The cooperative banking sector in the district is seeing an increase in loan defaults and non-performing assets (NPA) primarily due to uncertain livelihoods of those taking loans.
The rising defaults are attributed partly to the dearth of steady sources of income, particularly among daily-wage labourers in the city suburbs and rural areas. Droughts, poor rainfall, and other causes often render many labourers, including plantation workers and rubber tappers, jobless. “Gross NPAs which stood at around 15% three years ago have risen to 20-22%. But we have managed to bring down its magnitude from around 25% in recent times through strict measures,” says Thiruvananthapuram District Cooperative Bank general manager S. Kumar. Sources said the bank often struggled to recover housing loans. The Vellarada branch, which covered the Amboori, Vellarada and Ottasekharamangalam grama panchayats, maintained over 100 housing loans accounts, the highest in the district.
“People mostly take loans below ₹10 lakh. The loans are disbursed in four instalments with the loanee required to bear 25% expenses of the cost. Daily wage labourers have to raise the share by taking loans at 24% from loan sharks. They are forced to repay the loans to the moneylenders for fear of threats. Under the circumstances, many loanees fail to complete the construction, prompting the bank to withhold the final disbursal. Their prolonged struggle to repay the loans also result in the property of many getting attached,” a reliable source said.
The recent spike in loan defaults are also due to loanees remaining expectant of debt waivers declared by the government. “Besides, rumour mongering on possibility of moratorium being declared on farm loan repayment have also affected recovery, the source added.