Finance minister Nirmala Sitharaman on Tuesday told the Rajya Sabha that gross bad loans of district central co-operative banks (DCCBs) were among the highest in the banking system, at 12.6% (`35,298 crore) of their advances as of March 2020.
The minister said the gross non-performing assets (NPAs) of urban co-operative banks (UCBs), too, remained elevated at 11.3% (Rs 35,528 crore) at the end of March 2021. However, the gross NPAs of state co-operative banks were to the tune of 6.7% (Rs 13,477 crore) as of March 2020, Sitharaman said in a statement in the upper House.
In contrast, the bad loan ratio of scheduled commercial banks stood at 7.5% as of March 2021, having eased from 8.4% a year before, the RBI said in its latest report this month.
The finances of co-operative banks came under heightened scrutiny recently after the government carved out the department of co-operation from the agriculture ministry to make it a full-fledged ministry under Amit Shah. Before that, affairs of the co-operative sector came under focus following the crisis at the Punjab Maharashtra Co-operative (PMC) Bank in 2019. This had prompted the government to amend the Banking Regulation Act to empower the RBI for more effective regulation of cooperative banks. The idea was to better protect the interests of depositors and avoid a PMC Bank-like crisis in future.
Citing the latest data, Sitharaman said there are 34 state co-operative banks, 351 DCCBs and 1,534 UCBs in the country.
Separately, RBI data show, as of March 2020, India had as many as 97,006 rural co-operative banks — which include both state co-operative banks and DCCBs, and a huge number of primary agricultural credit societies.
In a written reply in the Rajya Sabha, minister of state for finance Bhagwat Karad also said as many as 28 UCBs are placed under the all-inclusive directions of the RBI, under which they are restricted from discharging their liabilities without the approval of the central bank.
The assets of UCBs stood at Rs 6.5 lakh crore as of March 2021, while their loan portfolio was worth Rs 3.1 lakh crore, Sitharaman said, citing the RBI data. Similarly, according to data sourced from Nabard, the assets of state co-operative banks and DCCBs were to the tune of Rs 3.4 lakh crore and Rs 5.4 lakh crore, respectively, as of March 2020. Similarly, their loans stood at Rs 2 lakh crore and Rs 2.8 lakh crore, respectively.
Many of the cooperatives, thanks to their opaque structure and severe governance issues, have been allegedly used to funnel black money for long.