Date:08/05/2008 URL: http://www.thehindubusinessline.com/2008/05/08/stories/2008050852322300.htm

Back Bengal state co-op bank’s farm loan recovery drops

Deposits increased by five per cent at Rs 2,575 crore, while advances increased by 11.5 per cent at Rs 2,207 crore.

Our Bureau

Kolkata, May 7 The farm loan waiver scheme, as announced by the Union Finance Minister in the Union Budget 2008, will lead to higher defaults in agricultural advances of the West Bengal State Cooperative Bank (WBSCB) and might also lead to higher non-performing assets (NPAs), according to its Chairman, Mr Samir Ghosh.

The co-operative bank’s recovery from agricultural loan for the year 2006-07 stood at 72 per cent. “We were expecting a higher recovery of about 77-78 per cent in 2007-08 but that did not happen and the recovery dropped to 56 per cent,” Mr Ghosh said, attributing it to the reluctance of the farmers to clear their dues following the Budget announcement.

The NPA level of the bank also increased to 5.89 per cent as on March 31, 2008, as against 5 per cent during the corresponding period of last year.

Agricultural loans accounted for almost 4.22 per cent of the total NPAs, while non-agricultural loans stood at 1.67 per cent. Mr Ghosh said that the NPA level of the bank after the implementation of revival package and debt waiver scheme would come down at 2 per cent.

In 2007-08, WBSCB recorded a marginal increase in net profit at Rs 10.15 crore (Rs 10.03 crore) due to an additional provisioning of Rs 8.10 crore on account of shortfall in farm loan recovery.

Deposits increased by five per cent at Rs 2,575 crore, while advances increased by 11.5 per cent at Rs 2,207 crore. The bank has disbursed short-term agricultural loans amounting to Rs 950 crore during 2007-08. The share capital stood at Rs 31.46 crore, an increase of Rs 2.65 crore over the last year.