Banks are seeing a dip in the low-cost CASA (current account savings account) deposits as part of the overall mix as most of the savers are shifting towards term deposits due to higher interest rates, according to a survey.

A higher component of CASA in the overall deposits of banks means that their margins will be under pressure.

Long-term credit demand has seen continued growth in sectors like infrastructure, textiles and chemicals, a survey by Ficci and Indian Banks' Association (IBA) released on Thursday showed.

Food processing and metals iron & steel have also witnessed accelerated long-term loan disbursements in the past six months.

Infrastructure is witnessing an increase in credit flow, with 67% of the respondents indicating an increase in long term loans as against 57% in the previous round, according to the 17th round of the Ficci-IBA Survey.

As per the survey, the outlook on expectations for the growth of non-food industry credit over the next six months is optimistic. About 42% of the participating banks expect non-food industry credit growth to be above 12% as compared to 36% in the previous round.

"Given the higher rates of interest, a shift towards term deposits has been observed. Over half of respondent banks (57%) reported a decrease in the share of CASA deposits in total deposits in the current round of the survey. The term deposits have picked up pace as reported by the respondent banks," it said.

On the asset quality front, the survey said that 75% of the respondent banks reported a decrease in their non-performing asset (NPA) levels in the last six months as compared to 90% of the banks that reported so in the previous round.

An overwhelming 90% of public sector banks have cited a reduction in NPA levels while among participating private sector banks, 80% have cited a decline in NPAs, it said.

Respondent banks were more confident about the asset quality prospects in the current round of the survey, cushioned by policy and regulatory support.

About 54% of the respondent banks in the current round believed that gross NPAs will be in the range of 34% over the next six months, it added.

As per the survey, a resilient domestic economy, a pick-up in credit growth supported by government capital expenditure, a robust recovery mechanism, high provisioning, and high write-offs were cited as key factors by the respondent bankers which expect asset quality to further improve over the next six months.