The Reserve Bank of India (RBI), in its latest Trend and Progress of Banking in India 2023-24 report, revealed a mixed performance by District Central Cooperative Banks (DCCBs). Of the 351 DCCBs operating through 13,759 branches across the country, 312 reported profits, while 39 continued to incur losses during the fiscal year.
The number of loss-making DCCBs decreased compared to the previous year, but their cumulative losses surged by 40.6%. The states of Madhya Pradesh, Uttar Pradesh, Punjab, and Bihar accounted for 64.1% of the loss-making DCCBs, highlighting regional disparities.
Conversely, the western and southern regions emerged as significant contributors to the overall profitability of DCCBs.
The report highlighted an improvement in asset quality, with the gross non-performing asset (GNPA) ratio of DCCBs declining for the fourth consecutive year. The GNPA ratio dropped from 12.6% at the end of March 2020 to 8.9% at the end of March 2024.
However, the GNPA ratio of DCCBs remained higher than that of State Cooperative Banks (StCBs). The central and western regions, particularly Madhya Pradesh and Maharashtra, reported the highest GNPA ratios, while the southern region boasted the highest recovery-to-demand ratio.
On the capital front, the consolidated capital adequacy ratio (CRAR) and Tier I capital ratio of DCCBs hit a four-year low at the end of March 2024. Despite this, the number of DCCBs with CRAR below the regulatory minimum of 9% decreased from 41 in March 2023 to 39 in March 2024.
A significant concentration of these undercapitalized banks—90%—was observed in six states and union territories, including Madhya Pradesh, Uttar Pradesh, Punjab, Jammu and Kashmir, Maharashtra, and West Bengal.
DCCBs continued to leverage their extensive branch network for better access to low-cost current account and savings account (CASA) deposits, which accounted for 41.7% of their total deposits at the end of March 2024, far surpassing the 18.6% CASA share of StCBs.
This strong deposit base contributed to a 10% growth in deposits during the year, outpacing the 6% growth recorded by StCBs.
On the lending front, the credit-deposit (C-D) ratio of DCCBs rose to 86.7% in March 2024, up from 85.6% a year earlier, driven by higher advances. Over three-quarters of DCCBs’ total advances and nearly all agricultural advances—96%—were directed towards primary agricultural credit societies (PACS) and other societies, underscoring their pivotal role in rural credit.
While deposit growth and asset quality improved, the RBI’s report underscored the need for continued vigilance to address regional disparities and maintain robust capital adequacy in the sector.
