Monday, August 07, 2017

RTI response by NABARD: NPAs of cooperative banks inflated

Financial Express: Shayan Ghosh: Mumbai: Monday, August 7, 2017.
Development financing institution Nabard has found co-operative banks have a much smaller quantum of bad loans than reported by them.
Development financing institution Nabard has found co-operative banks have a much smaller quantum of bad loans than reported by them. District central co-operative banks (DCCBs) reported total non-performing assets for 2015-16 that were Rs 6,277 crore more than Nabard’s findings in subsequent audits. While DCCBs in 20 states reported gross NPAs of Rs 22,695 crore, Nabard’s checks revealed these were Rs 16,417 crore, the institution disclosed in an RTI response. Curiously, in several instances, Nabard has said the gross NPAs are ‘not available’. It is not immediately clear whether Nabard has the data or not. Email queries to Nabard’s communication department remained unanswered. DCCBs were in the news immediately after demonetisation when their deposits surged. In mid-November 2016, RBI had barred co-operative banks from accepting demonetised currency. Later, in June this year, the Supreme Court allowed them to deposit demonetised notes of Rs 500 and Rs 1,000 with RBI.


At the end of March 2015, the accumulated losses of DCCBs were Rs 3,986 crore, data from the Reserve Bank of India (RBI) showed. While state cooperative banks (StCBs) and DCCBs are registered under State Cooperative Societies Act of respective states and are regulated by RBI, National Bank for Agricultural and Rural Development (Nabard) conducts an inspection of their books. RBI data showed that while aggregate loans of DCCBs stood at Rs 2.19 lakh crore in March 2015 (latest available), their deposits were at Rs 2.58 lakh crore in the same period. Data from the RTI showed that in Andhra Pradesh, the aggregate bad loans reported by the DCCBs stood at Rs 561 crore in FY16, while Nabard found them to be Rs 372 crore.
In Gujarat, the difference between the self-reported NPA and what was revealed in the Nabard audit was Rs 449 crore. In Maharashtra, the divergence was to the tune of Rs 1,361 crore while in Madhya Pradesh, it was Rs 904 crore. According to the data, Maharashtra reported the highest gross NPA, at Rs 7,138 crore, followed by Madhya Pradesh and Kerala. Among 20 states who have among them 371 DCCBs, only two — Jammu & Kashmir and Telangana — showed zero or minimal divergence.