Poor loan recovery in West Bengal worries Reserve Bank

KOLKATA: The Reserve Bank of India has expressed concern over low recovery of loans in West Bengal which has contributed to the rise in bad loans for banks, including United Bank of India.

“Recovery in priority sector has not been very encouraging,” EE Karthak, RBI chief general manager, said in Kolkata on Thursday at a credit seminar organised by the National Bank for Agriculture and Rural Development (Nabard).

Banks across regions are facing deterioration in asset quality, but the situation in West Bengal is different in the sense that banks in the state are facing poor repayment in small loans. “Delinquency in Kisan Credit Card (KCC) is rising, adding to NPAs,” said Rana Mazumdar, deputy general manager in UBI, the lead bank for the state. UBI, which is facing one of its worst crises in a decade, has faced it too.

Some of its troubles were due to rising NPAs in small accounts below Rs 10 lakh. The fortune of the Kolkata-based bank, which has three-fourths of its branches in the north and North-East, depends to a large extent on the economy and the performance of these regions.

Nabard, which has prepared a Rs 61,000-crore potential credit flow plan for the state, has sought government support in the recovery of bank dues under agriculture and government sponsored schemes. Principal secretary in the finance department HK Dwivedi, however, criticised lenders for their below-par recovery performance.