Drought Adds To Bank NPAs In Maharashtra

Mumbai, October 25: | Updated: Oct 26 2002, 05:30am hrs
Non-performing assets (NPAs) of banks in Maharashtra, particularly that of regional rural banks (RRBs), have gone up due to drought in the state during 2001-02, according to the information provided by a few banks to the Lok Sabha Estimates Committee.

In the case of commercial banks, a large part of their NPAs are due to industries facing the lower end of the cycle like steel, textile and tea. These industries have faced market fluctuations, which are unpredictable some times, the sources close to the committee told FE on Thursday.

The committee headed by Prof Ummareddy Venkateswarlu, which is in the city since Wednesday, has reviewed two state-run banks and two RRBs to ascertain the reasons for the mounting NPAs in these banks. The benchmark for the committee is the five per cent ceiling set by the Reserve Bank of India (RBI) for NPAs in the banks in a few years.

The committee has reviewed the NPAs of Bank of Baroda (BoB) and Bank of Maharashtra (BoM) as part of ascertaining the reasons for mounting NPAs in the banking sector and the means adopted by banks in tackling the issue.

The committee also reviewed the performance and NPAs of two RRBs, one each sponsored by Central Bank of India and Bank of India Akola Gramin Bank and Bhandara Gramin Bank respectively, both located in Maharashtra.

The banks in Maharashtra have suffered from NPAs from agriculture sector last year due to drought prevailing in some parts of the state, the sources said.

Responding to a query, sources said that the best performing sector of the banking assets in the country are loans disbursed to self-help groups - with 96 to 97 per cent by way of repayments.

Except Maharashtra, all other states have performed better in terms of repayments of agricultural loans during 2001-02.

Another important observation and the objective of the committee is to find out why the banks are trying to back step on providing loans in rural areas, from where they are getting 32 per cent of their deposits.

There was a strong feeling in the committee that the banks should intensify their extension activities in villages for taking latest agricultural techniques, the sources added.

The committee, the purview of which spans to all organisations either owned or funded by the Centre, has also reviewed labour policies of Mahanagar Telephone Nigam Ltd (MTNL), Mumbai Port Trust (MPT), largest co-operative fertiliser companies in the country Iffco and Kribhco, to ascertain whether they are following the statutory and other labour welfare measures.