBI).

To that extent, Khara said, the learnings have been incorporated in the system and nowadays banks do not just see how much equity promoters are bringing, but also its quality.

"This time the [corporate credit] growth is coming at a time when corporates have already deleveraged. That also gives us the confidence that the path which we are treading is sustainable," said Khara.

Comparing the last credit cycle to this one, he said that earlier insolvency courts were not there and today the fear of losing control of their companies has brought in some discipline among promoters.

"The ecosystem, in terms of strengthening the ratings system, Goods and Services Tax Network (GSTN) has given us credible data to evaluate the risk better. The banking sector has the benefit of leveraging all these ecosystems," he said.

The banking sector is seeing a fairly good pipeline of projects, which is as strong as about ₹2.5 trillion in SBI, he said.

"There is demand; corporates are willing to invest, come with infrastructure and enable capacity creation," said Khara.