New Delhi - Insolvency and Bankruptcy Code (IBC) has put the debt recovery process on a fast track and improved the position of banks, according to a Ficci survey.
Banks which participated in the survey highlighted that IBC has also increased promoters’ willingness to come forward for a 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 permitted.
“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 survey said.
“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% respondents have reported tightening of standards, steeply increasing from 28% in the last round of the survey.
In the first half of 2018, the 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 announced.
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.