SHOMA PATNAIK | NT
PANAJI: Even as plans are on to subject co-operative banks and credit societies to special audit, a senior source in the state government Thursday said that several of the local urban co-operative banks are in losses.
The source said that the losses are due to the piling up of non-performing assets (NPAs) caused by poor recovery of loans.
“Co-operative banks lend easily but are slow in recovering money from borrowers. And because of the poor recovery mechanism, their standard loan accounts become doubtful and non-recoverable easily,” he said.
The official said that banks have high NPAs in mining loans but post-mining setback, they have not improved, as the bad loans have increased in other sectors. “Co-operative banks have high NPAs in mining but their non-mining loan portfolio is in the red too,” he said.
Over the last two-three years, the banks have lent to construction companies, shopkeepers, local businessmen and failed to monitor the repayments.
The government has identified, Goa State Co-operative Bank, Madgaon Urban Co-operative Bank, Goa Urban Co-operative Bank and Mapusa Urban Co-operative Bank as those with high level of NPAs.
On Wednesday, Chief Minister Manohar Parrikar said that the government is working on a mechanism for carrying out special audit of financial institutions in the co-operative sector. He said that the special audit would focus on the financial propriety of such financial institutions for which teams of chartered accountants would be appointed.
According to senior sources, the special audit will be of those co-operatives that accept and disburse money to people, including the urban co-operative banks and the co-operative credit societies. There are six urban banks of which four are estimated to be in poor financial health.
Meanwhile, the financial health of the co-operative credit societies is expected to be no better. In 2012, it was revealed that barely 50 per cent of the credit societies were in sound health. Several were in dormant state and could be classified as sick. Like the urban banks, the credit societies suffered from poor management of loan recovery. The financially weak societies had high level of bad loans and a large percentage of NPAs. At present, there are 127 co-operative credit societies in the state and they are regulated by the state Registrar of Co-operative Societies (RoC).
The urban banks, on the other hand, are regulated by two authorities – the Reserve Bank of India and the Registrar of Co-operative Societies (RoC).
According to government sources, urban co-operative banks audit their accounts on time but are nevertheless unhealthy due to poor credit appraisal of borrowers resulting in NPAs.