Page 17 - Banking Finance February 2021

CO-OPERATIVE BANK NEWS

Co-Operative Bank News

Urban Co-Operative Banks' In 2019-20, the GNPA ratio of UCBs crore in FY19, the provision coverage
again surpassed that of SCBs. The ratio deteriorated from 63.5 per cent
asset quality, finances change was driven by improvement in in March 2019 to 60.3 per cent in

deteriorate: RBI report the asset quality of SCBs for two March 2020.
consecutive years while the slippages
The financial and asset quality profile On the balance sheet front, the growth
of UCBs increased.
of urban co-operative banks (USBs) in deposits, that constitute 90 per cent
deteriorated in the financial year SCBs as group showed GNPA of 9.1 per of the total resource base of UCBs,
2019-20 (FY20), with the sector cent in March 2019 and 8.2 per cent decelerated in 2019-20 after
in March 2020.
reporting net loss, an uptick in bad witnessing a revival in the previous
loans, and a fall in the provision While both gross NPAs and provisioning year.
coverage ratio. increased during 2019-20, the growth The average growth rate of deposits
in provisions was not fully
Gross non-performing assets (NPAs) declined from 13.1 per cent in the first
commensurate with the growth in the
rose from 7.3 per cent in 2018-19 to decade of the consolidation drive to 8
former, resulting in an increase in the
10.8 per cent in FY20. In absolute net NPA ratio. per cent between 2014-15 and 2019-
terms, NPAs worth Rs 10,900 crore 20, in line with the growth in balance
The overall operating profit of UCBs
were added, taking the tally to Rs sheet size.
took a major hit in 2019-20. Their
33,010 crore by March 2020.
interest income, that constitutes The advances of urban banks saw flat
The rise in NPAs may partly be around 89 per cent of total income, growth in 2019-20, against 8 per cent
attributable to stagnant growth in declined for the second consecutive expansion clocked in 2018-19, it
loans and advances and weak balance year on the back of deceleration in added.
sheets, according to the Reserve Bank investments and high NPAs. This was
of India's (RBI's) Trends and Progress of accompanied by an increase in interest RBI extends deadline for
Banking in India report. and non-interest expenditure. Urban Co-Ops by 6
Historically, UCBs have had a higher These factors combined, with higher months
level of NPAs than scheduled provisioning for contingencies - which
commercial banks (SCBs). Since 2015- more than doubled during the year - The Reserve Bank of India has
16, however, this position reversed, resulted in net losses in the extended the timeline for constitution
with the asset quality review resulting consolidated balance sheet of urban of Board of Management (BoM) by
in greater NPA recognition in SCBs, banks, the report added. Urban Cooperative Banks (UCBs) by six
months till June 30, 2021.
while the asset impairment of UCBs While provisions rose to Rs 19,921
inched up gradually over time. crore in March 2020 from Rs 14,020 The central bank has conveyed the

BANKING FINANCE | FEBRUARY | 2021 | 17