Nafcub President Jyotindra Mehta has demanded, among other things, change in applicable NPA norm from present 90 days to 180 days. In a letter addressed to the RBI, Mehta has listed issues being faced by the urban cooperative banking sector in the wake of Corona threat looming large over the nation.
Titled “Regulatory relaxations to Urban Cooperative Banks in the wake of economic slowdown & the onset of Covid-19 as a global pandemic, Mehta says “Sir, this is an SOS from the cooperative Banking sector and we request you to kindly ensure that RBI reacts to our submission so as to allow the banks to make changes/ adjustments well before 31st March 2020. We understand that IBA has also made some recommendations on behalf of the entire banking industry in this regard.”
Without going into any details of the reasons for making the request on behalf of the urban cooperative banking sector, as they are very well known to all including the Regulator, we submit the following for your immediate consideration, goes on the letter.
The basic demands are
- The 90-day NPA norm be changed to 180-day norm for the FY 20-21.
- One-time deferment be allowed for a period of 6 months and consequent extension of instalments in respect of all term loans.
- Implementation of SAF norms in respect of banks crossing mandated net NPA percentage be deferred.
- No existing bank in the FSWMB (Financially Sound and Well Managed Bank) category be removed from it for the next 6 months till the situation stabilizes and the criterion of FSWMB is revisited.
- The implementation of the directions of the circular of March13, 2020 on revision of exposure norms and new loan limits criterion for urban may be kept in abeyance for now, till the extraordinary circumstances that the world is passing through are normalised and the submissions of the sector in this regard are addressed.
Nafcub President argues that in the given situation one does not have to emphasise the position of the economy and more particularly that of the MSMEs, small business, and self-employed people of small means who all form the bulk of the clientele of the urban banks.
“If significant time bound relaxations are not provided as submitted above, the sector and its clientele will be very badly affected” Mehta signs off the letter with these words.