New Delhi: The proportion of banks citing reduction in non-performing assets (NPAs) stood at 52 per cent in the January-June period as against 43 per cent in the previous round, a Ficci-IBA report said.
The current round of the bankers' survey presented an improved picture of the changing trend in NPAs. Amongst the public sector banks (PSBs), about 55 per cent of lenders have cited reduction in NPA levels. Among the respondents stating infrastructure as high NPA sector, about 63 per cent have reported a decline in NPAs over the last six months. Likewise, 57 per cent of the respondents citing engineering goods as high NPA sector have mentioned a fall in NPA levels in this sector, while about 92 per cent of those indicating metals/iron and steel as high NPA sector have indicated a decline in NPAs in that sector over the last six months, the report pointed out.
A large majority of respondent banks (70 per cent) reported a rise in the share of CASA deposits in the first half of 2019, which is lower than the 78 per cent of respondents reported in the previous round of the survey. In terms of the composition of loans and advances, there has not been any change in the current round as compared to the previous round of the survey. The share of retail loans stood at 45 per cent while that of corporate loans at 55 per cent.
Some of the key sectors that are expected to see higher credit in the next six months as identified by the participating banks are infrastructure, metals, real estate, auto & auto components, pharmaceuticals and food processing. Majority of the banks were of the view that the establishment of Development Financial Institutions (DFIs) will help in boosting the flow of credit into the infrastructure sector and will help in addressing the asset-liability problem faced by the banks. The respondent banks also felt that source of funds will be an important factor in the success of DFIs.
They also proposed raising long-term finance from infra-bonds, equity and the budgetary allocations of the government, suggesting tax exemptions for investment in infra-bonds. The responses were received just before the presentation of the Union Budget 2019-20. In fact, the Budget did lay special emphasis on the banking and financial sector, including capital infusion of Rs 70,000 crore into PSBs and a proposal to provide one time six months' partial credit guarantee to PSBs for first loss of up to 10 per cent for purchase of high-rated pooled assets of financially sound NBFCs. These measures should help address the liquidity constraint besides ensuring greater lending to support growth.