Personal loan portfolio is just 3%; Bank all set to announce sterling profit
THIRUVANANTHAPURAM: “Reports circulating in the media about Kerala Bank being downgraded to ‘C’ category by the Reserve Bank of India (RBI) is just ‘humbug’,” is what a source close to Kerala Bank said while responding to a businessbenchmark.news query on the issue.
“RBI doesn’t come in the picture at all.” It was NABARD, the supervisor of cooperative banks, that made this downgrading to C from B after its customary inspection, according to the source.
“ And mind you, most of the cooperative banks in the country come under C category and Kerala Bank is one of the best run cooperative banks in the country,” said the source.
NABARD’s inspection nicknamed as CAMELS (Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, Sensitivity to Market Risks) is a regular one, and is carried out every year.
CAMELS is a widely used rating system for assessing the soundness of financial institutions, especially banks.
It’s true that with a ‘C’ categorisation, the size of personal loans should be kept below Rs25 lakhs, and knowing this, the bank itself, neither RBI nor NABARDS, has sent notifications to branches directing them to stick to the sID ceiling on personal loans. Out of a Rs48,000 crore loan book, personal loan portfolio is just Rs1,500 crore.
“Maybe a little over three per cent; Not a big deal,” he said.
There are views expressed by other bankers too on the issue. Talking to businessbenchmark.news, credit head of a bank said “In a cooperative banking system, keeping bad loans below 7 per cent is really difficult. Kerala Bank’s NPA has gone above 11 per cent, according to sources.
Smart net profit?
As businessbenchmark.news has earlier reported, Kerala Bank is poised to announce sterling results this time around, driven by its first net profit ever since the amalgamation of 13 district cooperative banks (DCBs) into Kerala State Cooperative Bank (KSCB) in 2019.
The bank will officially announce its 2023-24 financial results after the board meeting today to be convened at 10.30AM, according to sources.
