The tenth round of the FICCI-IBA survey was carried out for the period July to December 2019. A total of 18 banks consisting of public sector, private sector and foreign banks participated in the survey. These banks together represent about 50% of the banking industry, as classified by asset size.

The 10th FICCI-IBA survey asked bankers about their views on the measures that would help to improve the economic situation. Banks are of the view that rural distress should be addressed through laying emphasis on rural infrastructure development and stimulating demand by increasing the pace of fund transfers under the PM-Kisan and MGNREGA schemes.

Some of the respondent banks also suggested that the government could undertake structural land and labour reforms, while taking measures to increase job creation in the country.

A large number of participating bankers have mentioned that addressing the taxation issues by launching GST 2.0 regime and bringing a direct income tax code should be the top priority of the government at this moment.

The participating bankers also shared their views on ways to increase the flow of funds to the MSME sector which forms a crucial constituent of our economy.

These include suggestions including capacity building of MSMEs through various training programs, development of an online platform to help banks accelerate the SME lending process, development of creative ways of credit assessment like using psychometric testing, cash flow estimates or Qualitative Credit Assessment (QCA) and keeping NPA of this sector under check through measures like reclassification of IRAC norms for MSMEs, proper due diligence, regular follow up, strict monitoring of the end-use of funds, etc.

In the current round of Bankers' survey, a relatively lower proportion of responding banks have reported a decline in the level of NPAs. As compared to the first half of 2019 in which nearly 52% of the respondents had reported a decline in the NPA levels, the proportion of respondent banks citing a reduction in NPAs in the current round of survey has reduced to 39%.

The proportion of respondent banks reporting a rise in the NPA levels on the other hand has shown slight increase to 28% as against 26% in the preceding survey.

Amongst the key sectors with high level of NPAs such as Infrastructure, Metals and Iron & Steel, Engineering Goods and Textiles, higher proportion of respondent bankers have indicated high levels of NPAs in these sectors.

For instance, while about 73% and 55% of the respondents mentioned Infrastructure and Metals, Iron & Steel as sectors with high level of NPAs respectively in the last survey round, the proportion of respondents saying so have increased to 93% and 60% in the current round of survey. Amongst the respondents stating infrastructure as high NPA sector, about 36% of these respondents have reported an increase in NPA in this sector during July- December 2019 period.

The survey also shows that there has been a decrease in the MCLR, with  about 11% of the respondents having reported a reduction in the MCLR by more than 50 bps, 28% of the respondents reported reduction by 40-50 bps, 17% of the respondents reduced MCLR by 30-40 bps, another 17% reduced it by 20-30 bps and 22% reduced it by 0-20 bps.

In case of term deposits above one year, 67% of the responding banks have decreased interest rates by upto 50 bps while 28% have decreased the rates by more than 50 bps. For term deposits below one year, majority respondents (67%) have reduced the interest rates, while 28% have kept the interest rate unchanged.