Cooperative
A discussion on CRAR, GNPAS and PCR in scheduled urban cooperative
banks in the context of RBI’s latest FSR:T
he Reserve Bank of India’s Financial
Stability Report (FSR) released on 27
June 2019 discusses the performance
of scheduled urban cooperative banks. One
of the salient aspects brought out in the
report is that at the system level, the Capital
to Risk Asset Ratio (CRAR) of these banks
has remained unchanged at 13.6% between
September 2018 and March 2019. However,
at a disaggregated level, CRAR of 4 of these
banks was below the minimum required
level of 9%. The report has not named
these 4 banks. There are 54 SUCBs in the
country (42 in Maharashtra, 7 in Gujarat, 2
in Goa and 1 each from Karnataka, Andhra
Pradesh and Uttar Pradesh.
It has been found that CRAR of the
Ahmedabad Mercantile Cooperative Bank
has been falling in the last 3 consecutive
financial years. It was 31.52% a year ago and
31.35% in 2016-17. According to Narendra
Patel, chairman, of the bank, it has further
come down to 28.98% in 2018-19.
In the case of Surat People’s Cooperative
Bank, CRAR is 15.47% in 2018-19 and the
bank’s director Mukeshchandra Gajjar says
this is well above the minimum level.
Rajkot Nagrik Sahakari Bank’s CRAR
is 17.54% in 2018-19. Jyotindrabhai
Mehta, director at the bank, says: “We have
achieved a comfortable level as regards
CRAR. We don’t require any thing to do to
increase our position.”
In the case of Rajarambapu Sahakari
Bank, Sangli, the CRAR has marginally
come down in the last year. It stood at
13.42% a year ago. Rajaram Jakhale, MD,
saysit is at 13.18% in 2018-19, a slight
decrease due to growth in advances.
RBI data indicates that the comfortable
CRAR position of SUCBs continued in first
half of 2018-19 as well. However, at end-
September 2018, there were 4 SUCBs
with negative CRAR. During 2017- 18, as
much as 93% of SUCBs had achieved theminimum ratio. The capital position of
SUCBs improved in 2017-18. At end-March
2018, among the 54 SUCBs, 50 had a CRAR
of more than 9%.
A statement by N.S. Vishwanathan,
deputy governor, RBI, in September 2018,in the light of stress tests conducted by
the central bank for the banking sector to
check the resilience of the system, there has
been an increase in GNPAs by 2 Standard
Deviations (SDs), while the system level
CRAR of SUCBs remained above theCRAR of 4 SUCBs below the
minimum level of 9%
UCBs with CRAR 9 percent and above
- 0
- 0
- 0
90.0
- 0
- 0
- 0
Per centScheduled UCBs Non-Scheduled UCBs
All UCBs2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Source: O-site surveillance returns, RBLJyotindrabhai Mehta Narendra Patil