Abhyudaya Cooperative Bank sees threefold rise in wilful defaults in one year
Bank of India (RBI), witnessed a threefold increase in wilful defaults in the past one year to ₹416 crore, according to data from TransUnion Cibil. This surge in defaults may have exacerbated its challenges in the lead-up to regulatory action. These are accounts of ₹25 lakh or more where the bank has initiated legal action for wilful defaults.
A borrower is labelled a wilful defaulter when it fails to meet repayment obligations despite having financial capacity to do so. On 31 October 2022, the Mumbai-based cooperative bank reported wilful defaults amounting to ₹132 crore across nine entities. Data further showed that the count of companies classified as wilful defaulters shot up to 24 within a year.
The bank has seen a decline in its capital adequacy ratio in recent years, dropping from 12.6% in FY20 to 12.01% in FY21, and to 9.02% in FY22, according to RBI data. Of the defaulters, 23 were from Maharashtra, and one was from Gujarat. Among them are J Square Steels ( ₹88 crore), Saka Embroidery ( ₹52 crore), Swastish Enterprises and Satish Krishnakant Mohole-SKM Food ( ₹47 crore), and Nirman Gold Alloys ( ₹40 crore).
Abhyudaya Cooperative Bank not only has the highest number of defaults among cooperative banks, based on data available from TransUnion Cibil, but also surpasses or is close to several commercial banks with larger asset bases.For instance, Yes Bank’s wilful defaults were at ₹408 crore. HDFC Bank’s, at ₹512 crore, is barely ₹100 crore more than Abhyudaya but the private lender’s assets were 169 times more as on 31 March 2021. An email query to an RBI spokesperson didn’t elicit any answer.
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