According to Nabard, gross NPAs of district central cooperative banks (DCCBs) increased to 10.7 percent in the last fiscal. The regulatory body for the rural cooperative banking says enormous gross NPAs of smaller lenders like DCCBs have persisted for the last three years.
Nabard among other things, attributes this problem to weak governance and technological backwardness in these banks. The other factor that seriously affects these banks is the vagaries of climate, says Nabard.
The DCCBs are not performing satisfactorily in about a dozen states across the country but Bihar happens to be the worst with the highest gross NPA ratio of over 35 percent in recent years, according to Nabard.
Reeling off the latest statistics on DCCBs , Nabard informs despite receiving Rs 18,282 crore under the debt waiver scheme, these banks have accumulated bad loans because they follow flawed lending practices.
And in addition state govts that hold about 25 percent stake in these banks often do not allow them to begin legal steps against defaulters, Nabard points out.
According to Nabard, while district-level cooperative banks are struggling to improve their performance, state-level cooperatives banks, which are larger units that lend to DCCBs, are doing much better. Gross NPA ratio across all state cooperative banks stood at 4.7% in 2014, compared with 6% a year ago.