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Thursday, August 05, 2021

Four district central cooperative banks in tribal districts report low lending

These four banks, which are in the tribal-dominated districts of Chandrapur, Gondia, Gadchiroli and Bhandara, have reported a credit to deposit ratio (CDR) lower than 40, which contravenes Reserve Bank of India’s guidelines.

Written by Partha Sarathi Biswas | Pune |
Updated: June 30, 2021 8:29:12 am
cooperative banksCDR is an indicator of the business generated by the banks as compared to the deposits they receive | Representational image

Four district central cooperative banks (DCCBs) in Maharashtra have been pulled up for low lending rates as compared to the deposits they maintain. These four banks, which are in the tribal-dominated districts of Chandrapur, Gondia, Gadchiroli and Bhandara, have reported a credit to deposit ratio (CDR) lower than 40, which contravenes Reserve Bank of India’s guidelines.

CDR is an indicator of the business generated by the banks as compared to the deposits they receive. If the CDR is low, it means the bank has deposits lying idle and is not doing much business, while a very high CDR would indicate the bank is lending a large share of its deposits, which is not feasible either as the bank will not have enough funds to cover an emergency. To maintain a balance between the two options, RBI has mandated a minimum 40 per cent CDR for DCCBs.

Minutes of the meeting of the State Level Bankers Committee (SLBCC) — the apex committee of banks which monitors lending — shows that between December 31, 2020 and March 31,2021, the CRD of these four banks has dropped. The DCCBs in Bhandara and Gadchiroli banks have reported very low CDR, which indicates low lending and business (see box).

In its master circular about functioning of SLBC, the RBI has suggested the formation of a special committee to monitor such banks. The SLBC’s minutes of the meeting shows that lead district managers of these four districts have been instructed to analyse branch-wise data and continue monitoring. “Member banks with branches in these four districts are also requested to analyse and monitor performance of their branches with low CDR and make concerted efforts for improvement of the same,” read the minutes.

A senior officer of the state Cooperation department, however, said high CDR was not a cause of concern. “Towards the end of the financial year, these districts receive a lot of funds from the Tribal Welfare department. Disbursal of these funds require time, and that’s why the CDR is high. Once the new financial year starts, these funds are disbursed for various welfare programmes and the CDR becomes normal,” said the officer.

The officer said DCCBs have performed better than scheduled commercial banks in terms of disbursal of agricultural and other priority sector loans. For financial year 2020-21, these cooperative banks had lent Rs 17,757 crore of their Rs 18,296 crore-goal, thus achieving 97 per cent of their target. Commercial banks on the other hand had seen disbursal of only Rs 26,677 crore of their Rs 40,389 crore, meeting only 66 per cent of their target.

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