• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

`Don't equate us with other banks'

Mumbai , March 19

Urban co-operative banks (UCBs) have urged the Union Government to withdraw the tax on their profits announced in the Budget.

Until now, UCBs enjoyed 100 per cent tax deduction on profits derived from the banking business under Section 80(p)(a)(1) of the Income-Tax Act.

Mr Mukund Ghaisas, Chairman, Maharashtra Urban Co-operative Banks' Federation, said that equating UCBs with other commercial banks by withdrawing the tax deductible would make a dent in their profits.

"UCBs are currently going through a bad patch and require capital for technological upgradation. Besides, if we don't make a profit, our shareholders could withdraw their capital," he said. The National Federation of Urban Co-operative Banks has constituted a working committee that will take up this issue in Parliament.

According to Mr Ghaisas, of the 2,000 UCBs in the country, around 1,000 made a profit. He said that the Government's estimate of raking in Rs 600-800 crore by taxing UCBs was not reasonable. "The estimate was based on the financial years 2002-03 and 2003-04 when the profits were higher. However, treasury profits have evaporated in a hardening interest rate scenario," Mr Ghaisas said.

Representatives of the Maharashtra Urban Co-operative Banks' Federation said that UCBs cannot be compared with private and public sector banks in terms of the size or the scale of the business.

"The very fact that the priority sector advances targets for co-operative banks is set at 60 per cent of total advances, against 40 per cent for other commercial banks, shows the nature of our business. Besides, the average deposit of all the UCBs is around Rs 55 crore as compared to Rs 50,000 crore for the other banks," he said.

On the question of higher non-performing assets (NPAs) among UCBs, Mr Ghaisas said that the judicial structure had made recovery difficult. "Besides the judicial structure, there is no co-operation from the police department in terms of seizure of properties. On the other hand, we have borrowers who threaten suicide when we try to recover NPAs," he said.

UCBs are planning to launch an agitation if the Government fails to respond to their demand. Employees of UCBs will wear black bands on March 20 to register their protest.

More Stories on : Co-operatives | Income Tax

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Disclosure norms for insurance cos on cards

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line