THIRUVANANTHAPURAM: A 90-year-old urban cooperative bank in the state is putting up a brave front to tide over the crisis after the Reserve Bank of India (RBI) imposed unusual and wide-ranging restrictions on it for alarmingly low capital adequacy ratio and high NPA.
As per the “all-inclusive directions” issued by the RBI, customers of the Adoor Cooperative Urban Bank (ACUB) cannot withdraw more than Rs 2,000, irrespective of the type or volume of their accounts.
Until next May, the Adoor Cooperative Urban Bank (ACUB) is barred from accepting fresh deposits or granting new loans. ACUB, boasting nearly 5,000 account holders, has a total deposit of Rs 10 crore. Customers who want to withdraw money for wedding or medical purposes are now in dire straits.
The ACUB was on the central bank’s radar for nearly a decade for its low scores in key financial parameters. As per the bank’s statement for September, its NPA ratio was 18.74 per cent and capital to risk assets ratio (CRAR) -24.84 per cent as against the RBI’s prescribed minimum ratio of 9 per cent. RBI data was unavailable.
Recently, Finance Minister Thomas Isaac convened a meeting of RBI officers to discuss the bank’s revival. “The bank is in a grave situation, but we’re hopeful of a comeback. The RBI has agreed to relax the conditions in accordance with the bank’s progress in NPA recovery,” he told Express.
The minister said the government does not have liquidation or merger plans at present. “Government is giving all possible support to the bank to overcome the crisis. The issue has prompted us for a serious introspection on the cooperative banking sector and to take steps to prevent such incidents in future,” he said.
The RBI had informed Isaac that it would allow withdrawal of deposits for wedding purpose or medical emergency. But the central bank has not responded to some applications submitted in this regard.
P B Harshakumar, who took over as the bank’s chairman in November, said the bank has started steps for NPA recovery.
“NPAs worth Rs 1 crore will be recovered by December. We’re also asking shareholders to buy more shares to raise the capital,” said Harshakumar. He is heading the bank’s first pro-Left director board in the past 60 years. Only pro-UDF panels had won the director- board elections prior to that.
Cooperative Societies Registrar Shanavas S said his office had little scope to intervene in the administration of cooperative banks.
“Administrative powers are vested with the bank’s director board,” he said. Salary of eight employees of the bank has also been affected by the restrictions.
At a glance
Parameter, 31 Mar 2018, 30 Sept 2018 (Rs in lakh)
Deposits 1,078.58, 1,087.58
Loans and advances 448.87, 440.02
Gross NPAs 94.65, 82.50
Loss 21.08, 6.69
CRAR -23.65%, -24.84%