Big UCBs overpower the smaller ones
By Ankit Sharma
Nov 5, 2009
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According to a report on trends and progress of banking in India released by RBI only 1.2% of Urban Cooperative banks (UCBs) held deposits greater than Rs. 1000 crore as on March 2009. These banks constituted 33.6% in the entire UCB sector.

In absolute terms only 20 out of 1721 UCBs in the country hold Rs 53,281 crore deposits while the bottom 464 banks having deposits below Rs 10 crore account for just 1.9% of the total deposits in this sector.

Same is the case with loans. Less than 1% of the banks account for almost 25% of the total loans of all UCBs. Advances form almost 50% the total assets of these banks. The report says that 0.9% of the UCBs had assets amounting to Rs 62,339 crore which makes 31% of the total. These assets include cash-in-hand, balance with other banks, and investments apart from advances to the customers.

The report indicates a gradual improvement in the condition of urban cooperative banks although the number of banks is decreasing. The report says that the percentage of Grade III and Grade IV banks had decreased from 38 % in 2004 to 23% in 2009. As on March 2009, there were 1,329 banks in Grade I and II and 392 in Grade III and IV. The numbers were 1274 and 392 in the same period last year. However the number of banks has also come down by 205 to 1721 as on March 2009. The net NPAs also decreased to 6.1% as on March 2009 as against 8.8% in March 2007.

Kailashchandra Agrawal, former chairman of Maharashtra Federation of Urban Cooperative Banks said that several strict measures taken by RBI led to the improvement in the sector. He said that shutting down of a large number of non performing banks during the year had also led to improvement.

Kailash Jogani, president, of Nagpur Chamber of Commerce Limited (NCCL) expressed dissatisfaction over uneven growth in the sector and said that the state governments must ensure that the smaller banks also grew.


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