The financial performance of urban co-operative banks (UCBs) improved in 2021-22 characterized by augmented capital buffers, lower gross non-performing assets (GNPA) ratio and higher profitability. This was revealed in the report released by RBI on Wednesday with the title, “Report on Trend and Progress of Banking in India 2021-22”.
“Among the short-term rural co-operatives, balance sheets of both, state co-operative banks (StCBs) and district central co-operative banks (DCCBs) accelerated in 2020-21 after a slowdown in the previous year. Notably, the profitability of the latter improved”, it reads.
As of 31st March 2022, the combined total deposits and advances of Urban Cooperative Banks (UCBs) stood at Rs 8.40 lakh crore. The deposits and advances of UCBs (Tier I and Tier II) stood at Rs 5.26 lakh crore and Rs 3.14 lakh crore respectively.
Deposits contracted during 2021-22 for the first time in nearly two decades, leading to a deceleration in UCBs’ balance sheet. In 2021-22, the deposits were Rs 5.29 lakh crore.
The net profit after taxes of all UCBs (Scheduled UCBs and Non-Scheduled UCBs) rose to Rs 1558 crore (2020-21) to Rs 2881 crore (2021-22).
During the year 2021-22, the average per instance penalty was the highest for PVBs and was the lowest for cooperative banks. The RBI imposed a penalty of Rs 12.10 crore on 145 cooperative banks in 2021-22 whereas on 16 Private Sector banks, RBI imposed a penalty worth of Rs 29.39 crore.
The penalty imposition instances for UCBs increased to 145 during 2021-22 from 43 in the previous year.
During 2021-22, licenses of 10 UCBs were cancelled, raising the cumulative tally since 2015-16 to 54. Except one amalgamation relating to a scheduled UCB (SUCB), other mergers and cancellation of licenses took place in the case of Non-Scheduled UCBs, leading to a fall in their number from 1,481 in 2020-21 to 1,462 in 2021-22.
At end-March 2022, 94 per cent of UCBs maintained capital to risk-weighted assets ratio (CRAR) above the regulatory minimum of 9 per cent
Asset quality of UCBs, measured by the gross non-performing assets (GNPA) ratio, continuously deteriorated during 2015-16 to 2020-21 before improving in 2021-22 when a decline in the amount of gross non-performing assets occurred for the first time since 2012-13.
In 2021-22, all UCBs Gross NPA and Net NPA ratio stood at 9.7 percent and 4.4 percent respectively. Earlier, i.e in 2020-21, it was 12.1 (Gross NPA) and 5.8 (Net NPA).
Nine non-scheduled UCBs (NSUCBs) were voluntarily merged with financially stronger banks during 2021-22. Since 2004-05, the sector has witnessed 145 mergers, with the majority in Maharashtra, followed by Gujarat and Andhra Pradesh.
During 2021-22, the corporation settled aggregate claims of Rs 8,516.6 crore 23 under different channels. This includes the main claims and supplementary claims in respect of 15 urban co-operative banks (UCBs) amounting to Rs 1,225.0 crore under Section 17 (1) of the DICGC Act, 1961 and an amount of Rs 3,791.6 crore provided to Unity Small Finance Bank (USFB) for making payment to the depositors of the erstwhile Punjab and Maharashtra Cooperative Bank Ltd (PMCBL).
This also includes the claims settled of 22 UCBs under All Inclusive Directions (AID) amounting to Rs 3,457.4 crore as on March 31, 2022.
There are 1,05,074 cooperatives in 2021-22 out of which 1514 are UCBs and 1,03,560 are rural co-ops. The scheduled and non-scheduled cooperative banks are 52 and 1,462 respectively.
The short-term co-ops are 1,02,944 which includes StCBs (34), DCCBs (351) and PACS (1,02,559) whereas Long term co-ops are 616 which includes SCARDBs (13) and PCARDBs (603).
