By Sanjay Jog
Maharashtra State Cooperative Bank (MSCB), under administrator’s rule since May 2011, after its board was dissolved by the central bank, has returned to operating profits. From -1.50 per cent, MSCB’s capital-to-risk (weighted) asset ratio (CRAR) rose to 8.5 per cent and it is expected it would rise to 12 per cent in 2016-17.
As of March 2010, the bank’s gross non-performing assets stood at Rs 2,584.87 crore. This fell to Rs 2,179.69 crore as of March this year. The bank plans to cut this to Rs 1,600 crore by March 2013.
MSCB, which received a banking licence in April, proposes to improve its net profit. Speaking to Business Standard, Managing Director Pramod Karnad said, “The bank has wiped out accumulated losses of Rs 76 crore and earned profit of Rs 18 crore on a half-yearly basis (ended September). MSCB expects to record CRAR ratio at a standard level of nine per cent by the end of March 2013. It also expects it net worth to rise to Rs 800 crore by then. In the current year, the bank has already recovered Rs 300 crore by taking action against defaulters under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act by selling distressed units. It proposes to recover an additional Rs 200 crore…through the newly-floated comprehensive settlement scheme and the Act.”
Karnad added in its business plan, MSCB proposed to stabilise and move towards professionalism and gaining more net spreads in the net interest margin. “MSCB would be positioned back to its glory to retain its ace position in the cooperative field,” he said. Cooperation minister Harshvardhan Patil said the bank would have to become more professional and strictly adhere to the provisions of the state cooperative laws.
He added MSCB would also have to step up efforts to train its employees.
In its March 2010 inspection report, Nabard had criticised MSCB’s board of directors, most members of which are from the Nationalist Congress Party.
“MSCB and other federal organisations, including Mahanand, Maharashtra State Cooperative Marketing Federation and the Cotton Federation, would have to submit their annual audit reports to the state legislature for its approval. Reinstatement of MSCB’s board of directors would be considered only after the government puts in place amended cooperative laws from February 15, 2013,” he said.
In its March 2010 inspection report, the National Bank for Agriculture and Rural Development (Nabard) had criticised MSCB’s board of directors, most members of which are from the Nationalist Congress Party. Nabard had said the bank did not ensure the stock pledged to it was locked. The bank had also diluted security norms, it had added.