A survey conducted by FICCI and Indian Banks’ Association (IBA) showed more respondents claiming they have tightening credit standards during January-June 2018, the period in which survey was conducted.
“67% respondents among participating banks have reported tightening of standards, steeply increasing from 28% in the last round of the survey,” the industry bodies said in a statement.
A total of 22 public sector, private sector and foreign banks participated in the survey. These banks together represent 64% of the banking industry, as classified by asset size.
The survey has been conducted at a time when NPAs have shot over ₹10 lakh crore and continue to rise.
Cautious approach
The survey noted that with stressed asset rising, banks have generally adopted a cautious approach on lending to prevent fresh slippages.
Like the the previous round of the survey, 59% of the respondent banks reported a rise in NPAs in the current round of the survey.
“Infrastructure, metals and engineering goods were the key sectors reported with the highest NPAs. More than two-thirds of the respondents have cited these as sectors with high NPAs,” it said. At the same time, most responding banks agreed that the Insolvency and Bankruptcy Code (IBC) has put recovery process on a faster track and improved recovery position of banks.
Suggestions
To improve the resolution, bankers suggested enhancing capacity, strengthening of the judiciary, empowerment of local level government officials among other suggestions.
They also said that extension of moratorium beyond 270 days for any reason should not be permitted.
