Underling the role of cooperative sector in the state’s growth story, Uttar Pradesh Chief Minister Yogi Adityanath has asked state co-op department to look into the causes of co-op banks’ continual downfall and suggest measures to check the same.
Yogi was reviewing the performance of the cooperative sector last week and felt that an urgent road-map is needed to stem the slide. There are about 50 district central cooperative banks in the state, which are continually sliding down despite the govt support to some of them in the past.
Poor loan recovery and outdated technology are two factors that plague DCCBs in the state, say those connected with the sector.
According to a report published in the daily Business Standard “At the end of September 2018, cooperative banks in UP had a branch network of 1,589 with deposits and advances of Rs 16,750 crore and Rs 13,513 crore, respectively. Thus, their credit deposit ratio (CDR) stood at more than 80% against the net banking (including commercial banks and regional rural banks) sector ratio of less than 52%.”
“The elevated CDR has resulted in higher NPA levels with cooperative banks. Till September 2018, their NPAs stood at Rs 2,512 crore or 18.59%, which is more than twice the state banking sector average of 8.75% in the state”, it underlined.
Much like Kerala, Uttar Pardesh is also planning to merge all DCCBs to counter the challenge of lack of modern banking technology which is expensive for any individual retail bank. But when you pool the resources and share the burden among several banks it becomes affordable, said a NAFCUB official which is also planning an umbrella organization to counter technology issue, among others.
Yogi govt is currently busy organizing a SWOT analysis of the merger proposal. Aware of the fact that being primarily agrarian, Indian society cannot do without co-op banks, which through PACS are capable of reaching out to the grass-roots.
Reducing NPAs, holding the concerned officials accountable and working out on a road map of grand merger of co-op banks were some issues that were taken up for discussion by the Chief Minister last week.