mumbai dist central co op bank ltd Management discussions

THE MUMBAI DISTRICT CENTRAL CO-OPERATIVE BANK LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS COMPARATIVE FINANCIAL POSITION (Rs. in Lacs) 31-3-2005 Capital & Liabilities 31-3-2006 31-3-2005 51,386.15 Owned Funds & other funds 55,501.14 7,002.05 2,16,713.72 Deposits 2,14,208.58 1,88,317.41 2497.19 Borrowings 5,097.30 69,151.17 13,884.23 Other Liabilities 12,663.93 21,120.67 1,110.01 Profit 1,014.68 2,85,591.30 Total 2,88,485.63 2,85,591.30 Property & Assets 31-3-2006 Cash in Hand and with Bank 6,441.14 Investments 1,81,080.88 Loans & Advances 78,015.53 Other Assets 22,948.08 Total 2,88,485.63 INVESTMENT (Rs. 1810.81 CRORES) : The total Investment of the Bank (excluding the investment in immovable properties) as on 31.03.2006 stands at Rs. 1810.81 Crores, details of which is exibited in Annexure C. During the financial year 2005-2006 bank has earned a profit of Rs. 1.08 Crores from the sale / purchase transaction of Govt. Securities of Rs.3553.44 crores. Income from the Govt. Securities transaction is declining every year. As the yield on Govt. Securities increasing, prices of the same are declining. Liquidity in the Money Market was at lower level, which affects the Govt. Securities transactions in the market & resulted in lowering the sale / Purchase transaction, ultimately leads to declined in the profit. LOANS & ADVANCES (Rs. 780.16 CRORES) : The total Loans & Advances as on 31 st March 2006 stands at Rs. 780.16 crores. The Loan Portfolio has been increased by Rs. 88.64 crores. The comparative typewise classification and also particulars of Loan and Advances are shown in Annexure D, E, F & G respectively. OVERDUES : The total outstanding balance Loans and Advances as on 31-3-2006 stands at Rs. 780.16 crores. Out of which Rs. 710.36 crores are outstanding from various type of societies and Rs. 69.80 crores from Individuals. 243 cooperatives societies are in default. The total overdues of the Bank are Rs.160.98 crores. The loan outstanding from 26 sugar factories amount to Rs. 162.64 crores, out of which Rs. 101.35 crores in overdue from 17 sugar factories. The percentage of total overdues to total loans and advances stands at 20.63% out of which percentage of overdues of sugar factories is 12.99% and from other institutions including individuals is Rs. 7.64%. Our bank has financed 26 co-operative sugar factories of which 8 factories have been included in central Governments package. Hence the said factories are not in overdues; 17 factories are in overdues including 3 in Liquidation. We have already submitted our claims with Liquidator, and pursuing for recovery process. We have also taken action under securitasation act against 5 factories and started recovery proceedings. We have also taken decision to take legal actions against remaining 9 factories and for that we are also persuing the matter with our lead Bank as well as Government officials. Bank has filed arbitration cases in Co-op. court against 61 defaulting societies and have already obtained awards against 38 societies. Outstanding Balance as on 31.03.2006 from those societies is Rs. 6.56 crores. 23 cases are still pending with the Co-op. Court and amount involved therein is Rs. 8.52 Crores inclusive of interest. In addition to this 109 societies are in liquidation and amount involved is Rs. 71.22 crores. (Including 3 sugar factories) Bank has filed criminal cases against 23 societies where it was observed that the loan amount was misused or there is misappropriation by the office bearers of the said societies. The enquiries against the alleged criminal charges in respect of 8 societies have already been completed and criminal cases are registered against them. The Co-operative Department has appointed 5 Bank Officers as Administrators on 5 societies, and 4 Bank Officers as liquidators on 100 societies. This includes Bank Directors and Officers appointed on urban Bank which are in liquidation. Govt. officers are appointed on 3 sugar factories which are in Liquidation. The recovery of Bank during financial year (20052006) is Rs. 10.49 crores, which includes principal recovery from Sugar factories to the tune of Rs.1.71 crores & interest to the tune of Rs. 3.61 crores. For effective recovery from the defaulted societies separate officers for each co-operative ward are appointed and they have been attached to the Branches working in the concern ward. Recovery Officers are instructed to visit defaulted co-op. societies for effective recovery. For the recovery of members due of the non borrowing societies, 3 Special Recovery Officers are appointed by the Bank to guide and supervise them. Bank has decided to charge nominal recovery charges from the members societies. All the societies are requested to take advantage of this facility. For speedy disposal of Recovery cases under section 101, arrangement has been made for the borrowing and non-borrowing members societies, as well as societies under Administration and Liquidation, an officer of the rank of Asstt. Registrar of the Co-operative Department is taken up on deputation with the Bank to issue recovery certificate. Under these arrangement total 10752 Awards are issued. This office is situated at Bandra (reclamation) Branch of our Bank. All concerned above are requested to take advantage of the same. Due to above action, 14 societies have cleared all their dues with interest during the year 2005-2006. This includes 4 societies which are benefited under O. T. S. Scheme. In view to bring down N.P.A. of our Bank. Our Board of Directors have decided to appoint review Committee at Branch level, under control of one Directors of the Bank for review of Loan Recovery. Review of Overdues of Branch is taken in the monthly meeting of the committee and efforts are made to restrain new overdues as well to recover old dues. It is specifically appealed to the old defaulter societies to take assistance of the Special Recovery Officer for recovery of their member dues and repay the bank loan. N. P. A. PROVISIONING : In pursuance to the applicability of norms for Non Performing Assets issued by Reserve Bank of India to all State and District Central Co-operative Banks, the Bank has made provision for NPA as under. A) Sub-std. Assets (Rs. in Lacs) i) Overdues from 91 to 180 days (10%) Rs. 14.91 ii) Overdues from 181 to 3 years (10%) Rs. 522.73 B) Doubtful Assets I) Secured Advances (Overdues) i) 3 to 4 years Rs. 3327.83 (20%) i.e. Rs. 665.57 ii) 4 to 6 years Rs.1832.56 (30% ) i.e. Rs. 549.77 iii) above 6 years Rs.4393.33 (50%) i.e. Rs. 2196.67 II) Unsecured Advances Rs. 7919.23 (100%) i.e. Rs. 7919.23 C) Provision against other assets Rs. 97.34 (100%) i.e. Rs. 97.34 Total A+B+C Rs. 11966.22 Balance of provision as on 30-3-2006 towards N.P.A. Rs. 9415.72 Provision required to be made as on 31-3-2006 Rs. 2550.49 Provision actually made as under 1. By transfer of Excess provision of Investment Risk Fund Rs. 2164.00 2. By transfer as per Resolution No.7 of Board Meeting dt. 23-05-2006 from Development fund. Rs. 1105.80 Rs. 3269.80 Balance of Excess Provision as on 31-3-2006 Rs. 719.30 D) Contigent Provision against standard assets has been made at @ 0.25% as per Reserve Bank of India norms is as under. Standard Assets Rs. 55166.22 Lacs 0.25% i. e. Rs. 137.92 Balance Provision as on 30-3-2006 Rs. 118.66 Provision Required to be made as on 31-3-2006 Rs. 19.26 Provision made for this year(31-3-2006) Rs. 19.26 MEMORANDUM OF UNDERSTANDING : As per the guidelines issued by the National Bank for Agriculture & Rural Development and with a view to plan, overall progress of the Bank, a Development Action Plan is prepared for the year 2006-2007. The targets and achievements for the year 2005-2006 the targets set for the year 2006-2007 are given as under. (Amount Based on Average basis) (Rs. in crores) Sr. Particulars A B C No. 1. Paid up Share Capital 42.45 41.70 45.84 2. Funds and Reserves 453.93 483.31 -510.32 (excluding non-productivity) 3. Deposits 2230.00 2078.55 2240.00 4. Investments 2110.00 1782.11 2120.00 5. Loans & Advances Issued 360.00 574.44 370.00 6. Loan outstanding 630.00 750.97 650.00 7. Gross Financial Margin % 3.84 1.94 3.91 8. Percentage of Management 1.44 1.40 1.47 Cost to Working Capital 9. Net Margin % 0.33 -0.74 0.51 10. Productivity per Employee 3.31 3.36 3.32 11. Productivity per Branch 63.56 70.74 57.80 A = Target for the year 2005-2006 (Average) B = Achievements as on 31-3-2006 (Average) C = Target for the year 2006-2007 (Average) APPROPRIATION OF PROFIT : Bank has registered net profit of Rs.10,14,67,895.12 during this year and the total net profit available for appropriation is Rs. 10,14,68,107.09 including the last years balance profit of Rs. 211.97. The Board of Directors has recommended dividend @ 7% on pro-rata basis to our members for this year 2005-2006. Out of which 4.75% will be distributed from this years profit & remaining 2.25% will be distributed from the amount of Dividend Equalizatin fund with due prior permission from Co- operative Department. The appropriation of net profit is recommended as under: Sr. No. Particulars Rupees 1. Reserve Fund 2,53,68,000.00 2. Credit Stabilization Fund 1,52,20,300.00 3. Dividend @ 4.75% (Prorata basis) 2,02,93,600.00 4. Investment Fluctuation Fund 4,05,86,000.00 5. Balance profit to be carried 207.09 forward to the next year TOTAL RS. 10,14,68,107.09 The appropriation of profit recommended by the Board of Directors as above may kindly be approved. BUDGET: The Budget prepared for the year 2006-2007 is approved by our Board of Directors. The said Budget is incorporated in the annual report. The same may pleas: be approved. The budget prepared for the year 2005-2006 was approved in the last Annual General Meeting. The expected income was Rs.21350.00 lacs and expenditure Rs. 20150.00 lacs were shown in the budget. However, actual income is Rs.19851.49 lacs and expenditure incurred is Rs.18836.81 lacs. HUMAN RESOURCES As on 31st March 2006 the total strength of the Staff is 841. Considering the free economy, globalization & frequent changes in the banking sector, the Bank has fully computerised all its branches to cope up with the new challenges. To be more versatile with the management concepts, senior officers of the Bank are being deputed for higher degree courses such as Diploma in co- operative Business Management being conducted by Vaikunth Mehta National Institute of Co-operative Management, Dr. Vithhalrao Vikhe Patil Institute of Co-operative Management, Pune and Dhananjayrao Gadgil Institute of Co- operative Management. The Bank has started inhouse training to their staff from Quality Management of Urban Co-op. Banks throughout year. Also staff are being deputed for training courses held by BIRD, NABARD, at Banglore, Hyderabad & Lucknow.