FICCI-IBA survey shows tightening of credit standards by Banks

• A survey conducted by the FICCI and Indian Banks’ Association showed more respondents claiming they have tightened credit standards during January-June 2018, the period in which survey was conducted.

• A total of 22 public sector, the 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 Rs 10 lakh crore and continues 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 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.

• At the same time, most responding banks have agreed that the Insolvency and Bankruptcy Code 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.

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