“The RBI may perhaps, consider conducting a study on outstanding NPAs in the banking sector and analyse on the basis of corporate versus MSME outstandings to arrive at more liberal lending norms for export sector which may also be included in priority sector window,” said FIEO president Ramu S Deora in a press statement.

The banking sector's NPAs have risen to 33 per cent y-o-y for 36 listed banks; at-least a third of the top 100 borrowers in the corporate sector also showing that they have debt to equity ratios of more than 2 and about 70 per cent of these incidentally account for 70 per cent of the corporate debt.

He added these economic macro-indicators are reference points for introspection and sufficient reason and concern to work on the course of policy making in 2012.

The RBI, before leaving the key rates at the existing levels in the last monetary policy review a fortnight ago, hiked the lending rate seven times during the year, with both repo and reverse repo rates going up by 2.25 per cent. Repo is the short-term rate at which RBI lends to banks, while reverse repo is the rate at which it borrows from them.

Subsequently, rising interest rates resulted in the deterioration of the asset quality of banks. The Systemic Risk Survey, conducted by the RBI for the first time, has identified deterioration of asset quality as the highest risk.

Commenting on the recent RBI data on credit off-take falling to a 21 month low of 17.7 per cent against 23.1 per cent in the corresponding period last year, the FIEO chief said that the decline in industrial production to abysmal lows of -5.1 per cent in October from 7 per cent in January 2011 along with October data on 8 core sectors which are nearing contraction point and together grew at 0.1 per cent are indicative of a severe downtrend.

“Particularly, a fall in coal output to 9 per cent in October while the previous fall in September was a steep negative 17.8 per cent may cripple directly both electricity generation and manufacturing,” Deora cautioned.

On rupee depreciation, which has been about 17 per cent, he viewed that it has further compounded the problem and dollar – denominated debt has risen to $ 11.4 billion and the overall debt obligations aggregate $23 billion in 2012-13. He added redemption of Foreign Currency Convertible Bonds (FCCBs) will also impact issuing firms adversely which have elevated redemption values of $ 7.2 billion.

“Rupee, therefore, needs to be put in a comfort zone keeping in view these factors,” said the FIEO chief.