Municipal Coop Bank
While the bank has operational constraints, it is effectively utilizing its available resources:
Mumbai-based the Municipal Cooperative Bank functions with the sole objective of catering to financial needs of the staff of the Municipal Corporation of Greater Mumbai (MCGM), especially the class IV employees. It is a salary earner’s non-scheduled, primary urban cooperative bank, the municipal employees being its members. Advances are restricted to full time employees of MCGM, but the general public an avail of other banking facilities. Its area of operation is the city of Mumbai and it does not cater to the needs of farmers.
According to Milin Sawant, chairman of the bank, the bank has a customer base 166,962 as on 31 March 2019, of which members are 84,976. It added 3839 members in the past financial year. However, retirements and deaths of members the number got is reduced by 4366. The rest are non-members, who are either general public or retired employees of the municipal corporation, who entrust their terminal/retirement funds with the bank. Sawant adds these members can open their pension savings accounts with the bank.
GROWTH: DEPOSITS 8%, LOANS 3%
The bank’s members generally need consumption loans, which are termed as ‘medium term loans’, in order to meet their family needs like children’s school fees, repairs and renovation of residential premises, marriages in the family, hospitalization expenses for critical ailment/major diseases, higher education of children/wards, purchase of certain items to increase standard of living, etc. Says Sawant: “Our total of deposits in 201819 stood at `34.81 billion and deposits collected in 2018-19 are of the order of `2.55 billion, out of which `1.39 billion is towards CASA, which comes to 29.77%. On yoy basis, the growth in deposits is 7.91%. The total amount of advances is `24.09 billion, signifying a 2.91% yoy increase.”
The bank follows a simple process for credit appraisals. It has its internal rules for sanction of loans and recoveries are through salary deductions. It has developed a loan origination module, through which all data is fetched related to loans and past salaries of the members. If the borrower member fulfils the bank’s parameters, his/her loan application with all relevant documents are prepared at the branch level and the completed forms are then sent to sub-committee of the board of directors for sanction and upon sanction, the loan amount is disbursed centrally. A person can get loans up to `1.25 million and provided the documentation is proper, he can get the loan within 3 days of application.
Sawant says since the implementation of 7th pay commission in MCGM, the advances have come down as compared to growth in the last year. “However, we are hopeful that once they start spending with higher income in their hand and consumption pattern changes as there is more income at disposal and they tend to go for lifestyle products shopping, there will be a boost demand for advances in the near future,” he adds.
The bank offers housing loans at interest rate of 8.5% per annum and one can get up to `7 million Sawant says the home loan portfolio of the bank is at `120 million in the last financial year. However, the bank does not offer home loans in case of joint applicants, and when the joint applicant is not a member of the bank.
The investments of the bank have risen to `15.83 billion, recording yoy growth of 9.49% and interest on investments increased to `1.15 billion with yoy growth of 11.05%.
NO NETWORK EXPANSION
The bank has 22 branches and 10 ATMs, including 8 onsite ATMs. During the last financial year, it could not add any new branch or ATM. Sawant says instead of spending much on branch and ATM infrastructure, the bank is now focusing on alternate channels. The bank is providing 24x7 security at all ATMs with round the clock CCTV surveillance systems.
STAFF REDEPLOYMENT
One of the major sources of revenue for the bank had been the octroi collection in the city. However, post the implementation of GST and abolition of octroi, the bank had 86 excess staff but it did not get rid of these people as they were reassigned to handle certain tasks, which were hitherto outsourced after a cost benefit analysis. However, the staff cost has marginally decreased to `398.8 million in 2018-19 from `408.4 million in its previous year.
The bank incurred a loss of revenue to the extent of `230 million on account of abolition of octroi.
UPI, CHIP BASED CARDS
The bank has been providing ATM related services as well as SMS services to its members free of cost. It has introduced balance inquiry through missed call.
Says Saw ant :“We have issued 92,510 ATM cards to our members/ customers. We have upgraded our mobile banking application provided by C-edge Technologies. Recently we have launched UPI through which our customers can create digital wallets of any other payment solution provider like Google Pay, Paytm, etc. We have also provided chip-based cards to all our customers.”
Since the customer base is restricted to salaried individuals only, deployment of POS machines is not viable for the bank.
TECHNOLOGY VENDORS
The bank has implemented CBS on an ASP model using the system of C-edge Technologies, which is also taking care of the ATM connectivity, ATM switch and ATM cards. The IT team at the bank is headed by a system analyst (in the rank of an assistant general manager), who reports to DGM (Computers). There is a manager-IT and there are 4 IT assistant managers and 2 clerical staff.
“There are approximately 125 transactions per ATM per day at our ATMs. The total transactions done on our ATMs in 2018-19 are 455,615 and the overall transactions by our customers through all other ATMs are 1,653,281. We have deployed NCR ATMs,” says Sawant.
The bank also makes use of services of vendors such as P2B Ace Solution for the HR module and Loan Origination module, V-Soft Technologies for CTS, TJSB Sahakari Bank for AML software and Brinks India for cash collection and distribution to branches.
RISE IN NPA
The bank’s gross NPAs have increased to `628.8 million in 2018-19 from `456.6 million in the previous financial year. The gross NPA increased to 2.61% from 1.95%. Sawant says since many of the borrowers of the bank are class IV employees and on account of job hazards, they are exposed to various ailments and diseases, they are irregular in duties. This affects their repayments of loans. “This is a major concern for us and due to this our recoveries are affected. Out of total 1800 specific accounts, almost 75-80% accounts are in NPAs.”
TECH PLANS
Sawant says the bank may not grow horizontally by expanding branches and ATM centers, but it is planning for effective utilization of available infrastructure and resources. “We will be extending our mobile banking base to all tech savvy customers, adding new features in the application such as cheque book request, stop payment, PIN change, etc. We will have a more efficient loan origination system, biometric attendance system for bank employees and kiosks for passbook printing and other enquiries,” adds Sawant.