The financial health of as many as 31 District Central Cooperative Banks (DCCBs) in Pune is yet to recover from the effects of demonetisation, over a year after it was announced by the Centre. An RTI query filed by The Indian Express with National Bank For Agriculture And Rural Development (NABARD) shows that almost all the banks have reported a significant increase in bad debts, raising serious questions about their future.
Immediately after the withdrawal of Rs 500 and Rs 1,000 notes on November 8 last year, the Reserve Bank of India (RBI) had faced allegations of unfavourable treatment to these predominantly rural banks. Not only were these banks banned from exchanging the withdrawn notes, the RBI even refused to exchange the Rs 2,000 crore they had in old notes. After the matter reached the Supreme Court, the apex bank relented and allowed the money to be exchanged in June, but set a deadline for doing so.
Today, months after the deadline, these DCCBs are still saddled with over Rs 150 crore, which form part of the 1 per cent of old currency notes that have not returned to the coffers of the RBI.
The banks suffered further as the recovery of loans were hit severely by demonetisation and the banks had to pay about Rs 4,000 crore in interest to their depositors as the RBI refused to allow them to exchange old notes.
Responses to the RTI query reveal that of the 31 banks, 18 DCCBs have reported a considerable increase in their Non-Performing Assets (NPA). By the end of financial year 2016, the net NPA of the 31 banks stood at 7.6 per cent to the net advances, while at the end of March 2017, it stood at 8.6 per cent.
The net NPA of these banks, at the end of March 2017, was Rs 3,784.76 crore, higher than the net NPA at the end of March 2016 — Rs 3,284.39 crore.