NPAs in public sector banks shot up from January-June: Survey

Non-performing assets (NPAs) in public sector banks have shot up considerably, with 91 per cent respondents from public sector banks reporting an increase in NPA levels, according to a survey released on Thursday.

The fifth round of the FICCI-IBA (Indian Banks' Association) survey which was carried out for January to June 2017 said banks suggested easing of provisioning norms for stressed assets referred to the Insolvency and Bankruptcy Code (IBC) and strengthening of legal infrastructure to facilitate quicker disposal.

"NPAs in public sector banks have shot up considerably, with 91 per cent respondents from public sector banks reporting an increase in NPA levels. Private sector banks and foreign banks both have mixed experiences with regards to NPAs with 71 per cent of private bank and 50 per cent of foreign bank respondents stating that NPAs have increased during January-June 2017," a statement said.

According to the survey, metals, infrastructure and textiles, during this period, have witnessed high level of NPAs with at least 50 per cent of total respondents stating the same.

Some 40 per cent of respondents also mentioned an increase in requests for restructuring of advances.

The survey has been conducted at a time when NPAs are at a worrisome position, especially for the public sector banks.

The survey showed about 35 per cent of the respondents reported tightening of credit standards for large enterprises in first half of 2017 and about 40 per cent respondents expect further tightening in the next six months.

During the first half of 2017, majority of the respondent banks have reduced their Marginal Cost of Funds based Lending rate (MCLR), it showed.

The survey also pointed out that while some banks are supportive of moving ahead with consolidation of banks in current times, others have expressed concerns related to timing and have suggested that priority should be given to resolve the problem of mounting NPAs and measures to raise capital.

--IANS

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