shreeji bhatia co op bank ltd Management discussions

SHREEJI BHATIA CO-OPERATIVE BANK LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS PERFORMANCE OF THE BANK: The Banks overall performance during the year was satisfactory in the competitive environment despite shakened confidence of the general public at large in the functioning of co-operative sector. The Banks performance on the profit front is quite satisfactory as Bank made operating profit of Rs.16.64 lacs and net profit of Rs.8.23 lacs during the year. After adjusting previous years losses of Rs.7.07 lacs, surplus of Rs.1.61 lacs is available. The deposits as on 31.03.2006 stood at Rs.533.55 lacs as against 668.29 lacs as on 31.03.2005 registering reduction by 20.16%. While advances have decreased from previous years level of Rs.359.75 lacs to Rs.276.66 lacs with a reduction of 23.10% over the previous year. The main reason for reduction in deposits is due to lowering of interest on term deposits and few premature withdrawals of term deposits whereas reduction in advances is due to low offtake of loans and pre-closure of few loan accounts. Credit Deposit Ratio as on 31st March 2006 is 51.88% whereas on 31st March 2005 it was 47.64%, which has improved by 4.24% over the previous year despite reduction in businessmix. Banks staff cost and premises cost are very low. The Directors and Special Invitees offer honorary services and as such we save on sitting fees and traveling expenses hence no cost is incurred to the Bank on this count. This has led to maintain operating cost at low level. The Bank looks forward to improve growth rate with the active support of members and customers. We look forward to increase the advances because of up-surge in the economy. The Bank is always on the look out for viable loan proposals. RESERVES & SURPLUS FUNDS: Reserve Funds at the year ended 31st March 2006 stood at Rs.5.62 lacs, which has reduced by Rs.0.20 lacs over the previous year due to reversal of excess provision of standard assets during the year. PRIORITY SECTOR ADVANCES: With consistent efforts we have achieved the target of RBI of financing to priority sector advances of Rs.191.25 lacs as on 31st March, 2006 which is 69.13% of the total advances against the prescribed limit of 60%. Efforts are being continued to increase the percentage of priority sector advances. We have also achieved 17.50% financing to weaker sections against the target of 15% of total advances prescribed by RBI. NON-PERFORMING ASSETS: Our Banks Non-performing Assets for the last 4 years was 0%. However during the current year the N.P.A. has emerged and stood at Rs.7.41 lacs. Reduction and control of N.P.A. level is due to consistency and vigorous follow up efforts for recovery of overdue advances by Credit and Credit Monitoring Committee in its meetings regularly held on every Friday. The efforts were further supplemented by our worthy Chairman - Mr.Gopaldas Merchant, Executive Directors - Mr. C.C. Udeshi, Mr. C.A. Ashar and Mr. Arvind Gajaria and Directors Mr. Madhu H Ashar, Mr. Harjivan Lilani, Mrs. Jyoti Gajaria, Mr. Ketan H Ashar and Mr. Haridas D Gajaria. The Gross Non-Performing Assets of the Bank stood at Rs. 7.41 lacs constituting 2.68% of the total loans and advances of the Bank as on 31st March 2006. The Net Non-Performing Assets of the Bank stood at Rs.4.57 lacs constituting 1.67 % of the Loans and Advances of the Bank as on 31st March, 2006. By consistent efforts for recovery of overdue advances, we expect to bring down gross N.P.A. and net N.P.A. at very low level. LOANS TO DIRECTORS & THEIR RELATIVES: During the year under review, restriction of RBI of granting new loans and advances to Directors and their relatives continued. Even granting Advances against their own Fixed Deposits are also prohibited. However their - existing advances are to be continued as per terms of original sanction. Accordingly the position as on 31.03.2006 of Loans and advances granted to Directors and their relatives are as under; (Rs. in Lakhs) A B C D E F a) Directors 2 13.34 NIL 3.03 10.31 NIL b) Relative of Directors - - NIL - NIL NIL TOTAL 2 13.34 NIL 3.03 10.31 NIL A = No. of Directors, their relatives who have borrowed form the Bank B = Amt. of loan & advances outstanding at the beginning of the year C = Amount of loan sanctioned during the co-operative year D = Amount of recovery during the co-operative year E = Amount of Loan outstanding at the end of the co-operative year F = Over dues, if any out of amount in Column No. CAPITAL ADEQUACY RATIO: The Banks Capital Adequacy Ratio stood at 42.17% as on 31.03.2006 as required be to maintained at 9% by Co-operative Banks as per norms prescribed by Reserve Bank of India. This strong capital base shows inherent strength of the bank. HUMAN RESOURCES DEVELOPMENT: The involvement of staff at all levels has been one of the factors for the working results achieved by the bank during the year ending 31st March 2006. The process of providing training and motivation has already been commenced and shall be continued to ensure prompt and efficient customer service. CORRESPONDENT RELATIONS: Our arrangement with HDFC Bank for issue of their AT PAR cheques on centres where they have branches was available during the year for our customers. We have been issuing these cheques at concessional rates and the arrangement has been well appreciated by our customers. We have also made arrangements for foreign exchange transactions with Bank of Baroda. APPROPRIATION OF PROFIT: Bank has made operative profit of Rs. 16.64 lacs before depreciation and other provisions and reserves and net profit of Rs.8.23 lacs. After adjusting previous years losses of Rs.7.07 lacs, surplus of Rs.1.16 lacs is available for appropriation. Your Board recommends transfer to Statutory Reserve Funds a sum of Rs.29055/- (25% of net profit Rs. 116216/-) and carry forward of the surplus profit of Rs.87161.73 for the current year. I earnestly thank all of you on behalf of the Board of Directors for the continued support that you have given to the bank and request you to use the Banks services to its optimum levels. Whenever required please suggest ways and means of improving the Banks level of services.