Friday, Jun 05, 2020 | Last Update : 03:40 AM IST

72nd Day Of Lockdown

Maharashtra77793336812710 Tamil Nadu2725614901223 Delhi236459542615 Gujarat18609126671155 Rajasthan98577104213 Uttar Pradesh92375439245 Madhya Pradesh85882772371 West Bengal68762768355 Bihar4420212028 Karnataka4320161057 Andhra Pradesh4112252971 Haryana3281112324 Telangana31471587105 Jammu and Kashmir3142104835 Odisha247814819 Punjab2415204347 Assam19894434 Kerala158969015 Uttarakhand115328610 Jharkhand7642975 Chhatisgarh6781892 Tripura6221730 Himachal Pradesh3691636 Chandigarh3022225 Goa126570 Manipur124110 Puducherry90330 Nagaland8000 Arunachal Pradesh3710 Meghalaya33131 Mizoram1710 Sikkim200

Liquidity constraints continue in the market despite bank recoveries: FICCI-IBA

ANI
Published : Feb 18, 2019, 11:48 am IST
Updated : Feb 18, 2019, 11:48 am IST

At the same time, over 90 per cent of respondents said infrastructure continues to remain a key sector with high NPAs.

The capital infusion comes at a time when NPAs are declining and recoveries are improving.
 The capital infusion comes at a time when NPAs are declining and recoveries are improving.

New Delhi: Considerable liquidity constraints witnessed in the economy during second half of 2018 are likely to continue for the remaining fiscal year (January to March 2019), according to a joint survey by Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Banks’ Association (IBA).

Among the major factors are stress in non-banking financial sector, expansion of currency in circulation during third quarter of fiscal year (October to December 2018-19), forex interventions following higher oil prices, foreign portfolion investment outflows and tax outflows.

The 8th round of Ficci-IBA survey for July to December 2018 had participation of 23 banks representing over 65 per cent of the banking industry as classified by asset size.

Most respondent banks said the liquidity scenario remained in deficit. It could remain tight even in Q4 (January to March 2019) due to year-end liquidity demands, tax outflows, higher fiscal deficit and run-up to elections.

The Reserve Bank of India (RBI) has taken adequate measures by way of open market operations to maintain liquidity. It should continue OMO purchases and cut cash reserve ratio to bring more liquidity into the market and support growth, said both organisations.

The survey highlights a changing trend in non-performing assets (NPAs). In contrast to previous surveys, 54 per cent of reporting PSU banks cited a reduction in NPA levels with only 38 per cent citing an increase.

At the same time, over 90 per cent of respondents said infrastructure continues to remain a key sector with high NPAs. While 37 per cent of them reported a reduction in NPAs of infrastructure sector, 42 per cent of respondents reported an increase. Bankers said there has been positive experience in recoveries since the implementation of Insolvency and Bankruptcy Code (IBC).

The government's recapitalisation plan will help in improving balance sheets of public sector banks and help them write-off some current bad loans. The capital infusion comes at a time when NPAs are declining and recoveries are improving.

The survey said the share of retail loans is increasing. The previous survey said retail loans comprised 40 per cent and corporate loans 60 per cent. In the current round, the ratio changed to 45 per cent share for retail loans and 55 per cent for corporate loans.

Tags: banking sector, ficci, iba, nbfc, rbi, npa, fpi
Location: India, Delhi, New Delhi