The Hindu Business Line : UCBs want RBI to revert to 180-day norm for NPAs

THE Maharashtra State Co-operative Bank's Association will soon request the Reserve Bank of India to allow urban co-operative banks (UCBs) to revert to the 180-day norm for accounting for non-performing assets.

Mr Gulabrao Shelke, Chairman, Maharashtra State Co-operative Banks Association, said UCBs will also ask the RBI to allow the directors on their boards and their families to avail themselves of advances, as long as they do not have a history of default.

Recently, the RBI issued a direction preventing the directors of UCBs and their families from availing themselves of such advances. The RBI directive asking UCBs to follow the 90-day norm has shown huge NPAs in many co-operative banks leading to panic among depositors.

"There is no level playing field for co-operative banks. Ninety per cent of our advances are to the priority sector, which is much higher than the exposure of commercial banks. Don't compare us with nationalised banks. We are smaller and have our limitations," said Mr S.B. Adsul, CEO, Brihan Mumbai Nagari Sahakari Banks Association Ltd.

"We cater to the smaller and weaker sections of the community. So you cannot impose international norms like the 90-day norm for NPAs on us. We must be treated differently so that we can adopt new norms step by step," he added.

"The total advances that is availed of by directors and their families amounts to around 2.5 per cent of the total advances of the co-operative banking system, of which NPAs constitute 0.25 per cent," said a senior official with a leading UCB in Maharashtra.

Another demand that the UCBs will place to the RBI is that the central bank must consult UCB associations before taking any action on any co-operative bank.

Total deposits with co-operative banks in the country amounts to Rs 99,000 crore, of which Rs 60,000 crore are in Maharashtra.

More Stories on : Co-operatives | Maharashtra | Non-Performing Assets

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