63% banks report decline in NPA in infra sector in six months: Ficci-IBA

More banks are seeing a reduction in bad assets, especially in the sectors they had earlier quoted as high non-performing asset (NPA) sector, a recent survey by Ficci and IBA revealed.

The ninth Ficci-IBA survey in their report said the proportion of respondent banks citing a reduction in NPAs stood at 52 per cent as against 43 per cent in the previous round. About 55 per cent of reporting public sector banks (PSBs) have cited a reduction in NPA levels.

According to the survey, sectors such as engineering, infrastructure and iron ore and steel, which were more prone to become dud assets, banks are now seeing NPA levels reduce in the last six months in these sectors.

About 63 per cent of banks have reported a decline in NPA in the infrastructure sector during the last six months. Likewise, 57 per cent of banks surveyed said engineering goods has seen a reduction in NPA levels.

Moreover, banks have also seen about 92 per cent reduction in the level of NPAs in metals, iron and steel over the last six months.

Till June, the Reserve Bank of India (RBI) had cut its policy rate by 75 basis points (bps), however, the banks had passed on only 29 bps to the customers. The survey revealed that from February to June 2019, while the RBI had cut rates thrice by 25 bps each, 48 per cent of the responding banks reduced their MCLR by up to 20 bps.

In case of term deposits above one year, 39 per cent of responding banks have decreased interest rates by up to 50 bps while 30 per cent have not changed the rates. For term deposits below one year, 57 per cent respondents did not change their interest rates, while 22 per cent have reduced it by up to 50 bps.