Chitturi Ravindra (Ex-MP), Chairman of Andhra Pradesh State Cooperative Urban Banks and Credit Societies Federation has written a letter to the Executive Director of Reserve Bank of India requesting a temporary relaxation in NPA Classification Norms.
The letter has been addressed on behalf of Urban Cooperative Banks of Andhra Pradesh. “We request you to allow temporary reprieve to UCBs, and permit classification of NPAs on the basis of 180 days norm instead of the present 90 days norm, demands the ex-MP.
The letter further reads, “RBI and Government of India have taken several measures to kick start the economy. Most of these measures were in the form of offering financial stimulus to borrowers in the form of restructuring of loans, rescheduling of payments, conversion of interest accrued into another credit facility, granting of moratorium etc. These have been beneficial to the borrowers and as a result of various measures the economy is limping back”.
However, the lockdown and the slow revival of the economy has severely impacted the recovery of loans, especially in Cooperative Urban Banks. Despite several concessions the borrowers are not able to manage timely repayment of instalments and interest resulting in mounting of NPAs, it argues.
“The six months of lockdown and slump in business activities across the board have adversely affected business growth of banks, recovery of advances and interest income during the year 2020-2021″, the letter reads.
“The outbreak of COVID-19 posed enormous challenges for life and livelihood globally, warranting policy response from national governments and central banks at an unprecedented scale. Besides fiscal stimulus, several unconventional monetary policy tools (UMPTs) were deployed by central banks to unfreeze financial markets and revive economic activity”, it concludes.
There are 47 Urban Cooperative Banks in Andhra Pradesh and only one UCB is Multi-State namely the Visakhapatnam Cooperative Bank.