Mining ban resulting in overall decline in advances

At the 83rd meeting of the quarterly State Level Bankers’ Committee (SLBC) held in the city on Monday under the chairmanship of Finance Secretary of Goa, P. Krishnamurthy, J.B. Bhoria of the Reserve Bank of India (RBI) questioned the banks as to why there was no improvement in the credit delivery and improvement in the Credit-Deposit ratio of the banks in Goa.

Mr. Krishnamurthy expressed concern over the fact that the Credit-Deposit ratio further declined from 31 per cent in June to 29 per cent by September end.

Annual credit plan

Prashant Kumar, General Manager, SBI (Lead bank) in his inaugural speech reviewed the performance under the annual credit plan (ACP) and advised the banks to increase advances under agriculture and industries.

The ongoing ban on mining activities in the State continued to take toll on Goan banks and financial institutions, not only with increasing deterioration of the asset quality of advances to mining dependent borrowers but also in terms of overall decline in advances and also reflected in declining rate of growth of deposits, as revealed in the half-yearly figures released by the SLBC on Monday.

The industry continues to lag behind with advances of a meagre Rs. 24.66 crore, 19 per cent of the ACP target of Rs. 129.32 crore.

The bankers pressed for an exemption or reduction in the recently introduced stamp duty by the government which has already affected agricultural and priority sector loans of less than Rs. 2 lakh.

The State government has promised only to “look into it”, sources pointed out.

Slow growth

According to the latest SLBC figures, the actual growth during 2012-13 was 12 per cent in deposits and 5.7 per cent in advances contrary to projections of 14 per cent and 36 per cent, respectively. For the current year, the actual level of deposits and advances was Rs. 44,202 crore and Rs. 13,019 crore respectively as on six months ended September 30. Growth in deposit was 11 per cent and was 4.22 per cent in advances as against the projections of 15 per cent and 20 per cent, respectively.

The advances level as on September 30 as against Rs. 12,490 crore as on March 31, 2013 shows a marginal increase of Rs. 529 crore.

The deposit level as on September 30 is higher by Rs. 441 crore over March 2013 figure of Rs. 39,661 crore, but the growth is nowhere near traditional annual deposit growth of around 15-20 per cent for the State with a tradition of higher rate of savings.

Mining impact

Worst hit by the mining ban are the cooperative banks with 57 per cent of their accounts and 66 per cent of their outstanding loans having turned non performing assets (NPAs) by June 30.

The exposure of public sector, private sector and cooperative banks to mining and related activities was to the extent of Rs. 1,743.60 crore as on June 30, 2013.

The bankers say due to ban on mining activity 2,563 accounts with aggregate outstanding of Rs. 502.98 crore had become NPAs as on June 30, 2013 with a high NPA percentage of 29 per cent.

The possibility that mining would resume and stabilise by March 2014 as the Supreme Court recently began hearing cases regularly looked like a distant dream, bankers pointed out.

The only silver-lining in the mining ban scenario has been the rise of agricultural loans. The advances have kept up the good performance for the first quarter ended June 2013 with total advances of Rs. 102.28 crore with 62 per cent achievement against the annual credit plan (ACP) target of Rs. 163.99 crore.

The growing credit in the agri-sector is seen as a big boost to agriculture ostensibly as more land in the mining belt is coming under agriculture.

  • Credit-Deposit ratio declined from 31 per cent in June 2013 to 29 per cent by September end

  • Advances were just Rs. 24.66 crore – 19 per cent of the annual target of Rs. 129.32 crore