NT NETWORK
PANAJI
After being weighed down by high levels of non-performing assets (NPAs) and losses, the scenario is likely to get tougher for urban co-operative banks, said Ramakant Khalap, veteran in the co-operative sector.
Khalap, who is the director of Mapusa Urban Co-operative Bank (MUCB), said that he envisaged more stress for urban banks in coming months due to “struggle to cope with loan defaulters and provisioning.”
He said, “Urban co-operative banks are caught up in financial crisis because they are finding it difficult to comply with the Basel-1 norm imposed for the banking system. In future with the norms likely to be tightened further, the stress on co-operative banks will increase.”
The former Chief Minister and chairman of Mapusa Urban Co-operative Bank said that the outlook looks grim for urban and private sector banks most of which are burdened by losses not only in Goa but also pan-India.
Khalap was talking at the sidelines of a press briefing. He said that Mapusa Urban’s condition continues to remain grave as it remains under RBI embargo. The embargo was imposed on July 2015 and the matter is in court. A hearing on petition to lift the embargo is coming up this month end and the bank hopes to get a favorable reply, he said.
Khalap pointed out that the bank would be convening its annual general meeting (AGM) shortly and the directors would focus on ways to get the RBI sanctions lifted. He said that Mapusa Urban needed “basket of solutions” to regain its financial health.
He said that the bank is seeking RBI permission to monetise assets, sell properties of defaulting borrows and go in for one-time-settlement of NPAs to raise funds and improve its capital adequacy ratio. As on March 31, 2017, the gross NPAs stand at Rs 25 crore and accumulated losses at Rs 55 crore.
“The bank has several options to recover for which it needs RBI clearance,” said Khalap. These include selling of assets worth Rs 60 crore and compromising with defaulters through an OTS package. The other options are merging with a stronger bank or converting itself into a co-operative credit society, suggested the seasoned co-operator.
He said that several steps have been initiated to regain financial health including raising of share capital by members to Rs 26 crore and reducing staff strength by about 200 employees.
