Page 20 - Banking Finance June 2024

RBI imposes Rs. 60.3 lakh of any transaction of agreement en- NPAs) was 5.7 per cent in 2013-14. It
tered into by the banks with their re- increased to 8.8 per cent in 2022-23.
fine on five co-operative spective customers. The proportion of bad loans - after

banks accounting for provisions (or net NPAs)
The Reserve Bank has imposed penal- Tough times for urban co- - was 2.1 per cent in 2022-23, or
ties totalling Rs 60.3 lakh on five co- operative banks roughly similar to where it was a de-
operative banks for contravention of cade ago. The gross NPA ratio of
Urban cooperative banks in India trace
various regulatory norms. scheduled commercial banks, the
their history to the 19th century and
A penalty of Rs 43.30 lakh has been larger peers of urban cooperatives,
were set up after the success of simi-
imposed on Rajkot Nagarik Sahakari was 3.9 per cent and their net NPA
lar initiatives in Europe, trace their his-
Bank for non-compliance with RBI di- ratio was 1 per cent in 2022-23.
tory to the 19th century.
rections on 'ban on loans and advances The RBI governor in September 2023
to directors and their relatives, and The last few years have not been great expressed concern over the bad loans
firms/concerns in which they are inter- for the segment that holds more than of urban co-operative banks. Earlier
ested', 'prohibition on opening of sav- Rs 5 trillion in deposits, Reserve Bank that year, the central bank notified
ing bank accounts in the names of cer- of India (RBI) data released as part of measures to strengthen such banks.
tain bodies/organizations' and 'mainte- its 'Primary (Urban) Co-operative
nance of deposit accounts'. Banks' Outlook 2022-23'. The value of loans they have given is
up 65 per cent since 2013-14 to Rs 3.3
The central bank has imposed a mon- Cooperative banks are popular because
trillion. The value of deposits has
etary penalty of Rs 5 lakh each on The they often give higher interest than
Kangra Co-operative Bank (New Delhi), other banks but many of them are fi- grown slightly faster at 68 per cent, to
Rajdhani Nagar Sahkari Bank nancially weaker after the pandemic. Rs 5.3 trillion.
(Lucknow), and Zila Sahakari Bank, The RBI rates banks on the basis of From 2020, deposits are insured up to
Garhwal (Kotdwar, Uttarakhand). factors such as capital adequacy, asset Rs 5 lakh after the failure of Punjab and

Besides, a penalty of Rs 2 has been quality, management, earning, liquid- Maharashtra Co-operative Bank (PMC)
imposed on District Co-operative Bank ity and system and controls. Around 22 the year before.
(Dehradun). per cent of urban cooperative banks Deposits have grown since then. The
were put in the lowest two categories
In each case, the RBI said the penal- percentage of deposits insured in urban
in 2018-19.
ties are based on deficiencies in regu- cooperative banks has dropped from
latory compliance and are not in- The share of bad loans in their portfo- 71.2 per cent in 2021-22 to 69.5 per
tended to pronounce upon the validity lio (or gross non-performing assets, cent in 2022-23.

18 | 2024 | JUNE | BANKING FINANCE