Non-performing asset (NPA) levels in the Indian banking industry are expected to increase, a top banking industry official said.
An increased level of "stressed assets" in the banking system could push up the NPA levels of banks, State Bank of India's Chairman O P Bhatt told reporters on the sidelines of a FICCI-IBA organised banking seminar here today.
Banks must prepare themselves with better risk-management systems, Bhatt said.
Pegging credit growth in the industry at around 29 per cent this fiscal, Bhatt said that the overall asset growth in FY09 remains bullish because of a high demand.
He, however, said that some segments such as auto and commercial vehicles have witnessed a slowdown in recent times.
The infrastructure and agri-sectors needed more funds, he said, adding that there was a huge demand for credit from the corporate sector.
"There is a huge demand for credit from the corporate sector, as global funding sources have almost dried up. Most corporates have turned to banks for adequate credit," he said.
On liquidity, Bhatt said that "it continues to be a big issue" though for the present, there is ample liquidity in the system.
"There is a need for structural liquidity in the system, which is sustainable in the long-term," he said, adding that the regulator was aware of the prevailing liquidity situation in the system and was ready to act according to the requirements of the situation.
