NEW DELHI: While the moratorium had offered some relief to India’s NPA figures last year, a FICCI-IBA survey has found that a large majority of bankers expect bad loan levels to rise sharply during the first six months of 2021. The findings were part of the 12th round of the bankers’ survey carried out by FICCI-IBA between July and December 2020.
The survey was conducted on 20 banks, including public sector, private sector and foreign banks, representing about 59 per cent of the banking industry, as classified by asset size. In the survey, half of the respondent banks reported a decline in NPAs during the second half of 2020. State-run banks alone have reported a reduction of about 78 per cent in NPA levels.
“However, in terms of outlook, nearly 68 per cent of respondent bankers expect the NPA levels to be above 10 per cent in the first half of 2021,” the survey said. In fact, close to 37 per cent of the respondents expect NPA levels to be upwards of 12 per cent during the period. The central bank has already warned of the expected deterioration of asset quality this year.
The Reserve Bank of India’s Financial Stability Report, released in January this year, showed that gross non-performing assets (NPAs) of banks may rise to 13.5 per cent by September 2021, under the baseline stress scenario. In the survey, some of the high-risk sectors identified by bankers include tourism and hospitality, MSME, aviation and restaurants.
Around 55 per cent of respondents believe that NPAs would rise substantially in the tourism and hospitality sector, while another 45 per cent expect NPAs to increase moderately. Another high NPA risk sector is the MSME segment, with 84 per cent respondents expecting an increase in NPAs.
Close to 89 per cent respondents also expect the restaurant sector to see an increase in NPAs, though only 26 per cent expect NPAs to increase substantially in this segment, the survey showed. There was a significant increase in requests for one-time restructuring for MSMEs, announced by the RBI in August last year, respondents noted. “An overwhelming 85 per cent of the respondent banks have cited an increase in requests for restructuring as against 39 per cent in the last round,” the survey said.
68% bankers expect NPAs to rise sharply during first 6 months
Long-term credit growth seen
The survey showed long-term credit demand has been growing for some sectors. “Particularly for pharma, 45 per cent have indicated an increase in long term loans,” the survey said