105% business growth & 0% net NPA in tough times
Shri Veershaiv Cooperative Bank will be applying for a bank merger and for scheduled bank status:
The year 2019-2020 was full of challenges for cooperative banks in Maharashtra, particularly those in Kolhapur district, especially a severe flood in the early part of the year. There was huge loss of food grains and livestock. Then came the pandemic, which really gave a major jolt to the business and industry. Suryakant Patil, ex-President & Director at the Shri Veershaiv Cooperative Bank, says specifically the banking sector in Kolhapur has suffered the most. The lockdown due to the pandemic situation has hit the businesses like logistics, hospitality and education the worst and this has not only impacted the employment, growth rate (GDP) but also hampered exports. “Fortunately, the agricultural sector has shown good recovery due to a good monsoon and satisfactory harvesting. This is a gift given to the country by the farmers,” he says.
MORATORIUM, A BOOSTER
The dire situation was eased to some extent by the Reserve Bank of India, which brought in a reduction in the repo rate and CRR and ensured liquidity in the market. It also introduced a 6-month moratorium on loans availed by businesses up to August 2020 and other measures like soft loans, working capital easing and interest subvention. These measures very well helped ease the situation, avers Suryakant Patil.
LOANS, DEPOSITS UP
The Shri Veershaiv Cooperative Bank is a a multi-state cooperative bank, which has shown a net profit of `75.7 million in 202021 as against `31.5 million in the previous year. The gross profit of the bank in 202021 is `176.8 million (before provision). The bank could achieve 105% growth in business, which crossed `16 billion. Says Patil: “As per the pre-audit position, in spite of adverse situation, we have excelled in showing growth in loans and advances by `670 million to `6.32 billion, and deposit by `4.2 million to `9.64 billion in 202021. The gross NPA is reduced to 3.8% in 2020-21 as against 10.8% yoy and net NPA has touched absolutely zero in the midst of covid times from 4.2% in its previous year. We are hopeful to retain our B+ status in RBI ratings.”
PROFIT IN G-SEC TRADING
The bank has made investments in government sec urities, distric t cooperative banks, other cooperative banks and commercial banks. In terms of RBI guidelines, it has also made the required investment (SLR/CRR) in G-secs as well as in other portfolio with competitive rates and returns. “We have invested `4.09 billion under these heads. As per RBI rules, investment in G-Secs and treasury bills can be `3.02 billion. However, our investment of `90 million in PMC Bank has become a risky investment. We have made profit in trading of G-secs and mutual funds to the tune of `58.8 million,” says Patil.
CAPITAL ADEQUACY
As far as CRAR is concerned, the bank is in a strong position - 13.73% - against the minimum stipulation of 9%. Patil says as on 31 March 2021, there has been an increase of `92.9 million in the reserve and other provisions, which had stood at `992.1 million during the last FY.
Patil maintains that the ineffective action plans on the part of the government on the cooperative banking front and the prevailing pandemic situation have very adversely impacted the cooperative banking sector, resulting in reduction in deposits, total business volumes, profitability and increase in NPA in general.
The bank has recently concluded a MOU for merger of Mudhol Cooperative Bank in Karnataka with it and proposal is awaiting approval from the RBI. It has also completed all the formalities for securing a scheduled bank status and will be applying for the same in 2021-22, says Patil.