Industry bodies conducted a survey of 25 banks between January and June this year account for 76 per cent of the total asset base.
While 67% of those surveyed report a decline in NPAs in the past six months, the asset quality of banks continues to improve, with certain sectors such as textiles, infrastructure, retail, food processing, metals and iron and steel showing higher levels of NPAs. continues to show.
“Going forward, more than half of respondents expect gross NPA The level should be below 8% by the end of December 2022, while 33% of the respondents believe that the gross NPAs will be in the range of 9%,” the survey said. “65% of the respondents expect NPAs from MSMEs. Expect growth in the next six months while 50% expect growth from aviation in the next six months.”
The recovery of the economy from the Covid19 shock, high credit growth, substantial divergence of corporate balance sheets, better performance of the industry, healthy capital position and shifting of NPA accounts to NARCL, were cited by the respondent bankers as the key factors that contributed to the gross NPAs were reported to be below 8. % and in the range of 8 to 9% over the next six months.
Requests for restructuring of accounts have also declined as the proportion of responding banks citing increase in requests for restructuring of advances has come down from 61% in the current round of the survey to 12%, with 56% of respondents reporting has decreased. Such requests in the current round of survey.
The survey indicates that credit flows to infrastructure are on the rise with 76 per cent of the respondents indicating an increase in long-term loans as compared to 68% in the previous round. “In case of chemicals, 52% of the respondents indicated an increase in long-term loans in the current round as compared to 32% in the previous round, while the petroleum products sector was indicated by 40% of the respondents in the current round. in 27%,” the survey said.
Banks have also seen a rise in low-cost current and savings account (CASA) deposits, with an increase in 75% of those surveyed. casa,
Most of the respondent banks are of the view that the priority sector guidelines of the Reserve Bank need to be revisited and have suggested raising the cut-off for loans given to agriculture, renewable energy and NBFCs. He has also suggested to add more sector to this.
Eligibility including areas related to climate sustainability along the entire agricultural value chain.
About 48% of respondents expect non-food credit to grow by more than 10% in the next six months, while 24% expect it to grow between 8% and 10% over that period.