Appointment
of UCBs as Agents/Sub-agents under Money Transfer Service Scheme
4.60 After a review of the earlier guidelines prohibiting UCBs from acting as
agents/ subagents under money transfer service scheme (MTSS), it was decided that
UCBs holding AD category I and II licence could act as agents/ sub-agents under
MTSS (which are in conformity with the guidelines issued by the Foreign Exchange
Department of the Reserve Bank), subject to the following conditions: (a)
bank’s adherence to AML/KYC standards should be satisfactory; (b) the principal
should maintain foreign currency deposits (USD) equivalent to 3 days average payout
or USD 50,000, whichever is higher, with the designated bank, in favour of the
agent; (c) where the UCB is acting as a sub-agent, the agent should also maintain
with the designated bank, security deposits equivalent to 3 days average payout
or Rs.20 lakh, whichever is higher, in favour of the UCB subagents concerned;
(d) the UCBs should ensure that the payouts not reimbursed do not, at any point
of time, exceed the security deposits placed by the overseas principal /agent,
as the case may be; and (e) no UCB should appoint any other UCB/entity as its
sub-agent. Professionalisation of Management of UCBs
4.61 UCBs were advised in April 2002 to include at all times, at least two professional
directors on their boards with suitable banking experience (at middle/senior management
level) or with relevant professional qualifications, i.e., C.A. with
bank accounting/ auditing experience. The scope of professional directors prescribed
therein was reviewed and it was decided to enlarge the ambit of ‘professional
directors’ to include persons with professional qualification in the fields
of law, accountancy or finance. UCBs were advised to initiate steps to amend the
bye-laws of their banks accordingly and ensure compliance with the above requirements.
Off-site Surveillance 4.62 An off-site surveillance
(OSS) software was developed for UCBs to facilitate the preparation and submission
of all supervisory and regulatory (including OSS) returns to the Reserve Bank
electronically. Further, to enhance the knowledge and skills in the area of off-site
surveillance of banking an international workshop was organised in March, 2008
(Box IV.4). The OSS has been extended to all UCBs. 4.63 A set of eight
OSS returns, introduced for scheduled UCBs from the quarter ended March 2004,
were extended to Tier II non-scheduled banks with deposits of over Rs.100 crore
from June 2004 and to Tier II UCBs having deposits of Rs.50 crore and above from
June 2006. From the same period, a simplified set of five (four quarterly and
one annual) returns was also introduced for Tier I UCBs having deposits above
Rs.50 crore but less than Rs.100 crore. The OSS system has now been extended to
the rest of the UCBs with deposits below Rs.50 crore (a set of eight OSS returns
for Tier II UCBs and simplified set of five returns to Tier I UCBs) and will come
into effect from the quarter ending December 2008. Operations
and Financial Performance of Urban Co-operative Banks A
profile of UCBs 4.64 The urban co-operative
banking sector comprises a number of institutions which vary in terms of their
size, nature of business and geographic spread. The number of UCBs declined from
1,813 at end-March 2007 to 1,770 at end-March 2008. Of the total, 53 banks had
scheduled status. The 1717 non-scheduled UCBs included 105 Mahila (Women)
banks, 77 salary earners' banks and six SC/ST banks. Banks are classified into
four grades, viz., Grade I, II, III and IV, in the order of their performance
assessment based on capital adequacy, level of NPAs, history of profit/loss, among
others. The total number of Grade I and II banks increased over the past three
years, while those in Grade III and IV declined. The number of UCBs in Grade I
and Grade II increased to 1,274 (72 per cent of the total number of UCBs) at end-March
2008 from 1,250 (69 per cent of the total) at end-March 2007. At the same time,
however, the number of UCBs in Grade III and Grade IV declined to 496 at end-March
2008, from 563 at end-March 2007 (Tables IV.3 and IV.4).
The consultative process under TAFCUBs has brought about a general improvement
in the UCBs, resulting in increase in the share of Grade I and II banks. Box
IV.4: First International Workshop on Off-Site Surveillance The
first international workshop on off-site surveillance (OSS) was conducted during
March 4-7, 2008 for central banks from SAARC and ASEAN countries. The aim of the
workshop was to broaden the perspective and enhance the knowledge and skills of
participants in the area of off-site surveillance of banking entities, particularly
the financial co-operatives. The workshop was attended by 22 participants, including
19 foreign participants from central banks/supervisory authorities mostly from
senior and middle management cadres. The World Council of Credit Unions, USA was
also represented in the workshop as observer and guest speaker. A presentation
was made to the participants on the OSS system implemented by the Reserve Bank
for UCBs showing electronic collection of data from UCBs and utilisation of such
data in detecting incipient signals of stress in banks, generation of pre-inspection
study reports for inspecting officers (IOs), monitoring integrity of data and
timeliness of submission of returns by the supervised entities. The OSS database
receives data from UCBs, IOs, as also from important internal registers. This
buttressed supervision by providing access to all supervisory data from a central
point. Furthermore, the strategies for development of an OSS function were discussed
in detail. A field visit to a large UCB was arranged during which the
bank also made presentation on ‘OSS from the perspective of Supervised Entities.’
The bank through its presentation informed the visitors that the OSS system provided
by the Reserve Bank had helped the bank in improving follow-up with borrowers
whose accounts were non-performing, or were likely to become non-performing, i.e.,
were overdue but not yet classified as non-performing and this had helped in reducing
its non-performing advances. Similarly, the bank mentioned that OSS reporting
had helped it in reducing its concentration risk through the identification of
its large exposures in the process of preparing the returns for submission to
the Reserve Bank. A field trip was also arranged to a Mahila UCB, where,
in addition to the innovative products/technology used for reaching out to small/daily
depositors/borrowers etc., the participants also saw how banks in far
flung areas, affected by drought had developed close contact with supervisors
through the process of submitting OSS returns electronically and, therefore, were
able to communicate conveniently with supervisor over e-mail for reporting as
also for obtaining any clarifications. This closeness with the regulator was highlighted
by the bank during its presentation. Participants also observed that
the OSS software given to banks enabled them to generate analytical outputs provided
therein, which could help the supervised entities to understand the perspective
of the supervisor and thereby facilitate self-supervision. Participants in their
feedback observed that the programme had helped them to understand the challenges
faced in collecting reliable, regular and timely information from the supervised
entities and to use such data for identifying early warning signals of stress
on banks as also for supporting informed decision making and policy formulation.
They also observed that the OSS system of the Reserve Bank provided an interface
with the on-site examination of data which helped in maintaining integrity of
OSS data. Participants appreciated the Reserve Bank’s decision to hold the
workshop and even expressed that more such exposures were needed for enhancing
their own OSS systems.
Table
IV.3: Centre-wise Gradation of Urban Co-operative Banks |
(End-March
2008)* | Centre | Grade
I | Grade
II | Grade
III | Grade
IV | Total |
| 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 |
Ahmedabad | 114 | 110 | 88 | 99 | 42 | 27 | 40 | 35 | 284 | 271 |
Bangalore | 99 | 118 | 92 | 75 | 55 | 54 | 42 | 33 | 288 | 280 |
Bhopal | 12 | 12 | 24 | 23 | 15 | 16 | 9 | 6 | 60 | 57 |
Bhubaneswar | 2 | 3 | 4 | 2 | 4 | 5 | 4 | 4 | 14 | 14 |
Chandigarh | 9 | 9 | 3 | 3 | - | - | 4 | 4 | 16 | 16 |
Chennai | 69 | 79 | 34 | 33 | 22 | 13 | 6 | 5 | 131 | 130 |
Dehradun | 4 | 4 | - | - | 1 | 1 | 2 | 1 | 7 | 6 |
Guwahati | 6 | 5 | 6 | 8 | 4 | 3 | 1 | 1 | 17 | 17 |
Hyderabad | 65 | 72 | 33 | 26 | 7 | 7 | 11 | 10 | 116 | 115 |
Jaipur | 24 | 23 | 13 | 13 | 1 | 1 | 1 | 2 | 39 | 39 |
Jammu | 3 | 3 | - | - | 1 | 1 | - | - | 4 | 4 |
Kolkata | 31 | 26 | 10 | 13 | 1 | 1 | 9 | 9 | 51 | 49 |
Lucknow | 44 | 45 | 17 | 12 | 4 | 6 | 5 | 7 | 70 | 70 |
Mumbai | 117 | 171 | 178 | 131 | 76 | 59 | 80 | 79 | 451 | 440 |
Nagpur | 17 | 30 | 76 | 60 | 39 | 42 | 39 | 37 | 171 | 169 |
New Delhi | 12 | 11 | 1 | 2 | - | 1 | 2 | 1 | 15 | 15 |
Patna | 5 | 5 | - | - | - | - | - | - | 5 | 5 |
Raipur | 5 | 6 | 5 | 4 | - | - | 4 | 3 | 14 | 13 |
Thiruvananthapuram | 14 | 16 | 14 | 22 | 23 | 21 | 9 | 1 | 60 | 60 |
Total | 652 | 748 | 598 | 526 | 295 | 258 | 268 | 238 | 1,813 | 1,770 |
* : Data are provisional.
-: Nil |
Table
IV.4: Summary of Grade-wise Position of UCBs | End-
March | No.
of UCBs | Grade
I | Grade
II | Grade
III | Grade
IV | Grade
I+II | Grade
III+IV | Grade
(I+II) (as a percent to Total) | Grade
III+IV (as a percent to Total) | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
2006 | 1,853 | 716 | 460 | 407 | 270 | 1,176 | 677 | 63 | 37 |
2007 | 1,813 | 652 | 598 | 295 | 268 | 1,250 | 563 | 69 | 31 |
2008P | 1,770 | 748 | 526 | 258 | 238 | 1,274 | 496 | 72 | 28 |
P : Provisional. |
4.65 As at end-March 2008, 72 per cent of banks were either
in Grade I or Grade II. Their share in total deposits and advances was at 76.7
per cent and 75.8 per cent, respectively (Table IV.5).
4.66 The growth in deposits of UCBs by 6.4 per cent and 14.1 per cent for
the years 2006-07 and 2007-08 respectively, shows an improvement in public confidence
in this sector. Besides a few large banks, most of the UCBs are of small to medium
size. The distribution of deposits across UCBs is highly skewed. As at end-March
2008, of the total 1,770 UCBs, deposits of 544 UCBs were less than Rs.10 crore.
However, they accounted for only 2.2 per cent of total deposits. On the other
hand, 97 banks with deposits of Rs.250 crore and above accounted for 56.7 per
cent of the total deposits. Of these, 16 banks with deposits of Rs.1,000 crore
and above accounted for 28.8 per cent of total deposits of UCBs at end-March 2008.
In all, 94.5 per cent of banks had a deposit base of less than Rs.250 crore and
accounted for 43.3 per cent of deposits, while 5.4 per cent banks with a deposit
base of Rs.250 crore and above accounted for remaining 56.7 per cent of the deposits
of the UCB sector (Table IV.6). 4.67 The distribution
of outstanding advances across UCBs is skewed. The top nine
Table
IV.5: Grade-wise Distribution of UCBs as at end-March 2008* |
Grade | Number
of Banks | Number of banks
as percentage to total | Deposits
(Rs. crore) | Deposits
as percentage to total | Advances
(Rs. crore) | Advances
as percentage to total | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
I | 748 | 42.3 | 73,787 | 53.3 | 45,931 | 51.6 |
II | 526 | 29.7 | 32,361 | 23.4 | 21,556 | 24.2 |
III | 258 | 14.6 | 14,885 | 10.7 | 8,722 | 9.8 |
IV | 238 | 13.4 | 17,462 | 12.6 | 12,773 | 14.4 |
Total | 1,770 | 100.0 | 1,38,496 | 100.0 | 88,981 | 100.0 |
* : Data are provisional.
Note : Components may not add up to respective totals due to
rounding off. | banks with loan-size of above Rs.
1,000 crore accounted for 22.3 per cent of total outstanding advances. Most of
the UCBs (68.3 per cent of the total number) with small loan-size of less than
Rs. 25 crore constituted merely 12 per cent of the total advances. Within this
group, UCBs with loan-size of less than Rs.10 crore constituted 44.5 per cent
of the total number and 4.3 per cent of the total advances (Table IV.7).
4.68 The distribution of UCBs by size of assets is also skewed. As at end-March
2008, 593 UCBs, with a share of 33.5 per cent of the total number of UCBs, accounted
for 2.7 per cent of total assets, while 339 UCBs, constituting only 19.1 per cent
of the total number of banks with assets of Rs.100 crore and above, accounted
for 78.7 per cent of assets. Thirteen banks with assets of Rs.2,000 crore and
above accounted for 26.7 per cent of total assets of UCBs at end-March 2008. In
all, 80.9 per cent of the total number of banks with assets of less than Rs.100
crore accounted for 21.2 per cent of the assets (Table IV.8).
4.69 Fifty-three scheduled UCBs constituted more than 40 per cent of assets,
deposits, investments and loans and advances of the entire urban co-operative
Table
IV.6: Distribution of UCBs by Deposit-size | (End-March
2008)* | Sr. | Deposit
Base | No.
of UCBs | Deposits |
No. | (Rs.
crore) | No. | Share
in Total (per cent) | Amount
(Rs. crore) | Share
in Total (per cent) |
| 1 | 2 | 3 | 4 | 5 |
1. | j
1,000 | 16 | 0.9 | 39,841 | 28.8 |
2. | 500
to <1,000 | 22 | 1.2 | 14,779 | 10.7 |
3. | 250
to < 500 | 59 | 3.3 | 23,879 | 17.2 |
4. | 100
to < 250 | 154 | 8.7 | 23,756 | 17.2 |
5. | 50
to < 100 | 207 | 11.7 | 14,797 | 10.7 |
6. | 25
to < 50 | 308 | 17.4 | 10,871 | 7.8 |
7. | 10
to < 25 | 460 | 26.0 | 7,543 | 5.4 |
8. | <
10 | 544 | 30.7 | 3,030 | 2.2 |
| Total | 1,770 | 100.0 | 1,38,496 | 100.0 |
* : Data are provisional.
Note : Components may not add up to respective totals due to
rounding off. | banking sector. The number of
non-scheduled UCBs declined to 1,717 at end-March 2008 from 1,760 in the previous
year (Table IV.9). 4.70 While 1,529 Tier I UCBs (86.4
per cent of total) accounted for 25 per cent of deposits and advances, 241 UCBs
classified as Tier II UCBs accounted for 75 per cent of deposits and advances
(Table IV.10). Operations, Financial Performance
and Asset Quality of Urban Co-operative Banks Operations of UCBs
4.71 The balance sheets of UCBs expanded by 11.1 per
cent during 2007-08 as compared with 7.0 per cent during 2006-07. The
Table
IV.7: Distribution of UCBs by | Size
of Advances | (End-March
2008)* | Sr. | Size
of | No.
of UCBs | Advances
Outstanding | No. | Advances
(Rs. crore) | No. | Share
in Total (per cent) | Amount
(Rs. crore) | Share
in Total (per cent) |
| 1 | 2 | 3 | 4 | 5 |
1 | j
1,000 | 9 | 0.5 | 19,824 | 22.3 |
2 | 500
to < 1,000 | 14 | 0.8 | 10,254 | 11.5 |
3 | 250
to < 500 | 34 | 1.9 | 11,933 | 13.4 |
4 | 100
to < 250 | 107 | 6.0 | 16,686 | 18.8 |
5 | 50
to < 100 | 153 | 8.6 | 11,081 | 12.5 |
6 | 25
to < 50 | 243 | 13.7 | 8,497 | 9.5 |
7 | 10
to < 25 | 422 | 23.8 | 6,896 | 7.7 |
8 | <
10 | 788 | 44.5 | 3,810 | 4.3 |
| Total | 1,770 | 100.0 | 88,981 | 100.0 |
* : Data are provisional.
Note : Components may not add up to respective totals due to
rounding off. |
Table
IV.8: Distribution of UCBs by | Size
of Assets | (End-March
2008)* | Sr. | Asset
Size | No.
of UCBs | Total
Assets | No. | (Rs.
crore) | No. | Share
in Total (per cent) | Amount
(Rs. crore) | Share
in Total (per cent) |
| 1 | 2 | 3 | 4 | 5 |
1 | j
2000 | 13 | 0.7 | 47,981 | 26.7 |
2 | 1000
to < 2000 | 15 | 0.8 | 17,887 | 10.0 |
3 | 500
to < 1000 | 35 | 2.0 | 21,597 | 12.0 |
4 | 250
to < 500 | 65 | 3.7 | 22,112 | 12.3 |
5 | 100
to < 250 | 211 | 11.9 | 31,697 | 17.7 |
6 | 50
to < 100 | 233 | 13.2 | 16,040 | 8.9 |
7 | 25
to < 50 | 334 | 18.9 | 11,973 | 6.7 |
8 | 15
to < 25 | 271 | 15.3 | 5,227 | 2.9 |
9 | <
15 | 593 | 33.5 | 4,909 | 2.7 |
| Total | 1,770 | 100.0 | 1,79,421 | 100.0 |
* : Data are provisional.
Note : Components may not add up to respective totals due to
rounding off. | composition of the assets and
liabilities remained broadly the same during the year. Deposits, the main source
of funds for urban co-operative banks, grew at a higher rate during 2007-08 as
compared with 2006-07. Borrowings, however, declined by 13.7 per cent during the
year, reversing the sharp growth during the last year. Capital grew by 17.4 per
cent during 2007-08. ‘Other liabilities’ continued to decline during
the year. Loans and advances and investments, which constitute the two major items
on the asset side, grew at higher rates than the previous year (Table
IV.11).
Table
IV.9: Profile of UCBs | (End-March
2008)* | (Amount
in Rs. crore) |
| Non-Scheduled | Scheduled | All |
1 | 2 | 3 | 4 |
Number | 1,717 | 53 | 1,770 |
| (97.0) | (3.0) | (100.0) |
Assets | 1,00,103 | 79,318 | 1,79,421 |
| (55.8) | (44.2) | (100.0) |
Deposits | 80,580 | 57,916 | 1,38,496 |
| (58.2) | (41.8) | (100.0) |
Advances | 53,363 | 35,619 | 88,981 |
| (60.0) | (40.0) | (100.0) |
Investments | 33,961 | 26,162 | 60,123 |
| (56.5) | (43.5) | (100.0) |
Total number of |
| |
| deposits accounts | 39,143,063 | 14,487,941 | 53,631,004 |
| (73.0) | (27.0) | (100.0) |
Total number of |
| |
| borrowal accounts | 6,761,846 | 1,138,934 | 7,900,780 |
| (85.6) | (14.4) | (100.0) |
* : Data are provisional.
Note : 1. Figures in parentheses are percentages to their
respective totals. 2. Components may not add up to respective totals due to
rounding off. |
Table
IV.10: Tier-wise Distribution of Deposits | and
Advances | (End-March
2008)* | Type
of UCBs | No.
of banks | Deposits
(Rs. crore) | Advances
(Rs. crore) | Assets
(Rs. crore) | 1 | 2 | 3 | 4 | 5 |
Tier I | 1,529 | 34,984 | 22,525 | 47,331 |
| (86.4) | (25.3) | (25.3) | (26.4) |
Tier II | 241 | 1,03,512 | 66,456 | 1,32,090 |
| (13.6) | (74.7) | (74.7) | (73.6) |
Total | 1,770 | 1,38,496 | 88,981 | 1,79,421 |
| (100.0) | (100.0) | (100.0) | (100.0) |
* : Data are provisional.
Note : 1. Figures in parentheses are percentages to their
respective totals. 2. Components may not add up to respective totals due to
rounding off. | Financial Performance
4.72 During 2007-08, net interest income of all
UCBs increased compared with the previous year. Both, non-interest income and
non-interest expenditure also increased. As a result, operating profits of UCBs
increased only marginally. However, increase in provisions, contingencies and
taxes resulted in a decline in net profits (Table IV.12).
Table
IV.11: Liabilities and Assets of | Urban
Co-operative Banks | (Amount
in Rs. crore) | Item | As
at | Percentage |
| end-March
| Variations |
| 2006 | 2007 | 2008P | 2006-07 | 2007-08P |
1 | 2 | 3 | 4 | 5 | 6 |
Liabilities |
| |
| |
| 1. | Capital | 3,488 | 3,968 | 4,658 | 13.8 | 17.4 |
|
| (2.3) | (2.5) | (2.6) |
| |
2. | Reserves | 10,485 | 14,241 | 14,841 | 35.8 | 4.2 |
|
| (6.9) | (8.8) | (8.3) |
| |
3. | Deposits | 1,14,060 | 1,21,391 | 1,38,496 | 6.4 | 14.1 |
|
| (75.6) | (75.2) | (77.2) |
| |
4. | Borrowings | 1,781 | 2,657 | 2,292 | 49.2 | -13.7 |
|
| (1.2) | (1.6) | (1.3) |
| |
5. | Other
Liabilities | 21,140 | 19,196 | 19,134 | -9.2 | -0.3 |
|
| (14.0) | (11.9) | (10.7) |
| |
Total Liabilities/ Assets | 1,50,954 | 1,61,452 | 1,79,421 | 7.0 | 11.1 |
Assets | (100.0) | (100.0) | (100.0) |
| |
1. | Cash
in Hand | 1,558 | 1,622 | 1,845 | 4.1 | 13.7 |
|
| (1.0) | (1.0) | (1.0) |
| |
2. | Balances
with | |
| |
| |
| Banks | 9,037 | 8,906 | 10,764 | -1.4 | 20.9 |
|
| (6.0) | (5.5) | (6.0) |
| |
3. | Money
at Call and | |
| |
| |
| Short
Notice | 1,835 | 1,884 | 2,000 | 2.7 | 6.1 |
|
| (1.2) | (1.2) | (1.1) |
| |
4. | Investments | 50,395 | 50,859 | 60,123 | 0.9 | 18.2 |
|
| (33.4) | (31.5) | (33.5) |
| |
5. | Loans
and | |
| |
| |
| Advances | 71,641 | 79,733 | 88,981 | 11.3 | 11.6 |
|
| (47.5) | (49.4) | (49.6) |
| |
6. | Other
Assets | 16,488 | 18,448 | 15,708 | 11.9 | -14.9 |
|
| (10.9) | (11.4) | (8.8) |
| |
P: Provisional Note
: 1. Figures in parentheses are percentages to total liabilities/
assets. 2. Components may not add up to respective totals due to rounding
off. Source : Balance sheets of respective UCBs. |
Table
IV.12: Financial Performance of All UCBs | (Amount
in Rs. crore) | Item
| As
at end-March | Percentage
Variations |
| 2007 | 2008P | 2007-08P |
1 | 2 | 3 | 4 |
A. | Total
Income (i+ii) | 12,281 | 13,068 | 6.4 |
|
| | (100.0) | (100.0) |
| | i. | Interest
Income | 11,217 | 11,794 | 5.1 |
|
| | (91.3) | (90.3) |
| | ii. | Non-interest
Income | 1,066 | 1,274 | 19.5 |
|
| | (8.7) | (9.7) |
| B. | Total
Expenditure (i+ii) | 9,797 | 10,528 | 7.5 |
|
| | (100.0) | (100.0) |
| | i. | Interest
Expenditure | 6,696 | 7,159 | 6.9 |
|
| | (68.3) | (68.0) |
| | ii. | Non-Interest
Expenditure | 3,099 | 3,368 | 8.7 |
|
| | (31.6) | (32.0) |
| |
| of which: |
| |
| |
| wage bill | 1,150 | 1,551 | 34.9 |
|
| | (11.7) | (14.7) |
| C. | Profit |
| |
| | i. | Amount
of operating profit | 2,483 | 2,540 | 2.3 |
| ii. | Provisions,
contingencies, taxes | 1,311 | 1,408 | 7.4 |
| iii. | Amount
of net profit | 1,173 | 1,131 | -3.6 |
P: Provisional. Note
: 1. Figures in parentheses are percentages to respective totals.
2.Components may not add up to respective totals due to rounding off. Source
: Balance sheet of respective UCBs. | Priority
Sector Lending 4.73 Based on the revised guidelines on the priority
sector issued in August 2007, 52.7 per cent of cash advances were extended to
the priority sector by UCBs. Small enterprises constituted the largest share (16.9
per cent) of the priority sector lending, followed by housing loans (13.4 per
cent) and retail trade (11.5 per cent). Lending to the weaker sections constituted
13.7 per cent of advances (Table IV.13).
Table
IV.13: Priority Sector and Weaker Section Advances by
Urban Co-operative Banks- 2007-08* | Segment | Priority
Sector | Weaker
Sections |
| Amount (Rs.
crore) | Share
in Total Advances (Per cent) | Amount(Rs.
crore) | Share
in Total Advances (Per cent) | 1 | 2 | 3 | 4 | 5 |
Agriculture and Allied Activities | 5,363 | 6.0 | 1,464 | 1.6 |
i) Direct Finance | 2,264 | 2.5 | 614 | 0.7 |
ii) Indirect Finance | 3,099 | 3.5 | 850 | 1.0 |
Retail Trade | 10,271 | 11.5 | 2,828 | 3.2 |
Small Enterprises | 15,011 | 16.9 | 3,418 | 3.8 |
i) Direct Finance | 8,697 | 9.8 | 2,013 | 2.3 |
ii) Indirect Finance | 6,314 | 7.1 | 1,405 | 1.6 |
Educational Loans | 610 | 0.7 | 186 | 0.2 |
Housing Loans | 11,916 | 13.4 | 3,155 | 3.5 |
Micro Credit | 3,012 | 3.4 | 946 | 1.1 |
State sponsored organisations |
| |
| |
for SC/ST | 675 | 0.8 | 152 | 0.2 |
Total | 46,859 | 52.7 | 12,149 | 13.7 |
*: Data are provisional
Note : Components may not add up to respective totals due to
rounding off. | 4.74 SLR investments constituted the
bulk of investment (85.6 per cent) of UCBs as at end-March 2008. Although all
categories of investments increased during 2007-08 as compared with the previous
year, the increase was more pronounced in respect of term deposits with State
co-operative banks and term deposits with district central co-operative banks
(Table IV.14). Capital Adequacy
4.75 As at end-March 2008, the CRAR of 1,457 UCBs out of total
1,770 UCBs, was at 9 per cent and above (Table IV.15).
Asset Quality 4.76 The gross and net
NPAs increased in absolute terms. However, as a percentage of total advances,
both gross NPAs and net NPAs declined. The NPA ratios of UCBs were 16.4
Table
IV.14: Investments by Urban | Co-operative
Banks | (Amount
in Rs. crore) | Item | As
at end-March | Percentage
Variations |
| 2007 | 2008P | 2007-08P |
1 | 2 | 3 | 4 |
Total Investments (A+B) | 50,859 | 60,123 | 18.2 |
|
| (100.0) | (100.0) |
| A. | SLR
Investments (i to vi) | 42,742 | 51,452 | 20.4 |
|
| (84.0) | (85.6) |
| i) | Central
Government Securities | 26,826 | 30,648 | 14.2 |
|
| (52.7) | (51.0) |
| ii) | State
Government Securities | 3,633 | 3,937 | 8.4 |
|
| (7.1) | (6.5) |
| iii) | Other
Approved Securities | 918 | 1,001 | 9.1 |
|
| (1.8) | (1.7) |
| iv) | Term
Depoits with StCBs | 4,542 | 6,155 | 35.5 |
|
| (8.9) | (10.2) |
| v) | Term
Deposits with DCCBs | 6,382 | 8,980 | 40.7 |
|
| (12.5) | (14.9) |
| vi) | Others,
if any | 441 | 731 | 65.7 |
|
| (0.9) | (1.2) |
| B. | Non-SLR
Investments | 8,117 | 8,671 | 6.8 |
(in bonds of public sector | (16.0) | (14.4) |
| Institutions/AIFIs,
shares | |
| | of
AIFIs and units of mutual funds) | |
| | P
: Provisional. Note : 1. Figures in parentheses are
percentages to total investments. 2. Components may not add up to respective
totals due to rounding off. |
Table
IV.15: CRAR-wise Distribution of All UCBs | (End-March
2008)* | (Per
cent) | Range
of CRAR (per cent) | <3 | 3
to 6 | 6 to 9 | j9 | Grand
Total | 1 | 2 | 3 |
| 4 | 5 |
Non-Scheduled | 216 | 35 | 52 | 1,414 | 1,717 |
Scheduled | 8 | 1 | 1 | 43 | 53 |
All UCBs | 224 | 36 | 53 | 1,457 | 1,770 |
* : Data are provisional. |
per cent (gross) and 7.5 per cent (net) at end-March 2008
(Table IV.16). Operations and Performance
of Scheduled Urban Co-operative Banks 4.77
Total assets of scheduled UCBs continued to expand during 2007-08. While deposits
and capital increased significantly, borrowings declined during the year (there
was a marginal decline in reserves also). On the asset side, loans and advances,
and investments grew significantly during 2007-08 (Table IV.17).
Financial Performance 4.78 Net interest
income of scheduled urban co-operative banks declined. Since increase in other
income was more or less offset by increase in operating expenditure, the decline
in net-interest income resulted in decline in operating profits. However, significant
decline in provisions, contingencies and taxes resulted in increase in net profit
as against a decline in the previous year (Table IV.18).
4.79 SLR investments, which constitute the bulk of investment of UCBs, grew
by 17.7 per cent during 2007-08, while non-SLR investments declined. Of the SLR
investments, the increase was more pronounced in respect of term deposits with
State co-operative banks and district central co-operative banks (Table
IV.19).
Table
IV.16: Gross Non-Performing Assets of | Urban
Co-operative Banks | End-
March | No.
of Reporting UCBs | Gross
NPAs (Rs crore) | Gross
NPAs as percentage of Gross Advances | Net
NPAs (Rs crore) | Net
NPAs as percentage of Net Advances | Net
NPAs as percentage of Gross Advances |
1 | 2 | 3 | 4 | 5 | 6 | 7 |
2005 | 1,872 | 15,486 | 23.2 | 8,257 | - | 12.1 |
2006 | 1,853 | 13,506 | 18.9 | 6,335 | - | 12.3 |
2007 | 1,813 | 14,541 | 18.3 | 6,235 | 8.8 | 7.8 |
2008P | 1,770 | 14,583 | 16.4 | 6,685 | 9.1 | 7.5 |
P : Provisional - : Not available.
Note : Components may not add up to respective totals due to
rounding off. | Operations and Performance of Non-scheduled
Urban Co-operative Banks 4.80 The consolidated
balance sheet of non-scheduled UCBs expanded at a higher rate of 12.0 per cent
during 2007-08 as compared with 3.6 per cent during 2006-07. While deposits and
capital grew at a higher rate, borrowings declined during 2007-08. On the asset
side, loans and advances and investments grew significantly (Table
IV.20).
Table
IV.17: Liabilities and Assets of Scheduled Urban Co-operative Banks |
(Amount
in Rs crore) | Item | As
at end-March | Percentage
Variations |
| 2006 | 2007 | 2008P | 2006-07 | 2007-08P |
1 | 2 | 3 | 4 | 5 | 6 |
Liabilities |
| |
| |
| 1. Capital | 899 | 995 | 1,208 | 10.7 | 21.4 |
| (1.4) | (1.4) | (1.5) |
| |
2. Reserves | 5,439 | 6,898 | 6,759 | 26.8 | -2.0 |
| (8.4) | (9.6) | (8.5) |
| |
3. Deposits | 45,297 | 51,173 | 57,916 | 13.0 | 13.2 |
| (70.0) | (71.0) | (73.0) |
| |
4. Borrowings | 922 | 1,345 | 1,197 | 45.9 | -11.0 |
| (1.4) | (1.9) | (1.5) |
| |
5. Other Liabilities | 12,145 | 11,674 | 12,238 | -3.9 | 4.8 |
| (18.8) | (16.2) | (15.4) |
| |
Total Liabilities/Assets | 64,702 | 72,085 | 79,318 | 11.4 | 10.0 |
Assets |
| |
| |
| 1. Cash in hand | 386 | 424 | 491 | 9.8 | 15.8 |
| (0.6) | (0.6) | (0.6) |
| |
2. Balances with Banks | 4,227 | 4,542 | 5,616 | 7.5 | 23.7 |
| (6.5) | (6.3) | (7.1) |
| |
3. Money at call and short notice | 618 | 1,097 | 1,100 | 77.5 | 0.3 |
| (1.0) | (1.5) | (1.4) |
| |
4. Investments (SLR+Non-SLR Investments) | 22,593 | 22,873 | 26,162 | 1.2 | 14.4 |
| (34.9) | (31.7) | (33.0) |
| |
5. Loans and Advances | 27,960 | 32,809 | 35,619 | 17.3 | 8.6 |
| (43.2) | (45.5) | (44.9) |
| |
6. Other Assets | 8,918 | 10,340 | 10,330 | 15.9 | -0.1 |
| (13.8) | (14.3) | (13.0) |
| |
P: Provisional Note
: 1. Figures in parentheses are percentages to total liabilities/assets
2. Components may not add up to respective totals due to rounding off. Source
: Balance sheet of respective UCBs. |
Table
IV.18: Financial Performance of Scheduled UCBs | (Amount
in Rs crore) | Item |
| |
| Percentage
Variations |
| |
| 2005-06R | 2006-07R | 2007-08P | 2006-07 | 2007-08P |
1 |
| | 2 | 3 | 4 | 5 | 6 |
A. | Total
Income (i+ii) | 4,499 | 4,594 | 4,664 | 2.1 | 1.5 |
|
| | (100.0) | (100.0) | (100.0) |
| |
| i. | Interest
Income | 3,912 | 4,060 | 4,074 | 3.8 | 0.3 |
|
| | (87.0) | (88.4) | (87.3) |
| |
| ii. | Non-interest
Income | 587 | 533 | 590 | -9.2 | 10.7 |
|
| | (13.0) | (11.6) | (12.7) |
| |
B. | Total
Expenditure (i+ii) | 3,653 | 3,791 | 3,880 | 3.8 | 2.3 |
|
| | (100.0) | (100.0) | (100.0) |
| |
| i. | Interest
Expenditure | 2,516 | 2,489 | 2,524 | -1.1 | 1.4 |
|
| | (68.9) | (65.7) | (65.1) |
| |
| ii. | Non-Interest
Expenditure | 1,137 | 1,302 | 1,356 | 14.5 | 4.1 |
|
| of which: | (31.1) | (34.3) | (34.9) |
| |
|
| Wage bill | 634 | 394 | 497 | -37.9 | 26.1 |
|
| | (17.4) | (10.4) | (12.8) |
| |
C. | Profit
| |
| |
| |
| i. | Amount
of operating profit | 846 | 803 | 783 | -5.1 | -2.5 |
| ii. | Provisions,
contingencies, taxes | 332 | 298 | 212 | -10.2 | -28.9 |
| iii. | Amount
of net profit | 514 | 505 | 572 | -1.8 | 13.3 |
P: Provisional R: Revised
Note : 1. Figures in parentheses are percentages to respective
totals. 2. Components may not add up to respective totals due to rounding
off. Source : Balance sheet of respective UCBs. |
4.81 During 2007-08, net interest income of
UCBs at Rs.3,085 crore for 2007-08, was higher than that of Rs.2,949 crore a year
ago. Increase in other income was significantly lower than the increase in operating
expenditure. However, operating profit of UCBs increased marginally. Higher levels
of provisions, contingencies and taxes resulted in decline in net profits of non-scheduled
UCBs during 2007-08 (Table IV.21). 4.82 SLR investments
constitute the bulk of investment of UCBs. Although all categories of investments
increased during 2007-08 as compared with the previous year, the increase was
more pronounced in respect of term deposits with State cooperative banks and district
central cooperative banks. Furthermore, apart from Central Government securities,
term deposits with State co-operative banks and district central co-operative
banks constituted significant proportions of total investments (Table
IV.22).
Table
IV.19: Investments by Scheduled Urban | Co-operative
Banks | (Amount
in Rs. crore) | Item
| As
at | Percentage |
| end-March | Variations |
| 2007 | 2008P | 2007-08P |
1 | 2 | 3 | 4 |
Total Investments (A+B) | 22,873 | 26,162 | 14.4 |
|
| (100.0) | (100.0) |
| A. | SLR
Investments (i to vi) | 18,893 | 22,239 | 17.7 |
|
| | (82.6) | (85.0) |
| | i) | Central
Government Securities | 14,507 | 16,886 | 16.4 |
|
| | (63.4) | (64.5) |
| | ii) | State
Government Securities | 2,026 | 2,132 | 5.2 |
|
| | (8.9) | (8.1) |
| | iii) | Other
Approved Securities | 191 | 151 | -20.9 |
|
| | (0.8) | (0.6) |
| | iv) | Term
Depoits with StCBS | 1,496 | 2,186 | 46.1 |
|
| | (6.5) | (8.4) |
| | v) | Term
Deposits with DCCBs | 622 | 755 | 21.4 |
|
| | (2.7) | (2.9) |
| | vi) | Others,
if any | 51 | 129 | 152.9 |
|
| | (0.2) | (0.5) |
| B. | Non-SLR
Investments | 3,981 | 3,923 | -1.5 |
| (in
bonds of public sector | (17.4) | (15.0) |
| | Institutions/AIFIs,
shares | |
| |
| of
AIFIs and units of mutual funds) |
| |
| P: Provisional
Note : 1.Figures in parentheses are percentages to total
investments. 2.Components may not add up to respective totals due to rounding
off. |
Table
IV.20: Liabilities and Assets of Non-Scheduled UCBs |
(Amount in
Rs crore) | Item | As
at end-March | Percentage
Variations |
| 2006 | 2007 | 2008P | 2006-07 | 2007-08P |
1 | 2 | 3 | 4 | 5 | 6 |
Liabilities
| |
| |
| |
1. | Capital | 2,589 | 2,973 | 3,450 | 14.8 | 16.0 |
|
| (3.0) | (3.3) | (3.4) |
| |
2. | Reserves | 5,046 | 7,342 | 8,082 | 45.5 | 10.1 |
|
| (5.9) | (8.2) | (8.1) |
| |
3. | Deposits | 68,763 | 70,218 | 80,580 | 2.1 | 14.8 |
|
| (79.7) | (78.6) | (80.5) |
| |
4. | Borrowings | 859 | 1,312 | 1,095 | 52.7 | -16.5 |
|
| (1.0) | (1.5) | (1.1) |
| |
5. | Other
Liabilities | 8,994 | 7,522 | 6,896 | -16.4 | -8.3 |
|
| (10.4) | (8.4) | (6.9) |
| |
Total Liabilities/Assets
| 86,251 | 89,367 | 1,00,103 | 3.6 | 12.0 |
|
| (100.0) | (100.0) | (100.0) |
| |
Assets |
| |
| |
| 1. | Cash
in hand | 1,171 | 1,198 | 1,354 | 2.3 | 13.0 |
|
| (1.4) | (1.3) | (1.4) |
| |
2. | Balances
with Banks | 4,810 | 4,364 | 5,147 | -9.3 | 17.9 |
|
| (5.6) | (4.9) | (5.1) |
| |
3. | Money
at call and | |
| |
| |
| short
notice | 1,217 | 787 | 900 | -35.3 | 14.3 |
|
| (1.4) | (0.9) | (0.9) |
| |
4. | Investments |
| |
| |
| | (SLR+Non-SLR
Investments) | 27,802 | 27,985 | 33,961 | 0.7 | 21.4 |
|
| (32.2) | (31.3) | (33.9) |
| |
5. | Loans
and Advances | 43,680 | 46,924 | 53,363 | 7.4 | 13.7 |
|
| (50.6) | (52.5) | (53.3) |
| |
6. | Other
Assets | 7,571 | 8,108 | 5,378 | 7.1 | -33.7 |
|
| (8.8) | (9.1) | (5.4) |
| |
P: Provisional. Note
: 1. Figures in parentheses are percentages to total liabilities/assets.
2. Components may not add up to respective totals due to rounding off. Source
: Balance sheet of respective UCBs. | 4.83 UCBs
made significant progress in terms of technological advancements. As at end-March
Table
IV.21: Financial Performance of | Non-Scheduled
UCBs | (Amount
in Rs. crore) | Item |
| As
at end-March | Percentage
Variations |
| | 2007 | 2008P | 2007-08P |
1 |
| 2 | 3 | 4 |
A. Total
Income (i+ii) | 7,687 | 8,404 | 9.3 |
|
| (100.0) | (100.0) |
| i. | Interest
Income | 7,156 | 7,720 | 7.9 |
|
| (93.1) | (91.9) |
| ii. | Non-interest
Income | 532 | 684 | 28.6 |
|
| (6.9) | (8.1) |
| B.
Total Expenditure (i+ii) | 6,005 | 6,648 | 10.7 |
|
| (100.0) | (100.0) |
| i. | Interest
Expenditure | 4,207 | 4,635 | 10.2 |
|
| (70.1) | (69.7) |
| ii. | Non-Interest
Expenditure | 1,798 | 2,012 | 11.9 |
| of
which: | (29.9) | (30.3) |
| | Wage
bill | 755 | 1,054 | 39.6 |
|
| (12.6) | (15.9) |
| C.
Profit |
| |
| i. | Amount
of operating profit | 1,680 | 1,756 | 4.5 |
ii. | Provisions,
contingencies, taxes | 1,012 | 1,197 | 18.3 |
iii. | Amount
of net profit | 668 | 560 | -16.2 |
P: Provisional.
Note : 1. Figures in parentheses are percentages to respective
totals. 2. Components may not add up to respective totals due to rounding
off. Source : Balance sheet of respective UCBs. |
2008, 265 on-site and 21 off-site ATMs have been established. While
22 UCBs have already
Table
IV.22: Investments by Non-Scheduled | Urban
Co-operative Banks | (Amount
in Rs. crore) | Item | As
at end-March | Percentage
Variations |
| 2007 | 2008P | 2007-08P |
1 | 2 | 3 | 4 |
Total Investments (A+B) | 27,985 | 33,961 | 21.4 |
|
| (100.0) | (100.0) |
| A. | SLR
Investments (i to vi) | 23,849 | 29,213 | 22.5 |
|
| (85.2) | (86.0) |
| i) | Central
Government Securities | 12,319 | 13,762 | 11.7 |
|
| (44.0) | (40.5) |
| ii) | State
Government Securities | 1,607 | 1,805 | 12.3 |
|
| (5.7) | (5.3) |
| iii) | Other
Approved Securities | 727 | 850 | 16.9 |
|
| (2.6) | (2.5) |
| iv) | Term
Deposits with StCBS | 3,046 | 3,969 | 30.3 |
|
| (10.9) | (11.7) |
| v) | Term
Deposits with DCCBs | 5,760 | 8,225 | 42.8 |
|
| (20.6) | (24.2) |
| vi) | Others,
if any | 390 | 602 | 54.4 |
|
| (1.4) | (1.8) |
| B. | Non-SLR
Investments | 4,136 | 4,748 | 14.8 |
| (in
bonds of public sector | (14.8) | (14.0) |
| | Institutions/AIFIs,
shares | |
| |
| of
AIFIs and units of mutual funds) |
| |
| P: Provisional.
Note : 1. Figures in parentheses are percentages to total
investments. 2. Components may not add up to respective totals due to rounding
off. | introduced core banking solutions (CBS),
18 UCBs are in the process of implementing CBS. Urban Co-operative
Banks – Regional Operations 4.84 The number of operating
UCBs is concentrated mainly in five States/Union Territories, viz., Andhra
Pradesh, Gujarat, Karnataka, Maharashtra (including Goa) and Tamil Nadu. Nearly
79 per cent of total UCBs with 86 per cent of total branches operated in these
five States as at end-March 2008. Maharashtra (including Goa) alone accounted
for around 55 per cent of total branches of UCBs. Of the 7,424 branches of UCBs,
874 operated as unit banks, i.e., banks which function as head office-cum-branch.
Maharashtra (including Goa), Gujarat and Karnataka together accounted for around
61 per cent of total number of unit banks (Table IV.23).
4.85 Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu together
accounted for 88.1 per cent of the deposits and 89.5 per cent of the credit of
the entire UCB sector at end-March, 2008. Maharashtra alone accounted for 65.2
per cent of deposits and 65.8 per cent of total advances. As at end-March 2008,
the number of districts with the presence of a UCB was
Table
IV.23: Distribution of Urban Co-operative Banks-State-wise |
State | As
at end-March 2007 | As
at end-March 2008P |
| Number
of UCBs operating | Unit
UCBs | Branc-
hes# | Exten-
sion Counters | Number
of UCBs operating | Unit
UCBs | Branc-
hes# | Exten-
sion Counters | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
Andhra Pradesh | 116 | 87 | 273 | 5 | 115 | 85 | 258 | 4 |
Assam/Manipur/Meghalaya/ |
| |
| |
| |
| |
Mizoram/Tripura | 17 | 13 | 28 |
| 17 | 13 | 28 |
| Bihar/Jharkhand | 5 | 4 | 6 | 1 | 5 | 4 | 6 | 1 |
Chhattisgarh | 14 | 10 | 20 | 2 | 13 | 10 | 20 | 2 |
Gujarat | 284 | 151 | 924 | 4 | 271 | 146 | 917 | 4 |
Jammu & Kashmir | 4 | 1 | 16 | 4 | 4 | 1 | 16 | 4 |
Karnataka | 288 | 153 | 848 | 16 | 280 | 148 | 838 | 16 |
Kerala | 60 | 17 | 324 | 2 | 60 | 17 | 324 | 2 |
Madhya Pradesh | 60 | 45 | 80 |
| 57 | 43 | 80 |
| Maharashtra
(including Goa) | 622 | 237 | 4,010 | 138 | 609 | 235 | 4,013 | 140 |
New Delhi | 15 | 6 | 60 | 1 | 15 | 6 | 60 | 1 |
Orissa | 14 | 5 | 51 | 4 | 14 | 5 | 51 | 4 |
Punjab/Haryana/ |
| |
| |
| |
| |
Himachal Pradesh | 16 | 10 | 39 | 3 | 16 | 9 | 39 | 3 |
Rajasthan | 39 | 19 | 142 | 7 | 39 | 19 | 146 | 3 |
Tamilnadu/Pondicherry | 131 | 60 | 311 | 0 | 130 | 59 | 310 | – |
Uttar Pradesh | 70 | 42 | 173 | 27 | 70 | 42 | 173 | 27 |
Uttarakhand | 7 | 3 | 45 | 2 | 6 | 2 | 45 | 2 |
West Bengal/Sikkim | 51 | 31 | 103 | 2 | 49 | 30 | 100 | 2 |
Total | 1,813 | 894 | 7,453 | 218 | 1,770 | 874 | 7,424 | 215 |
P : Provisional.
# : Including head office cum branch. |
Table
IV.24: State-wise Distribution of UCBs | (As
at end-March 2008)* | State | No.
of UCBs | Amount
of Deposits (Rs. crore) | Amount
of Advances (Rs. crore) | Total
Number of districts with a presence of UCB branch |
1 | 2 | 3 | 4 | 5 |
1. | Andhra
Pradesh | 115 | 3,093 | 2,067 | 21 |
2. | Assam | 9 | 230 | 130 | 6 |
3. | Bihar | 3 | 33 | 16 | 2 |
4. | Chhattisgarh | 13 | 238 | 79 | 7 |
5. | Goa | 6 | 1,144 | 617 | 5 |
6. | Gujarat | 271 | 16,343 | 10,419 | 26 |
7. | Haryana | 7 | 228 | 131 | 7 |
8. | Himachal
Pradesh | 5 | 216 | 138 | 4 |
9. | Jammu
and Kashmir | 4 | 232 | 134 | 5 |
10. | Jharkhand | 2 | 13 | 5 | 2 |
11. | Karnataka | 280 | 9,188 | 6,331 | 25 |
12. | Kerala | 60 | 3,169 | 2,109 | 14 |
13. | Madhya
Pradesh | 57 | 905 | 477 | 48 |
14. | Maharashtra | 603 | 90,263 | 58,539 | 35 |
15. | Manipur | 3 | 140 | 62 | 3 |
16. | Meghalaya | 3 | 60 | 20 | 3 |
17. | Mizoram | 1 | 11 | 3 | 1 |
18. | New
Delhi | 15 | 1,037 | 457 | 1 |
19. | Orissa | 14 | 688 | 471 | 15 |
20. | Puducherry | 1 | 89 | 75 | 1 |
21. | Punjab | 4 | 461 | 239 | 2 |
22. | Rajasthan | 39 | 2,031 | 1,128 | 24 |
23. | Sikkim | 1 | 4 | 3 | 1 |
24. | Tamil
Nadu | 129 | 3,184 | 2,297 | 30 |
25. | Tripura | 1 | 10 | 5 | 1 |
26. | Uttar
Pradesh | 70 | 2,324 | 1,336 | 36 |
27. | Uttarakhand | 6 | 976 | 484 | 7 |
28. | West
Bengal | 48 | 2,187 | 1,209 | 11 |
| Total | 1,770 | 1,38,496 | 88,981 | 343 |
* : Data are provisional
Note : Components may not add up to respective totals due to
rounding off. | highest in Madhya Pradesh, followed
by Uttar Pradesh and Maharashtra (Table IV.24).
Table
IV.25: Centre-wise Select Indicators of Scheduled Urban Co-operative Banks
| (As
at end-March 2008)* | (Amount
in Rs crore) | Centre | Capital | Reserves | Deposits | Loans
and Advances | Total
Liabilities/Assets | C-D
Ratio (per cent) | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Ahmedabad | 124 | 3,201 | 6,008 | 4,013 | 11,018 | 66.8 |
Bangalore | 6 | 23 | 302 | 180 | 632 | 59.6 |
Hyderabad | 102 | 364 | 585 | 526 | 1,370 | 89.9 |
Lucknow | 10 | 30 | 257 | 106 | 347 | 41.2 |
Mumbai | 870 | 2,799 | 47,134 | 28,520 | 61,254 | 60.5 |
Nagpur | 95 | 342 | 3,630 | 2,273 | 4,697 | 62.6 |
Total | 1,208 | 6,759 | 57,916 | 35,619 | 79,318 | 61.5 |
* : Data are Provisional.
C-D ratio : Credit-Deposit ratio. Note: Components may not
add up to respective totals due to rounding off. | 4.86
At end-March 2008, the C-D ratio of scheduled UCBs at select centres showed large
variations across centres. The C-D ratio was the highest in Hyderabad (89.9 per
cent) followed by Ahmedabad (66.8 per cent) and Nagpur (62.6 per cent). Mumbai
accounted for the largest share in both deposits and loans and advances (Table
IV.25). 4.87 Non-scheduled UCBs in five centres, viz., Ahmedabad,
Bangalore, Chennai, Mumbai and Nagpur accounted for more than 70 per cent of capital
and reserves and around 80 per cent of deposits and advances of all non-scheduled
UCBs at end-March 2008. Wide variations were observed in the C-D ratio of non-scheduled
UCBs. The C-D ratio was the highest in Chennai (72.5 per cent) and the lowest
in Raipur (33.2 per cent). At five centres (Dehradun, Guwahati, New Delhi, Patna
and Raipur) the C-D ratio of non-scheduled UCBs was less than 50 per cent (Table
IV.26).
Table
IV.26: Centre-wise Select Indicators of Non-Scheduled Urban Co-operative Banks |
(As
at end-March 2008)* | (Amount
in Rs crore) | Centre | Share
Capital | Free
Reserves | Deposits | Loans
and Advances | Total
Liabilities / Assets | C-D
Ratio (per cent) | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Ahmedabad | 364 | 2,594 | 10,335 | 6,406 | 13,891 | 62.0 |
Bangalore | 440 | 623 | 8,886 | 6,151 | 11,804 | 69.2 |
Bhopal | 41 | 58 | 902 | 476 | 1,282 | 52.8 |
Bhubaneswar | 33 | 169 | 688 | 471 | 892 | 68.5 |
Chandigarh | 36 | 69 | 905 | 509 | 1,111 | 56.2 |
Chennai | 153 | 603 | 3,273 | 2,373 | 4,504 | 72.5 |
Dehradun | 13 | 107 | 976 | 484 | 1,131 | 49.6 |
Guwahati | 15 | 50 | 452 | 221 | 544 | 48.9 |
Hyderabad | 155 | 457 | 2,507 | 1,542 | 3,325 | 61.5 |
Jaipur | 121 | 215 | 2,031 | 1,128 | 2,501 | 55.5 |
Jammu | 5 | 7 | 232 | 134 | 284 | 57.8 |
Kolkata | 253 | 343 | 2,191 | 1,212 | 2,879 | 55.3 |
Lucknow | 144 | 184 | 2,067 | 1,230 | 2,766 | 59.5 |
Mumbai | 1,258 | 1,128 | 33,183 | 23,276 | 37,988 | 70.1 |
Nagpur | 252 | 842 | 7,460 | 5,086 | 9,403 | 68.2 |
New Delhi | 50 | 204 | 1,037 | 457 | 1,396 | 44.1 |
Patna | 3 | 14 | 46 | 21 | 66 | 45.7 |
Raipur | 10 | 32 | 238 | 79 | 308 | 33.2 |
Thiruvananthapuram | 102 | 382 | 3,169 | 2,109 | 4,027 | 66.6 |
Total | 3,450 | 8,082 | 80,580 | 53,363 | 1,00,103 | 66.2 |
Memo Item: |
| |
| |
| |
Share of Major Centres** | 71.5 | 71.6 | 78.4 | 81.1 | 77.7 |
| * : Data are
provisional ** : Share of Ahmedabad, Bangalore, Chennai, Mumbai and Nagpur
in total. Note : Individual figures may not add up to total
due to rounding off. | 3. Rural
Co-operatives 4.88 Recognising the wide outreach of rural co-operative
credit institutions, particularly among the rural and vulnerable segments of the
society, and their role in purveying rural credit and deposit mobilisation, efforts
have been made to restore operational viability and financial health of these
institutions. 4.89 The financial performance of rural cooperative credit
institutions continued to be characterised by several weaknesses such as high
NPAs, poor recovery and accumulated losses. As on March 31, 2007, four out of
31 StCBs, 97 out of 371 DCCBs, 48,078 out of 97,224 PACS, eight out of 20 reporting
SCARDBs and 342 out of 697 reporting PCARDBs incurred losses, which together amounted
to Rs.1,524 crore (excluding PACS). Regulation of Rural Co-operative
Banks 4.90 The total number of licensed StCBs and DCCBs as on
June 30, 2008 was 14 and 75, respectively. No new banking licence was granted
during 2007-08. The West Bengal StCB was, however, granted permission for
opening of two branches at Dum Dum and Kancharapara in North 24 Paraganas district
of West Bengal. During 2007-08, no StCB/ DCCB was issued directions under
Section 35A of the Banking Regulation Act, 1949 (AACS). However, as at end-September
2008, two StCBs and nine DCCBs were placed under the Reserve Bank’s directions
issued in terms of Section 35A of the Act, prohibiting them from granting loans
and advances to certain areas and/or accepting fresh deposits. No licence/application
for licence was cancelled/rejected during the year. No StCB was
granted scheduled status during the year for inclusion in the Second Schedule
under Section 42 of the RBI Act, 1934. The total number of scheduled StCBs remained
at 16. As on June 30, 2008, seven out of the 31 StCBs and 118 out of the
371 DCCBs did not comply with the provisions of Section 11 (1) of the Banking
Regulation Act, 1949 (AACS). Similarly, seven StCBs and 118 DCCBs did not comply
with the provisions of Section 22(3) (a) of the Act, implying that they were not
in a position to pay their present and future depositors in full as and when their
claims accrued. Further, 14 StCBs and 343 DCCBs did not comply with Section 22
(3) (b) of the Banking Regulation Act, 1949, implying that the affairs of these
banks were being conducted in a manner detrimental to the interests of their depositors.
Deposit Schemes with Lock-in-period 4.91 It was brought
to the notice of the Reserve Bank that some StCBs/DCCBs were offering special
term deposit products to customers, in addition to regular term deposits, ranging
from 300 days to five years, with certain restrictive features. In terms of extant
guidelines, banks are required to ensure that the provisions of the Reserve Bank
directives on interest rates on deposits, premature withdrawal of term deposits
and sanction of loans/advances against term deposits, among others, issued from
time to time, are strictly adhered to. Any violation in this regard is viewed
seriously and may attract penalty under the Banking Regulation Act, 1949 (AACS).
Further, no bank should discriminate in the matter of interest paid on deposits,
between one deposit and another, accepted on the same date and for the same maturity,
whether such deposits are accepted at the same office or at different offices
of the bank, barring fixed deposit schemes specifically for senior citizens (which
offer higher and fixed rates of interest as compared to normal deposits of any
size), and single term deposits of Rs.15 lakh and above on which varying rates
of interest may be permitted on the basis of size of deposits. In the light of
the prevalence of the restrictive practices, the StCBs/DCCBs were again advised
in November 2007 that the special schemes, with lock-in periods and other features
floated by some banks were not in conformity with the Reserve Bank’s instructions.
Such schemes should be discontinued with immediate effect and compliance be reported
to the Reserve Bank’s concerned regional office. Complaints
about Excessive Interest Charged by Banks 4.92 According to
the announcement in the Annual Policy Statement for the year 2007-08,
boards of all StCBs/DCCBs were advised to lay down appropriate internal principles
and procedures so that usurious rates of interest, including processing and other
charges, are not levied by them on loans and advances. In laying down such principles
and procedures in respect of small value loans, particularly, personal loans and
other loans of similar nature, banks have to take into account, inter-alia,
the following broad guidelines: (i) an appropriate prior approval process for
sanctioning such loans, which should take into account, among others, the cash
flows of the prospective borrower; (ii) interest rates charged by banks, inter-alia,
to incorporate risk premium, as considered reasonable and justified, having regard
to the internal rating of the borrower and in considering the question of risk
to take into account the presence or absence of security and the value thereof;
(iii) the total cost to the borrower, including interest and all other charges
levied on a loan, to be justifiable having regard to the total cost incurred by
the bank in extending the loan, sought to be defrayed and the extent of return
reasonably expected from the transaction; (iv) an appropriate ceiling on the interest,
including processing and other charges to be levied on such loans, which has to
be suitably publicised. Application of Capital Adequacy Norms to
State Co-operative Banks and District Central Cooperative Banks
4.93 In order to strengthen the capital structure of StCBS and DCCBs, in the context
of financial stability of the whole system and pursuant to the announcement in
the Mid -Term Review of Annual Policy Statement for the year 2007-08, all StCBs
and DCCBs were advised to disclose the level of CRAR as on March 31, 2008 in their
balance sheets and thereafter every year as ‘notes on accounts’ to
their balance sheets. They were also advised to furnish an annual return to the
respective regional offices of RBI/NABARD, indicating CRAR in the prescribed format
(Box IV.5). Supervision of the Rural Co-operative
Banks 4.94 NABARD undertakes statutory inspection of StCBs and
DCCBs for effective supervision. This is focussed on ensuring conformity with
banking regulations and facilitating internalisation of prudential norms. Accordingly,
statutory inspections of all StCBs and DCCBs not complying with minimum capital
requirements continued to be conducted annually, while statutory inspections of
DCCBs having positive net worth are conducted once in two years. NABARD also conducts
voluntary inspections of all SCARDBs, apex weaver’s co-operative societies
and state co-operative marketing federations, among others. While the
voluntary inspections of all SCARDBs continued to be conducted annually, those
for apex co-operative societies/federations continued to be conducted once in
two years. The objective of NABARD’s supervision is to assess the financial
and operational soundness and managerial efficiency of cooperative banks (StCBs,
DCCBs and SCARDBs) as also to ensure that the affairs of these banks are conducted
in conformity with the relevant Acts/Rules, Regulations, Bye-laws, etc., so
as to protect interests of their depositors. NABARD also looks into the ways and
means of strengthening the institutions to enable them to play a more efficient
role in the dispensation of credit. The inspections focus sharply on core areas
such as capital adequacy, asset quality, management, earnings, liquidity, systems
and compliance (CAMELSC). During 2007-08, NABARD carried out statutory inspections
of 366 banks (31 StCBs, 261 DCCBs and 74 RRBs) and voluntary inspections of 18
SCARDBs and 1 apex co-operative institution. Box
IV.5: Application of Capital Adequacy Norms to StCBs and DCCBs At
present, the CRAR norms do not apply to StCBs and DCCBs. However, the Task Force
on Revival of Rural Cooperative Credit Institutions (Short-term) (Chairman: Prof.
A. Vaidyanathan), in its report recommended as under : “The
package will include assistance necessary to bring all co-operatives, including
Primary Agricultural Credit Societies (PACS), to a minimum Capital to Risk Weighted
Assets Ratio (CRAR) of 7 per cent. While this ratio will be raised within three
years to 9 per cent by PACS, DCCBs and StCBs shall raise their CRAR as prescribed
by the Reserve Bank of India. This increase in CRAR shall be met by the CCS from
its own resources.” As per the directions of the Board for Financial
Supervision (BFS), a Technical Group was constituted with the Chief General Managers
of various regulatory departments of the Reserve Bank to examine the applicability
of Basel norms to StCBs and DCCBs and articulate appropriate policy responses.
The group made the following recommendations, among others: - Capital
adequacy regulation be introduced for StCBs, DCCBs on par with commercial banks.
-
The road-map for capital infusion be finalised taking into account special characteristics,
uncertainties, and constraints of the entities in question.
- Banks choosing
not to adopt Basel norms could remain so and in that case they would not be granted
any facility like licence for opening of branch, conducting foreign exchange business
(except restricted money changers licence), access to payment system, among others.
However, even such banks should possess a minimum net worth of Rs.10 lakh, otherwise,
a phased exit out of the banking system could be considered for them in a non-disruptive
manner.
4.95 The Board of Supervision [BoS] for StCBs, DCCBs and RRBs
met four times during 2007-08. The issues deliberated by BoS included (i) functioning
of StCBs and SCARDBs; (ii) functioning of co-operative credit institutions of
Orissa, Maharashtra, Karnataka and Gujarat and RRBs; (iii) functioning of insolvent
StCBs and DCCBs; (iv) trigger-point policy for supervisory prescription and regulatory
action for cooperative credit institutions; (v) impact of amalgamation of RRBs;
(vi) policy, procedure and status of complaints, grievance redressal and courteous
service; (vii) frauds, misappropriation, embezzlements, defalcations; (viii)
implementation of development action plans (DAPs) by cooperative banks; (ix) implementation
of reforms under the Government of India package for Short Term Co-operative Credit
Structure; (x) the revised inspection strategy; (xi) revision of exposure norms
and credit monitoring arrangements (CMA) guidelines; and (xii) investment portfolio
management based on special studies. 4.96 NABARD revised the inspection
guidelines for on-site inspection of all banks. NABARD conducted pilot inspections
of 20 select banks before implementing the revised
Table
IV.27: Elected Boards under Supersession | (Position
as on March 31, 2007) | Particulars | StCBs | DCCBs | SCARDBs | PCARDBs | Total |
1 | 2 | 3 | 4 | 5 | 6 |
(i) | Total
no. of Institutions | 31 | 371 | 20 | 697 | 1,117 |
(ii) | No.
of Institutions where Boards are under Supersession | 12 | 152 | 9 | 346 | 519 |
Percentages of Boards
under Supersession [(ii) as percentage of (i)] | 39 | 41 | 45 | 50 | 46.4 |
Note : Data
are in respect of reporting banks only. Source : NABARD. |
guidelines which included: (i) revised audit classification/rating
norms for audit of cooperative banks; (ii) guidelines on customer service and
grievance redressal mechanism in co-operative banks; (iii) guidelines on asset-liability
management to be introduced on a pilot basis for 5 StCBs and 12 RRBs.
4.97 NABARD also constituted a Central Fraud Monitoring Cell to monitor and investigate
frauds above Rs.10 lakh. In addition, portfolio studies were also undertaken in
respect of investment management, NPA management. CMA in select co-operative banks,
were also undertaken. Management of Co-operatives 4.98
The percentage of boards under supersession increased to 46.4 per cent at end-March
2007 from 45.7 per cent at end-March 2006. The number of co-operatives where boards
were under supersession remained high. Barring DCCBs, the number and proportion
of boards under supersession at end-March 2007 increased or remained same for
other segments of the rural cooperative banking sector (Table
IV.27). A Profile of Rural Co-operative Banks
4.99 As on March 31, 2007, the consolidated assets of the rural co-operative
credit institutions1 amounted to Rs.3,70,719 crore. The rural co-operative
sector, on aggregate, held Rs.1,67,519 crore of deposits and a loan portfolio
of Rs.2,25,770 crore. Their financial performance continued to deteriorate during
2006-07 compared with the previous year. The number of loss-making entities continued
to far exceed the number of profit-making entities. Institution-wise, the upper-tier
of the short-term (StCBs and DCCBs) long-term structure (SCARDBs) made profit,
while the lower-tier comprising PACS and PCARDBs made losses. The asset quality,
however, improved as reflected in decline in the NPA ratio (as percentage of loans
outstanding) during 2006-07 in respect of both short-term and long-term rural
co-operative credit institutions (Table IV.28).
Table
IV.28: A Profile of Rural Co-operative Banks | (At
end-March 2007**) | (Amount
in Rs. crore) | Item | Short-Term | Long-Term | Total |
| StCBs | DCCBs# | PACS | SCARDBS@ | PCARDBs^ |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
A. | No.
of Co-operative Banks | 31 | 371 | 97,224 | 20 | 697 | 98,343 |
B. | Balance
Sheet Indicators |
| |
| |
| |
| i) | Owned
Fund (Capital + Reserves) | 10,549 | 26,180 | 11,038 | 2,931 | 3,596 | 54,294 |
| ii) | Deposits | 48,560 | 94,529 | 23,484 | 605 | 341 | 1,67,519 |
| iii) | Borrowings | 22,256 | 29,912 | 43,715 | 16,662 | 12,751 | 1,25,296 |
| iv) | Loans
and Advances Issued* | 52,777 | 82,963 | 49,614 | 2,436 | 1,970 | 1,89,759 |
| v) | Loans
and Advances Outstanding | 47,354 | 89,038 | 58,620 | 18,644 | 12,114 | 2,25,770 |
| vi) | Investments | 24,140 | 41,006 | N.A. | 1,916 | 824 | 67,886 |
| vii) | Total
Liabilities/Assets | 85,756 | 1,58,894 | 79,959## | 24,336 | 21,774 | 3,70,719 |
C. | Financial
Performance |
| |
| |
| |
| i) | Institutions
in Profit | |
| |
| |
| |
| a) No. | 27 | 271 | 33,983 | 10& | 350 | 34,641 |
|
| b) Amount of Profit | 319 | 754 | 749 | 280& | 419 | 2,521 |
| ii) | Institutions
in Loss | |
| |
| |
| |
| a) No. | 4 | 97 | 48,078 | 8& | 342 | 48,529 |
|
| b) Amount of Loss (-) | -44 | -724 | -2,402 | -190& | -566 | -3,926 |
| iii) | Overall
Profit/Loss (-) | 275 | 30 | -1,653 | 90 | -147 | -1,405 |
| iv) | Accumulated
Loss(-) | -389 | -5,712 | N.A | -946 | -2,870 | -9,917 |
D. | Non-performing
Assets | |
| |
| |
| | i) | Amount | 6,704 | 16,495 | 11,558+ | 5,643 | 4,316 | 44,716 |
| ii) | As
Percentage of Loans Outstanding | 14.2 | 18.5 | 26.9@@ | 30.3 | 35.4 | 19.8 |
| iii) | Recovery
of Loans to Demand (per cent) |
| |
| |
| |
|
| (as on 30 June) | 85.7 | 71.1 | 70.9 | 44 | 52 |
| ## : Working
Capital. ^ : Data in respect of 4 PCARDBS in Orissa not received. &
: Profit/Loss data for Bihar SCARDB not received. # : Data for three new DCCBs,
viz., Baran in Rajasthan, S.S. Nagar in Punjab and Udham Singh Nagar
in Uttarakhand, are not available. @ : Since Manipur SCARDB is under orders
of liquidation, data for Manipur SCARDB is repeated from 2004 and profitability
data for Manipur and Bihar SCARDBs are not available. @@ : Percentage of overdues
to loans outstanding. * : April- March. ** : Data are provisional. + : Total
overdues. Note : N.A.-Not available. Source : NABARD
and NAFSCOB. | Rural Co-operative Banks–Short
Term Structure State Co-operative Banks 4.100
The balance sheet of StCBs expanded significantly during 2006-07. On the liabilities
side, deposits continued to account for the largest share of the resources of
StCBs, despite the modest decline in the share during the year. However, the share
of borrowings increased during the year. High growth in borrowings, which outpaced
the growth of other components during the year indicates that StCBs continued
to rely heavily on outside sources for their expansion. Capital and deposits also
witnessed a higher growth during the year. On the asset side, while loans and
advances grew at an accelerated pace, investments declined by 12.8 per cent. Cash
and bank balances registered a sharp increase during the year (Table
IV.29) Financial Performance 4.101
Income of the StCBs declined by 7.3 per cent on account of decline in both interest
income and non-interest income during 2006-07. Despite increase in both interest
expended and operating expenses, total expenditure
Table
IV.29: Liabilities and Assets of State | Co-operative
Banks | (Amount
in Rs.crore) | Item | As
at end-March | Percentage
Variations |
| 2006 | 2007* | 2005-06 | 2006-07* |
1 | 2 | 3 | 4 | 5 |
Liabilities |
| |
| |
1. Capital | 1,114 | 1,246 | 10.1 | 11.8 |
| (1.5) | (1.5) |
| |
2. Reserves | 9,431 | 9,303 | 11.1 | -1.4 |
| (12.3) | (10.8) |
| |
3. Deposits | 45,405 | 48,560 | 2.4 | 6.9 |
| (59.4) | (56.6) |
| |
4. Borrowings | 16,989 | 22,256 | 16.3 | 31.0 |
| (22.2) | (26.0) |
| |
5. Other Liabilities | 3,542 | 4,392 | 4.5 | 24.0 |
| (4.6) | (5.1) |
| |
Total Liabilities/Assets | 76,481 | 85,756 | 6.5 | 12.1 |
Assets |
| |
| |
1. Cash and Bank balance | 4,323 | 9,290 | -34.5 | 114.9 |
| (5.7) | (10.8) |
| |
2. Investments | 27,694 | 24,140 | 18.8 | -12.8 |
| (36.2) | (28.2) |
| |
3. Loans and Advances | 39,684 | 47,354 | 6.2 | 19.3 |
| (51.9) | (55.2) |
| |
4. Other Assets | 4,781 | 4,971 | 4.6 | 4.0 |
| (6.3) | (5.8) |
| |
* Data are Provisional.
Note : 1. Figures in parentheses are percentages to total
liabilities/ assets. 2. 'Reserves' include credit balance in profit and loss
account shown separately by some of the banks. Source : NABARD. |
declined due to decline in provisions and contingencies.
The increase in both interest expenditure and operating expenditure coupled with
the decline in income, led banks’ operating profits to decline significantly
(45.2 per cent). However, sharp reduction in provisions and contingencies constrained
the decline in net profits (27.2 per cent) (Table IV.30). Out of 31 StCBs, 27
StCBs earned profits aggregating Rs.319 crore, while four of them made losses
amounting to Rs.44 crore during the year (see Table IV.28). Asset
Quality and Recovery Performance 4.102 During
the year, the NPAs of StCBs declined in both absolute and percentage terms. The
gross NPAs to total loans ratio at 14.2 per cent during 2006-07 was lower than
that of 17.0 per cent in 2005-06. The improvement in asset quality was also discernible
from the decline in ‘loss’ assets and
Table
IV.30: Financial Performance of State Co- | operative
Banks | (Amount
in Rs.crore) | Item | 2005-06 | 2006-07* | Percentage
Variations |
| |
| 2005-06 | 2006-07* |
1 | 2 | 3 | 4 | 5 |
A. | Income
(i+ii) | 5,656 | 5,242 | -2.0 | -7.3 |
|
| | (100.0) | (100.0) |
| |
| i) | Interest
Income | 5,320 | 4,974 | -1.2 | -6.5 |
|
| | (94.1) | (94.9) |
| |
| ii) | Other
Income | 336 | 269 | -13.8 | -20.0 |
|
| | (5.9) | (5.1) |
| |
|
| |
| |
| |
B. | Expenditure
(i+ii+iii) | 5,278 | 4,967 | -3.8 | -5.9 |
|
| | (100.0) | (100.0) |
| |
| i) | Interest
Expended | 3,658 | 3,708 | -1.2 | 1.4 |
|
| | (69.3) | (74.7) |
| |
| ii) | Provisions
and | 1,039 | 502 | -17.5 | -51.7 |
|
| Contingencies | (19.7) | (10.1) |
| |
| iii) | Operating
Expenses | 581 | 757 | 10.5 | 30.3 |
|
| | (11.0) | (15.2) |
| |
of which: Wage Bill | 381 | 398 | 3.3 | 4.4 |
|
| | (7.2) | (8.0) |
| |
C. | Profit |
| |
| |
| i) | Operating
Profit | 1,417 | 777 | -8.3 | -45.2 |
| ii) | Net
Profit | 378 | 275 | 32.2 | -27.2 |
|
| |
| |
| |
D. | Total
Assets | 76,481 | 85,756 | 6.5 | 12.13 |
* : Data are provisional.
Note : Figures in parentheses are percentages to the respective
total. Source : NABARD. | 1
Rural co-operative credit institutions include State co-operative banks, district
central co-operative banks, primary agricultural credit societies, State cooperative
agriculture and rural development banks and primary co-operative agriculture and
rural development banks. |