On the
macroeconomic front ,
the financial year 2005-06 has been good with GDP growing at 8.1% and
agriculture, industry and service growing at 2.3, 9.0 and 9.8
per cent respectively. Bank deposits grew by 14.1% while bank advances
grew by 23.3%.
Your Bank’s business growth
has surpassed the average industry growth levels. Deposits grew
by Rs.427.97crore as against Rs.279.91 crore last year.
In percentage terms the growth was 21.32% as against the industry
growth of 14.1%. Advances grew by Rs.403.24crore with a
percentage growth of 32.41% as against the industry growth of 23.3%.
On the Investment & Treasury front, your Bank has been able
to invest surplus funds wisely. Interest income on investments
during the year has increased by Rs.16.34crore
(percent growth of 25.95%). Although G-sec prices continued to
fall substantially, the Bank has been able to restrict the
depreciation on securities to Rs.2.23crore during the current
year as against Rs.11.03crore in the previous year. Your Bank
has also been able to earn a profit of Rs.2.00crore from trading
in securities. Your Bank maintains an Investment
Fluctuation Reserve (including capital reserve created out
of gain on sale of securities from held to maturity category) of
Rs. 10.18 crore (as against Rs.9.22 crore required as per RBI guidelines)
to guard against market risk on the investment portfolio.
A good Asset Liability Management system has also helped the
Bank to maintain high liquidity levels and ensure timely
re-pricing of its assets and liabilities. This has also reduced
the cost of deposits to 6.37% as on 31-03-2006 from 6.86% on 31-03-2005.
Your Bank has been able to better its growth in profitability
with net profits growing by 4.47% in the current year as against
0.5% in the previous year. Your Bank has declared a net profit of Rs.
21.00crore this year.
On the Expansion front
,your Bank was able to open
five new extension counters during the financial year 2005-06,
three in Pune, one in Nashik and one in Bangalore. All the extension
counters have during the year added over Rs.5.00crore of deposits each
to the total business of the Bank.
Falling in line with the Reserve Bank policy of allowing expansion
only through mergers, your Bank submitted proposals for acquiring four
smaller Co-operative Banks. Of these, the order for merger of one Bank namely
Shree Saptashrungi Urban Co-operative Bank Ltd. was received on April 24, 2006.
The date of merger was May 1, 2006. The merger has been put into
effect smoothly. I take this opportunity to thank you all for your
unstinted support for the merger. The remaining three mergers also are
likely to be effected in the current financial year.
On the Bank’s attempts to foray into new business areas, the financial
year 2005-06 saw the successful launching of Depository Services in
October 2005. The services were initially introduced only at locations
in Mumbai and then by the year end extended to all the Bank’s branches.
Since inception, the Bank has been able to open over a thousand demat
accounts. In addition the Bank in the current year is also planning
to obtain permission from the Reserve Bank of India to maintain a Currency
Chest and introduce Foreign Exchange Services.
On the NPA front,
your Bank has done well to restrict further addition to NPA accounts.
Consistent follow-up measures on existing NPA accounts also helped your
Bank to reduce the net NPAs further from 2.87% as on March 31, 2005 to
1.30% of net advances as on March 31, 2006. During the financial year 2005-06
recoveries from NPA accounts increased by 32.82% over the previous year.
Having identified technology
as a key driver for its growth strategy and having put in place
a world class banking software, your Bank, during the year was given
permission by The Reserve Bank of India to market its banking software
to other banks. Such permission is the first of its kind in the co-operative
banking sector and reflects the professional standards adopted by
your Bank in all areas. Keeping in mind the need to provide convenient
banking to customers, the Information Technology department during the
year introduced various new banking products, major amongst them being Cache
Token for non-ATM card holders and automated e-mailing of statement of account
to customers.
Recently, the Reserve Bank of India has allowed good Co-operative Banks to
install onsite as well as offsite ATMs and network its ATMs. Your Bank has
already chalked out its plan for expansion through ATMs.
On the audit front
, your Bank has ensured the existence of adequate internal controls
in all its operational and administrative areas. This coupled
with high levels of ethical standards, professional integrity
and regulatory compliance has ensured disciplined and healthy overall
growth. During the financial year 2005-06 too, your Bank has been awarded
an ‘A’ audit classification.
On the Risk Management front
, your Bank had already initiated measures to monitor market and
interest rate risks in the previous year namely 2004-05.
During the financial year 2005-06, your Bank has also initiated
measures to implement credit risk monitoring systems under the able
guidance of CRISIL, one of the leading experts in this field.
These systems are likely to be in place during the current financial year.
The discontinuance of section
80P benefits
(exemption from income tax) to the Co-operative Banking System
has been a set back, nevertheless the recent relaxation in
business restrictions will help Co-operative Banks compete
with all sectors in the banking industry.
The macroeconomic factors are likely to be positive in the current year
with a good GDP growth rate pegged at 7 to 7.5%. Having recorded an
exceptional growth in business during the year, we propose to
continue this trend in future too. A professional Board of Directors
and a well qualified Management team has always been one of our
main strengths and with this we will continue to make a mark in the
banking industry for another hundred years and more.
While convenience
banking for customers
would be the main focus in all our operations,
other thrust areas in future would include:
-
Expansion through acquisition of smaller and financially
viable co-operative banks and opening of ATMs.
-
Marketing of your very own Banking software ‘Genius’ to other Banks
-
An aggressive marketing strategy to establish our presence as a Co-
operative Bank with a difference
-
Introduction of new products in line with customer needs
-
Risk Management systems to identify and mitigate risks
and ensure stable growth
-
Timely action on defaulters to ensure maximum recoveries
from NPA accounts.
With extreme pleasure
, I place on record the Board’s appreciation
of the contribution made by all the employees towards the growth
of your Bank. Their commitment and devotion has helped further enhance
the employee productivity ratio in the Bank that happens to be amongst
the best in the Indian banking fraternity.
Your Bank has completed its 100th financial year and will celebrate
the completion of its centenary year on December 27, 2006. Its indeed
a privilege and a moment of pride to be a part of the team that
took your Bank into its hundredth year. And with the unstinted support
and trust that you all have shown in us I have no doubt that our
Institution will progress with the required confidence towards
another 100 years in banking. I take this opportunity to express our
gratitude to our members, depositors, clients and well wishers for
their valuable support.
Your Bank is obliged
to the officials of the Reserve Bank of India,
especially the Urban Banks’ Department, the Central Registrar,
Co-operative Societies, New Delhi, the Commissioner of Co-operation,
Pune and the officials of the Departments of Co-operation in the
states of Maharashtra, Goa and Karnataka for their invaluable guidance
and assistance from time to time.
The Board is grateful
to all the members for their continual support
and trust in us.The Board also would like to put on record its appreciation for
the professional services offered by the Bank’s Legal Advisers,
Management and Tax Consultants, Architects, Concurrent Auditors, Internal
Auditors and Statutory Auditors for their co-operation and guidance.
I would also
like to thank
all those institutions, authorities
and individuals who have extended their support and helped the
Bank scale new heights.
Lastly I would like to mention that
