Insolvency and Bankruptcy Code (IBC) has put the debt recovery process
on fast track and improved the position of banks, according to a Ficci
Banks which participated in the survey highlighted that IBC has also
increased promoters' willingness to come forward for resolution at an early
stage of default.
To improve the resolution process, bankers suggested further enhancing
of capacity, strengthening of the judiciary and empowerment of local level
government officials, the seventh round of the FICCI-IBA survey said.
Participating in the survey, 22
bankers suggested that extension of moratorium beyond 270 days should not be
"They also suggested increasing the tenor
of debt for companies that have viable businesses but are currently suffering
from over-leveraged balance sheets, along with a moratorium period," the
"The IBC has shown success with resolution
of stressed assets even as the law continues to evolve. Banks continue facing
challenges in lending even as GDP growth has bounced back while CPI inflation
faces upward risks in the form of rising oil prices and increasing government
expenditure," it said.
About 67 per cent respondents have reported
tightening of standards, steeply increasing from 28 per cent in the last round
of the survey.
In the first half of 2018, RBI hiked the repo
rate by 25 basis points in June 2018.
As per the survey, over half of the respondents
(55 per cent) have increased their MCLR by up to 20 basis points during the
period Jan-Jun 2018. Further, 27 per cent respondents increased MCLR by more
than 30 basis points. Since then another hike in repo rate by 25 basis points was
In case of term deposits, 41 per cent respondents increased their rates
by more than 50 bps on term deposits of tenure below one year, while 50 per
cent did so for term deposits of one year or above.
In view of the inter-departmental group set up
to study feasibility of the introduction of a central bank digital currency
(CBDC) formed by the RBI, bankers highlighted the benefits from CBDC.
Introduction of CBDC would increase digitization
and greater competition between banks for deposits, benefitting depositors, it
"Amongst the key areas of concern, respondents flagged the risk of
increase in illegal transactions, cyber security threats, its use for
speculative gains and effects to profitability and business model of