(a) whether several cooperative banks especially in tribal areas are running in losses;
(b) if so, the details thereof;
(c) the amount of losses suffered by each such bank during the last three years as on
date and the reasons therefor;
(d) the total administrative expenditure made by these banks during the said period; and
(e) the action being taken or proposed to be taken to contain these losses?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PAWAN KUMAR BANSAL)
(a) to (c) : Of the 10 State Cooperative Banks (SCBs) and 100 District Central Cooperative
Banks (DCCBs) operating in tribal areas of the country, some of the SCBs and DCCBs incurred
losses in all the three years 2003-04, 2004-05 and 2005-06 while some incurred losses either
in one or two years. The details of such SCBs and DCCBs, as available with National Bank for
Agriculture and Rural Development (NABARD), earning profits/incurring losses during these
three years are at Annex-I.
The reasons for losses of these Cooperative banks in tribal areas can be attributed to high
cost of funds, low volume of business, poor recovery, high cost of management, inadequate
follow up action on recovery of loans, low resource base, low borrowing membership, lack
of democratic and professionalism in management, lack of skilled manpower, low yield on
assets, inadequate margins, inadequate legal action, frequent changes in Chief Executive
Officers, etc.
(d) : The details of administrative expenses incurred by the loss making SCBs and DCCBs
operating in tribal areas, State-wise, during three consecutive years, viz. 2003-04,
2004-05 and 2005-06 are at Annex.-II.
(e) : The Government of India (GoI) has approved a revival package to strengthen Short
Term Rural Cooperative Credit Structure (STCCS). The States willing to implement the
package are required to sign a Memorandum of Understanding (MoU) with GoI and NABARD for
carrying out certain legal and institutional reforms.
Financial assistance for STCCS under the package is available for cleansing of Balance
Sheet as on 31st March 2004 and increasing the capital to a specified minimum level subject
to legal and institutional reforms. In order to ensure that STCCS continues on sound
financial, managerial and governance norms, technical assistance is to be provided to upgrade
institutional and human resources of STCCS, computerization and setting up proper internal
control and accounting systems.