On
13th January, 1977, Janab Dr. Mumtaz Ahmed Khan and Janab K.Rahman Khan
founded the Amanath Co-operative Bank and within a short span of 26 years,
the Bank has attained the status of Karnataka's
first scheduled Urban Co-operative Bank. With a small capitalbase
of Rs. 3 lakhs, the bank has grown to be the largest Urban Co-operative
Bank in the state,with a deposit of over Rs. 440 crores, working capital
of Rs.
505 crores and net owned funds of
Rs. 29.53 crores.
The Bank that began with just 3000 members, now boasts of nearly 41000
members. The depositors and account holders, who exceed 2.54
lakhs in number, are serviced by the 15 branches in the state. Many more
branches are scheduled to open shortly with the aim of extending the area
of operation in the state.
Amanath Co-operative Bank Ltd. offers ATM facility at its branches at
Brigade Road, Gangenahalli, N.R. Road, Shivajinagar, R.V. Road, Ilyas
Nagar, Mangalore and Gulbarga. The Bank has stepped into the new millennium
incorporating the latest development in banking and Information Technology
with a resolve to make banking with Amanath a pleasure.
The microcosm of its objective is "MASS BANKING"
right from its inception. Hence, the major thrust of the bank has been
to inculcate the banking habits among middle and lower strata of the society,
mostly in hitherto unbanked / underbanked areas. Keeping this objective
in view, Amanath Bank opened branches in such areas which are predominantly
resided by middle/lower income groups and the areas concentrated by minorities
and backward classes to whom commercial banks are not easily accessible.
The bank has, therefore adopted selective policy in the opening of branches
by identifying the centres where there is a good potential for inculcating
the habit of saving amongst the people and at the same time, providing
much needed finance to these people, not only to meet their domestic needs
but also for developing their businesses, and in the process helping them
become self-sufficient. Keeping this objective in view, Bank has introduced
a scheme called 'MICRO-CREDIT' for the benefit of poorest among poor by
involving SHGs and NGOs who are working for the economic upliftment of
the poor. The last decade has seen a meteoric rise of the bank in all
spheres which is reflected in the financial indicators furnished in the
table below.
The bank has 419 employees on its roll, including 74 Officers. Human resources
being the most important asset of the bank,all out efforts are made to
enhance the motivational level and efficiency of the employees. In-house
capabilities for imparting adequate training to the employees continued
to be a major strength of the bank. Training is being provided to make
them more competitive and customer oriented.
The Bank has bagged the "Best
Urban Co-operative Bank" award for the second successive
year from the Karnataka State Co-operative Federation and Karnataka State
urban Banks Federation.
The Reserve Bank of India conferred the "Scheduled
Status" on Amanath Bank effective from 29th January,
2000 and has included the name of the bank in the second schedule to the
Reserve Bank of India act, 1934. Amanath Bank is the first urban Co-operative
bank in Karnataka to be awarded this prestigious status. The conferment
of "Scheduled Status" will
enable it to render more service to the members, clientele and the society.
The past achievements are the source of inspiration for future progress
and prosperity.
The bank has also excelled in the field of sports by winning both the
"Inter-Bank Cricket Tournament"
organised by the Canara Bank and the "Inter
Co-operative Banks Cricket Tournament" in 2000.
Respected Shareholders and patrons,
It is indeed a great privilege in welcoming you all and to be present here today in your midst as an Administrator of your Bank appointed by the Government. I take this opportunity to place before you the 33rd & 34th Annual Report of the Bank for the period 2006-07 & 2007-08 together with the Audited Financial Statement of Accounts for the period 2002-03, 2003-04, 2004-05 & 2005-06 and Provisional Statements of Accounts for the last 2 years for the period from 2006-07 & 2007-08.
As you are aware that the Registrar of Co-operative Societies had issued Show Cause Notices to the Ex-Board of Management for the super cession of the Board Framing charges of grave violations of KCS Act and Rules and Reserve bank of India Guidelines. The Registrar of Co-operative Societies after examining the explanation of the Board found it unsatisfactory and superceded the Board of the bank on 5th December 2006 by appointing Mr. Jawaid Akhtar, IAS as Administrator of the Bank. He relinquished the post due to Directors occupation and the Government has shouldered the responsibility on me which I was reluctant to accept the same. After deliberations with the Community Leaders and keeping in view the various factors responsible for the cause of super cession, the assignment has been accepted and I took charges of the Bank on 25th January 2007. The Government has also deputed Shri. D.C.Nagarajaiah, Deputy Registrar of Co-operative Societies as General Manager on Official Duty. He possesses vast experience in Co-operative Sector and has played a vital role in revival of various Societies before joining your Bank as General Manager.
It is true that various encouraging developments had taken place in the bank as a result of which the Schedule Bank Status has been accorded, but these have unfortunately overshadowed on super cession by removal of elected board of management.
The main role of the Administrator and general manager for which the Government appointed them is to rectify the defects which exists, to maintain stability, to regain confidence of the shareholders and depositors.
At the outset, I would like to put-forth the issues pending before the bank. A detail analysis/review of the performance of the bank in various financial areas has been made immediately after taking charge of the bank on 25th January 2007.
- Bank continued to be under Grade IV since 2004.
- Resource position not satisfactory, declining trend in deposits from the level of Rs.48895.70 Lakhs to in March 2002 to Rs. 31359.05 lakhs a on the date of appointment.
- Reduction in the level of advances from the level of Rs. 30833.77 lakhs in March 2002 to Rs.19691.20 lakhs-affected profitability/generation of interest income.
- High level of NPAs – beyond tolerable limit in terms of Gross NPAS more than 60%, which had further worsen the interest income
- Un-healthy practice adopted for closure of NPA Loans through unauthorized One Time Settlement Scheme without prior approval from Registrar/Reserve bank of India.
- Various Omissions and commissions/mis-management by previous board of Managements.
- Weak Recovery/NPA management.
- Non-Recovery of hard Core NPA is involving problematic loans of Rs.63.00 crores.
- Imposition of directions by Reserve Bank of India through operational instructions on interest cap and credit expansion.
- Non-Publication of Balance Sheet, Profit & Loss Accounts since 2003.
- Non-Adherence of Regulatory Norms/instructions/guidelines.
- Poor supervision & Control of the branches by the Functionaries/Executives at Corporate Office.
- High Level of Operation/Accumulated losses.
- Negative Networth & CRAR as assessed by Reserve Bank of India.
In fact the bank had reached a point of no return and was at that juncture, the Government has shouldered the responsibilities on me after the super cession of the Board of Management. The task was touch and challenging but not impossible.
In order to understand the problems and to evolve methods, measures and systems to review the bank, the following steps were initiated.
Meetings with Bank Officials, Staff Members & Customers.
- A series of meetings with the Senior Officials and Branch Managers were conducted emphasizing the issues pending before the bank to be resolved without loss of time to revive/rebuild the bank.
- A Meeting with all the Staff Members of 11 branches and Corporate Office was arranged on 10th Feb.2007, the pending issues were discussed. Subsequently a 3 days work shop titled “Discover Yourselves” was also arranged from 17th –19th Feb.-2007 with a view to bring awareness/motivation among the staff.
- The customers meets at all the Branches were conducted. The customers overwhelmingly acknowledged and reposed confidence during the meets.
- An investors Meet was organized at the Corporate Office on 11th March 2007 by inviting 100 very important businessmen, industrialist and Investors. The Meeting was fairly successful. The bank has received valuable suggestions and many of them have come forward and willing to participate in development of the Bank.
Review of NPAs [Non-performing Assets] & steps initiated for its reduction. |
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Recovery performance in General NPAs: |
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In general though there is no significant performance in the recovery of NPAs, however a very pragmatic and practical approach was initiated in recovery front. Streamlined the Recovery Force, Arbitration & Execution Cells at Branch level, Branch Managers have been made responsible for recovery of NPAs., fixing targets for NPA recovery to individual branches for reduction of NPAs by filling disputes, attaching immovable properties of the borrowers. The Bank has initiated action under Securitization Act 2002 for recovery of amounts involved in the cases. Since the Courts have stayed the operation of the said Act, the action for recovery received a set-back. FINANCIAL HIGHLIGHTS: We are happy to inform you all that despite several constraints, the present management succeeded in arresting the downward trend with stability by regaining trust and confidence of the shareholders and depositors. A comparative position for the last 5 years for the period from 2003 to 2008 & as on 31st March 2008 is given below: |
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1. Capital Base & Its Structure: The membership of the Bank, over the last 2 years, has not been growing, since the bank is prohibited to enroll new members during the period of Administrator. Reserves: The increase in the Reserves due to creation of provisions on Bad and doubtful & Loss Assets as per advise of Reserve bank of India. Subsequent to release of provisions on recovery of NPAs, the provisions to the extent of Rs.1016.90 lakhs has been reversed to profit and loss account during the year 2007-08. Deposits: There has been marginal increase in deposit from the level of Rs.33049.50 lakhs as on 31st March 2007 to Rs.33163.412 lakhs as on 31st March 2008 with more than 50% consisting of demand deposits, which is a healthy sign for any banking industry to reduce the cost of deposits. Mobilization of Deposits of Rs.100.00 crores. The bank has mobilized Rs.100.00 crores deposits for a short period from a valuable customer of the bank. This shows the confidence of the depositors in the bank. Advances: There has been no significant improvement in credit portfolio, the position stood at Rs. 18011.39 lakhs as on 31st March 2008 when compared to the position at Rs.18901.52 lakhs as on 31st March 2007. This is due to fact that the Bank is under “operational Instructions” and advances were restricted to Rs.15.00 lakhs for existing members only. This is the main reason, the bank could not improve the advances. However, recently the TAFCUB has approved Rs.50.00 lakhs as the upper limit. Investments: The total investment of the bank stood at Rs.17638.60 lakhs as on 31st March 2008 of which a sum of Rs.12996.00 lakhs have been invested in Government Securities, term deposits with other Banks, and on Public Sector Bonds, adhering to the Statutory requirement. |
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LIQUIDITY : The liquidity position of the bank has taken an increasing edge when compared to previous years. You may please refer the following comparative position for the last 4 years:- |
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MAINTENANCE OF CRR & SLR: The Bank has successfully continued to maintain the required level of CRR & SLR as per Statutory Norms. PROFIT/LOSS: Your bank has posted a operational profit of Rs.1424.49 lakhs during the year 2007-08. The accumulated losses have been reduced to Rs.977.61 lakhs from Rs.11204.10 lakhs as on 31-03-2007. CUSTOMER BASE: The Bank’s customers Base increased from 220191 number of depositors in march 2007 to 2222820 number of depositors in march 2008, of which Demand (CASA) deposits constituting more than 76% of total depositors which reflects the strength of the retail segments which we are keen to improve further. However, the high-cost deposits exceeding Rs.20.00 crores are still outstanding in our books of accounts at interest ranging from 12% to 16.5% which has an impact on profitability of the bank. This areas is need to be addressed at the earliest possible time by requesting the concerned depositors for redemption keeping in view a sound liquidity position on date. Visit of Security to Government, Registrar of Co-Operative Societies to the Bank: The secretary to Government, Department of Co-operation, Government of Karnataka and the Registrar of Co-operative Societies in Karnataka visited the bank and has assured to extend all possible support and guidance in revival of the Bank. Meeting with TAFCUB [Task Force for Urban Co-operative Banks] The Role of TAFCUB is to identify the potentially viable/non-viable urban co-operative banks in the state and suggest revival path. In this connection, our bank also was invited for the deliberations. During the course of the meeting, various issues pending before the bank were discussed. The Administrator and the General Manager also presented the case on behalf of the bank and many issues were sorted out in favour of the Bank. Meetings with Regional Director, Executive Director, Reserve Bank of India and submission of Action Plan upto march 2010. Meeting with Executive Director, Reserve Bank of India, Central Office, Mumbai, Regional Director of Reserve Bank of India, Bangalore, were held. Various matters relating to performance/actions were discussed. During the meetings, the bank has submitted an Action Plan upto March 2010 to turnaround the bank’s performance in reaching the positive results:- The Highlights of the Action Plan 2010 is summarized below for information of the Members. |
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The bank is hopeful of accomplishing the targets given in the Action Plan: AN APPEAL TO THE MEMBERS WHO HAVE DEFAULTED IN REPAYMENTS OF LOANS The Bank’s philosophy involves developing and maintaining a healthy credit portfolio within the frame work of minimum/no risk. However, your bank has a track record of high level of NPAs comprising of will full defaulters, though they are comfortable, they are not repaying the loans keeping the bank in problems, thus causing loss to the bank and to the shareholders and depositors. The Bank has initiated suitable action for recovery of loans against whom a substantial amounts have been blocked without generating any income to the bank. We request and appeal in the interest of the bank and on their own interest to come forward and settle the loan accounts failing which the bank has no option left otherwise to attach and sell their immovable properties mortgaged to the bank including those of sureties/guarantors. RESERVE BANK OF INDIA INSPECTIONS: The present Management pleased to keep on record the immaculate guidance and suggestions given by the Officers of Reserve Bank of India, Urban Banks Department, for qualitative functioning of the Bank during the course of inspections for the year 2002-03 to 2006-07. MY THANKS & ACKNOWLEDGEMENT: We extend our thanks to Shri. V.S. Das, Executive Director, Reserve Bank of India, Central Office, Mumbai, Ms Devaki Muthukirshnan, Regional Director, Reserve Bank of India, Bangalore, for their valuable suggestions, support and guidance and also their patient hearing during meetings for the improvement of the bank. We also thank the Chief General Manager, General Manager & Officers, Urban Banks Department of Reserve Bank of India at Central Office and Regional Office for their kind co-operation. We sincerely thank Shri.Ravi Kumar, IAS, Secretary, Department of Co-operation, Government of Karnataka and Shri Mohamed Sanaulla, IAS, Registrar of Co-operative Societies in Karnataka for having visited the Bank and for extending co-operation, timely guidance and support in all our endeavors, Policies and strategies. We record our deep sense of gratitude towards our Members and Customers who have reposed full faith and confidence in the Bank and expect the same patronage at all times. I, take this opportunity to express appreciation for the hard work and dedicated efforts extended by the staff members and look forward to their continued support and contribution in rebuilding this bank to regain its past glory. My thanks, too, to our numerous partners in progress, associates and well wishers, who have placed in us their faith, confidence and has assured to extend co-operation for revival of this great institution. |
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