The percentage of banks reporting a fall in non-performing assets (NPAs) in January-June this year has risen significantly, indicating stability in the credit environment, according to a report.
The latest round of the Ficci-IBA survey drew responses from 23 public sectors, private and foreign banks representing 67 percent of the banking industry by asset size.
According to the survey, 52 percent of the respondent banks reported a fall in NPAs, significantly lower than 43 percent in the previous round. Infrastructure, metals and engineering goods were key contributors to the bad debt.
Amongst the public sector banks, about 55 percent of reporting public sector banks have cited a reduction in NPA levels.
However, only 29 percent banks reported a rise in the number of requests for the restructuring of loans.
The survey was carried out for the period of January – June 2019.
The number of banks reporting an increase in the share of CASA deposits has been lower in the current round of the survey, with 70 percent indicating an increase as against 78 percent in the previous round.
"In terms of the composition of loans and advances, there has not been any change observed in the current round as compared to the previous round of the survey," Ficci survey said.
CASA (current account savings account) is mobilised at a very low rate and subsequently deployed for lending at a much higher rate resulting in a higher margin for banks.
To facilitate credit growth and investment pick-up in the economy, bankers recommended accelerated investments in the infrastructure sector as well as interest subvention for investments in long gestation infrastructure projects.