The Delhi Urban Co-operative Banks Federation has endorsed the letter written by Atul Khirwadkar, CEO of Kalyan Janata Sahakari Bank published on 14th April 2020 by Indian cooperative on UCBs condition precarious.
In a mail signed by Chairman Vijay Mohan of the Delhi Federation, the mail reads “The Delhi Urban Co-operative Banks Federation hereby endorses the letter dated 14th April 2020 written by Atul Khirwadkar, CEO of Kalyan Janata Sahakari Bank published on 14th April 2020 by Indian cooperative on UCBs condition precarious.”
The letter by Atul Khirwadkar talks about the present situation of urban cooperative banks in the state and the country and says it is very precarious bordering on their existential crisis. To help them wriggle out of the situation, RBI must initiate relief without delay.
“Various UCBs have invested Rs.900 crore in PMC Bank. Almost 140 banks are facing the threat of extinction due to provisioning norms which currently requires 100% provisioning for default by PMC. Secondly a few UCBs have discounted bills around Rs.300 crore accepted by PMC under letter of Credit issued by PMC”, the letter reads.
It also says “These also are becoming NPA today attracting 100% provisioning. The RBI should immediately advise UCBs for deferring the Provisions for their exposure towards PMC bank from Prudential Norms this year which will enable these UCBs for postponing provisioning immediately. RBI may advise that the exposure towards PMC may be provided to the tune of 10% without classifying the exposure as NPA in its books.”