pratap co operative bank ltd Management discussions

THE PRATAP CO-OPERATIVE BANK LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS 1. BANKING SCENARIO: Cut throat competition in Banking industry have further heated up this year. Due to increase in inflation rate, trend in interest rates is looking up due to which Govt. Security market has continued its southward trend. Reserve Bank of India is coming out with various measures to control Co- operative Banking Sector, which includes merger and amalgamation of Co- operative Banks. During the year under report, Reserve Bank of India further tightened norms for NPA provisions. On doubtful asset outstanding more than three years now Banks are required to provide 100% inspite of availability of security, due to which now banks have to recover NPA loan account speedily or otherwise their profitability will be affected adversely. 2. OPERATIONAL RESULTS: During the year under review, Banks financial position is as under. (Rs. in Lacs) PARTICULARS As on As on 31.03.2005 31.03.2006 Paid up Capital & Reserves 416.94 429.02 Deposits 2875.84 3689.85 Advances 1543.44 1620.61 Investment 1302.93 1974.97 Working Capital 3399.23 4233.15 Net worth of the Bank stood at Rs. 259.79 lacs showing adequate assets to meet its liabilities. The Capital Adequacy Ratio (CRAB) stood at 19.02% which is more than prescribed corms by Reserve Bank of India. 3. PAID UP CAPITAL AND RESERVES: Paid up capital of the Bank have increased from Rs.103.51 lacs to Rs.104.68 lacs as on 31st March, 2006. The Reserve and other funds have increased from Rs. 313.43 lacs to 324.34 at the end of the current year, details are as under (Rs. in lacs) As on As on PARTICULARS 31.03.2005 31.03.2.006 1) Share Capital 103.51 104.68 2) Statutory Reserve Fund 93.19 99.70 3) Building Fund 49.91 49.91 4) Dividend Equalisation Fund 0.13 0.13 5) Bad & Doubtful Debts 140.00 143.40 6) Provision for Interest on Overdues - - 7) Contingent Provision against Standard Assets 3.25 3.50 8) Members Welfare Fund 0.66 0.66 9) Investment Department Reserve 5.05 5.05 10) Staff Gratuity Fund 21.24 21.99 TOTAL 416.94 429.02 4) ADVANCES: Gross advances of the Bank increased marginally by Rs. 77.17 lacs from Rs.1543.44 lacs to Rs.1620.61 lacs during the year. The break-up of advances to different segment of borrowers are as under (Rs. in lacs) Type of Loans/Advances Outstanding position as on 31.03.2005 31.03.2006 Cash Credit/Overdrafts 429.97 392.74 Housing Loans 357.33 385.41 Business Loans 261.40 189.85 Vehicle Loans 61.73 196.64 Loans against Deposits 57.91 66.98 Loan against NSC/KVP 28.18 30.15 Surety Loans 84.42 108.25 Staff Loans 81.87 90.07 Premises Loans 156.05 128.37 Other Loans 24.58 32.15 TOTAL 1543.44 1620.61 5) NON PERFORMING ASSETS AND PROVISIONS: The net NPA of the Bank have decreased to 5.86% from 9.77% last year. As on 31st March, 2006, Net NPA was to the tune of Rs. 86.42 lacs as against the net advances of Rs. 1473.71 lacs. Bank have made total provision under BDDR of Rs. 146.90 lass which is more than adequate as per RBI guidelines. 6) PRIORITY SECTOR ADVANCES: Out of total advances of Rs. 1620.61 lacs. Rs. 1309.17 lacs are given to priority sector. The percentage of priority sector advances to total advances is 80.73% which is above the ratio prescribed by Reserve Bank of India Advances to weaker section is 14.71%. 7) STAFF: Total staff strength as on 31st March, 2006 is 40 excluding trainess. Per employee business mix is Rs.132.67 lacs. We place on record our appreciation of the officers and staff members of the Bank for their dedicated services in promoting business development and customer satisfaction. 8) PROFIT AND APPROPRIATION: The gross income of the Bank during the year under review was Rs.346.69 lacs. The net profit of the Bank for the year after making provisions required under the MCS Act and Rule, amounted to Rs.25.48 lacs as against Rs.7.73 lacs in the previous year. The Board of Directors have recommended the appropriation of the profit as under. Profit trade during the year Rs. 25,48,146.82 Add - Balance of profit brought forward from last year Rs. 11,965.77 Aggregate profit available for disposal Rs. 25,60,112.59 Less - Provision for Statutory Reserve Fund Rs. 6,40,000.00 Less - Additional provision for Bad & Doubtful Debts Rs. 7,00,000.00 Less - Proposed dividend to Shareholders at 6% on Rs. 6,34,052.00 Pro-rata basis. Less - Transfer to Div. Equalisation Fund Rs. 5,00,000.00 Balance profit proposed to be carried forward Rs. 86,060.59 to next year.