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Journalism of Courage
The Indian cooperative banking sector is facing a deep crisis. The Reserve Bank of India (RBI) has said gross non-performing assets (NPA) of urban cooperative banks (UCBs) shot up to Rs 11,922 crore for the fiscal 2003-04.
To make matters worse, RBI said apart from UCBs, central co-op banks have recorded NPAs of Rs 13,862 crore, and state co-operative banks’ NPAs was Rs 6,284 crore as on March 31st, 2003.
In toto, urban co-op banks, state co-op banks and central co-op banks have recorded NPAs of Rs 32,068 crore — which is enough to fund 50 per cent of India’s Golden Quadrilateral road project.
In its report on ‘Trend and Progress of Banking 2003-04’, RBI said while the deposits of 55 urban co-operative banks have risen to a staggering Rs 39,305 crore, their accumulated losses were Rs 2,320 crore.
The deposits and advances of all UCBs were Rs 1,10,256 crore and Rs 67,930 crore respectively as on March 2004.
RBI said there is no clear demarcation of regulatory powers between state government, Nabard and itself, which has resulted at times in cross-directives from the controlling agencies thereby undermining the working of co-operatives.
In order to reduce NPAs, RBI has banned loans to directors and their family members and also directed these banks to step up their statutory liquidity ratio (SLR) investments in government securities. Though RBI asked banks to adhere to 90-day NPA norms, various representations (read lobbies) extended the time period to 180-days till June next year.
RBI has also admitted that 203 banks have been classified as Grade IV. This means the financial condition of these banks has worsened to such an extent that they require imposition of directives, amalgamation, reconstruction and liquidation etc. Of the 203 grade IV banks, 50 are in Ahmedabad and 31 are in Mumbai.
Of the 1,919 urban co-operative banks, the financial position of 732 banks were not considered satisfactory and were categorised under grade III and IV.
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NPA recovery picks up momentum
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• MUMBAI: Public sector banks have recovered Rs 1,748 crore from 24,092 cases under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002. But they had issued 61,263 notices involving an outstanding amount of Rs 19,744 cr as of June 30, 2004, said RBI in its report on ‘Trends and Progress in Banking 2003-04’. RBI said as on June 30, 2004, out of 63,600 cases (involving Rs 91,926 cr) filed with the Debt Recovery Tribunals (DRTs) by banks, 27,956 cases (involving Rs 25,358 cr) has been adjudicated. — ENS Banks shying away from gilts: RBI |
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