Gujarat Urban Coop Banks Profit Plunges To Rs 273 Crore

While the number of urban co-operative banks (UCBs) in Gujarat rose during 2000-01, their profits have slipped.

There has also been a sharp decline in deposits (in Ahmedabad alone, they have fallen from Rs 5,54,358 lakh in 1999-00 to Rs 4,49,426.15 lakh).

While in 1999-2000, 341 UCBs (with 728 operational branches) in the state reported a total profit of Rs 294 crore, 350 banks (800 branches) posted a profit of just Rs 273 crore during 2000-01.

"While the number of banks and branches has increased in Gujarat, profits are coming down and this is a matter of deep concern," said a senior member of an urban co-operative bank with a statewide network. In 1998-99, the 330 UCBs (with 708 branches) recorded a profit of Rs 237.80 crore.

In 1999-00, seven UCBs in Gujarat reported profits in excess of Rs 10 crore. This is down to just two in 2000-01. While 66 banks reported a profit between Rs 1 and 5 crore during 1999-00, 67 banks reported profits in that range during 2000-01.

In the case of Ahmedabad, there were 50 UCBs in 1974-75, which rose to 71 in 1999-00 and 74 by 2000-01. "The total profit reported by these banks during 1999-00 was of Rs 85.87 crore and this dropped sharply to Rs 76.69 crore in the last fiscal," said a member of the Gujarat State Urban Co-operative Banks Federation. Ten UCB branches have stopped operations in Ahmedabad in 2000-01 and the number of branches has slipped to 247 (257 in 1999-2000).

According to Ramesh Chandra Pandya, general manager of The Manekchowk Co-operative Bank Ltd, Ahmedabad, the main reason for the slump in profits is the lower return in government securities in the last two years -- they have come down to 7 per cent from 12 per cent earlier. "Mobilisation of resources has been a problem and some policy decisions by the Reserve Bank of India have also contributed to the decline in profits," he added.

The drop in profits of UCBs has been the most alarming in Kheda district. The 48 banks in the district have reported a profit of Rs 18.19 crore -- nearly half the Rs 38.35 crore profit logged in the previous year. While the number of banks in the district remained the same, the number of branches has fallen by eight.

In Valsad district, five UCBs reported a profit of 6.98 crore in 2000-01 (Rs 9.14 crore in 1999-00). The number of branches increased to 28 (18) in the period.

The eight UCBS in Banaskantha district reported a profit of Rs 1.74 crore in 2000-01 (1.88 crore).

But there is a silver lining in the form of the performance of the 13 UCBs in Rajkot district where profits rose to Rs 15.34 crore in 2000-01, against Rs 12.98 crore during 1999-00. Similarly, the 30 UCBs in Surat district reported a profit of Rs 45.23 crore in 2000-01, up from Rs 37.90 crore in 1999-00.