CRAR Of 4 SUCBs Below The Minimum Level Of 9%

A discussion on CRAR, GNPAS and PCR in scheduled urban cooperative banks in the context of RBI’s latest FSR:

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The Reserve Bank of India’s Financial Stability Report (FSR) released on 27 June 2019 discusses the performance of scheduled urban cooperative banks. One of the salient aspects brought out in the report is that at the system level, the Capital to Risk Asset Ratio (CRAR) of these banks has remained unchanged at 13.6% between September 2018 and March 2019. However, at a disaggregated level, CRAR of 4 of these banks was below the minimum required level of 9%. The report has not named these 4 banks. There are 54 SUCBs in the country (42 in Maharashtra, 7 in Gujarat, 2 in Goa and 1 each from Karnataka, Andhra Pradesh and Uttar Pradesh.

It has been found that CRAR of the Ahmedabad Mercantile Cooperative Bank has been falling in the last 3 consecutive financial years. It was 31.52% a year ago and 31.35% in 2016-17. According to Narendra Patel, chairman, of the bank, it has further come down to 28.98% in 2018-19.

In the case of Surat People’s Cooperative Bank, CRAR is 15.47% in 2018-19 and the bank’s director Mukeshchandra Gajjar says this is well above the minimum level.

Rajkot Nagrik Sahakari Bank’s CRAR is 17.54% in 2018-19. Jyotindrabhai Mehta, director at the bank, says: “We have achieved a comfortable level as regards CRAR. We don’t require any thing to do to increase our position.”

In the case of Rajarambapu Sahakari Bank, Sangli, the CRAR has marginally come down in the last year. It stood at 13.42% a year ago. Rajaram Jakhale, MD, says it is at 13.18% in 2018-19, a slight decrease due to growth in advances.