Maharashtra Contributes Major Share In StCBs’ Net Profits

Credit growth of StCBs remained robust in 2022-23 and they liquidated their SLR investments to bridge the C-D gap due to contraction in deposits; 2 StCBs reported GNPA ratios greater than 50 %

FinTech BizNews Service    

Mumbai, January 27, 2024: The Reserve Bank of India recently released the Report on Trend and Progress of Banking in India 2022-23, a statutory publication in compliance with Section 36 (2) of the Banking Regulation Act, 1949. This Report presents the performance of the banking sector, including co-operative banks during 2022-23 and 2023-24 so far.

State Co-operative Banks

State co-operative banks (StCBs) operate in a two-tier/three-tier/mixed-tier structure. In a two-tier structure, mostly located in the northeastern part of India, StCBs operate through their own branches, whereas in case of a three tier structure, StCBs work as the apex bank for all DCCBs. At end March 2022, the short-term rural co-operative sector consisted of 34 StCBs. At end-March 2022, StCBs had 2,089 branches, providing more than 45 % of their total credit towards agriculture. 

Balance Sheet Operations 

Owned funds of StCBs, which comprise share capital and reserves, grew by 11.5 % during 2021-22, and were 6.5 % of their total liabilities at end-March 2022. The growth in owned funds was driven by accretion to share capital and improvement in profitability. Although deposits accelerated in 2021-22, they were outpaced by growth in loans and advances. 

Credit growth of StCBs remained robust in 2022-23 and they liquidated their SLR investments to bridge the C-D gap due to contraction in deposits.


Reflecting the accommodative monetary policy stance and the reduction in deposit and lending rates, growth in the interest income of StCBs decelerated in 2021-22 while there was a contraction in interest expended. On balance, net interest income rose by 30.3 %, faster than 13.9 % in the previous year, which led to higher profits. However, the contraction in non-interest income adversely affected their profitability.

The western region, especially Maharashtra, contributes the major share in StCBs’ net profits. 31 StCBs posted a profit of Rs2,338 crore while 3 StCBs (viz. Arunachal Pradesh, Puducherry and Jammu and Kashmir StCB) incurred losses of Rs50 crore. 

Asset Quality

Asset quality of StCBs improved during 2021-22 on lower slippages. Within NPAs, substandard and loss category loans contracted. However, the doubtful category — which constitutes nearly half of the outstanding NPAs — grew for the fifth consecutive year. While a majority of the 34 StCBs reported lower GNPA ratios at end-March 2022 than a year ago, two StCBs reported GNPA ratios greater than 50 %. The improvement in GNPA ratios and recovery-to-demand ratios was led by southern and western states. 

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