In its latest report, the Reserve Bank of India (RBI) highlighted the performance of long-term credit cooperatives, noting that State Co-operative Agriculture and Rural Development Banks (SCARDBs) have lower accumulated losses and a higher share of loans and advances in total assets. During 2022-23, the income of Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) grew by 18.8%, while their expenditure declined, resulting in net profits.
As of March 2023, SCARDBs operated in 13 states and Union Territories, with Uttar Pradesh accounting for 46.7% of their branches. Borrowings made up 45.2% of SCARDBs’ total liabilities, with over 80% of these borrowings sourced from NABARD due to their limited deposit base.
After two years of growth, the consolidated balance sheet of SCARDBs contracted in 2022-23, driven by a decline in loans and advances. On the liabilities side, borrowings decreased, accompanied by a slowdown in deposit growth.
Despite the reduction in their balance sheet, SCARDBs’ Net Interest Income (NII) rose by 25.3% in 2022-23, as interest income grew faster than interest expenses. This increase in NII, coupled with a rise in non-interest income, led to a substantial increase in net profits, albeit from a low base.
The Gross Non-Performing Assets (GNPA) ratio of SCARDBs increased during 2022-23, even as their recovery ratio improved. The southern region reported the lowest GNPA ratio and the highest recovery ratio.
At the end of March 2023, 608 PCARDBs operated across eight states and Union Territories. The consolidated balance sheet of PCARDBs contracted during the year, reflecting a decline in loans and advances on the assets side and borrowings on the liabilities side.
In 2022-23, the income of PCARDBs grew by 18.8%, driven by both interest and non-interest income, while their expenditure decreased due to reduced operating costs, particularly wage bills. This resulted in net profits. However, of the eight states and Union Territories with PCARDBs, five recorded consolidated net losses.
The GNPA ratio of PCARDBs declined marginally in 2022-23 due to reductions in sub-standard and doubtful loans.
Nevertheless, it remained high at over 40%, as the loss category of loans expanded. In contrast to other regions, the GNPA ratio in the northern region increased, making it the region with the highest GNPA ratio and the lowest recovery-to-demand ratio. Conversely, the southern region had the lowest GNPA ratio and the highest recovery-to-demand ratio.