CHENNAI: Thirteen of the 23 district central cooperative banks in the State are operating under loss.

Their cumulative losses crossed Rs. 500 crore in March 2006. Aggregate accumulated losses increased substantially from Rs. 180.81 crore in 2004-05 to Rs. 512.20 crore during 2005-06. Accumulated losses ranged between Rs. 4.32 crore (Kanyakumari bank) and Rs. 145.07 crore (Dharmapuri bank). The Thanjavur district bank accumulated a loss of Rs. 86.21 crore, followed by Tirunelveli (Rs. 50.03 crore), Kumbakonam (Rs. 42.24 crore), Ramanathapuram (Rs. 39.35 crore), the Nilgiris (Rs. 27.01 crore), Tuticorin (Rs. 23.03 crore), Dindigul (Rs. 22.49 crore), Virudhunagar (Rs. 22.78 crore), Dindigul (Rs. 22.49 crore), Madurai (Rs. 20.37 crore) and Sivagangai (Rs.11.65 crore).

Only 10 banks made profits. Their aggregate profit stood at Rs. 54.56 crore.

The performance of Chennai Central Cooperative Bank was remarkable, with the net profit for 2005-06 touching Rs. 45 crore.

Erode district bank recorded a profit of Rs. 3.21 crore, followed by Kancheepuram (Rs. 2.70 crore) and Coimbatore (Rs. 1.49 crore). Profits of the other banks were less than Rs. 1 crore. There was a marginal growth in deposits. Loans issued by district central banks increased by 8 per cent during 2005-06 over the previous year. However, the recovery rate declined from 81 per cent in 2004-05 to 70 per cent in 2005-06.

One reason for the fall in recovery, says a bank official, was drought in some parts of the State and late release of water from the Mettur dam. Non-performing assets, which declined from Rs. 22 crore in 2003-04 to Rs. 18 crore in 2004-05, went up to Rs. 25 crore in the last financial year.

Tamil Nadu Cooperative Bank Employees Federation general secretary P. Balakrishnan said the net worth of the loss-making banks eroded by Rs. 300 crore. This trend could be set right if the State Government took "constructive" measures.

The Government had released 20 per cent of the amount (Rs. 1,435 crore) waived under the farmers' debt relief Scheme. It should release another 30 per cent, especially to the loss-making banks. Interest margin for funds sanctioned from the Central and State Governments should be enhanced.

He said the State should advise its public sector banks to invest at least 25 per cent of their surplus funds and investments in cooperative institutions. The Centre should withdraw the income tax imposed on cooperative institutions.

Interest rate

W.R. Varadarajan, president of the Cooperative Bank Employees Federation, Tamil Nadu, said repeated waiver of loans, interest and penal interests, without sufficient compensation from the State Government, and the new non-performing assets regulations introduced by the Reserve Bank of India had affected the banks. He wanted these banks to be allowed to change the rate of interest, based on market conditions, for mobilising funds from the public.

Printer friendly page  
Send this article to Friends by E-Mail