Chances of Maharashtra State Cooperative Bank (MSCB), which is under the administrator’s rule since May last year, getting banking licence by March 31 have brightened after the state government made an adhoc provision of Rs 50 crore. The state government's move would help MSCB achieve the 4% capital to risk assets ratio (CRAR) as mandated by Reserve Bank of India and National Bank for Agriculture and Rural development (Nabard) to seek the banking licence.
Currently, Nabard, in its inspection report for 2010-11 accounts, has shown MSCB's CRAR at 3.95%, while MSCB's statutory auditors, Batliboi & Company, has reported it to be at 5.76% as on February 29. As per the recommendations of the RBI, the state registrar of cooperation had superceded the 44-member board of directors of MSCB in May last year on account of breach of several lending norms.
A senior government official, who did not want to be identified, told Business Standard, "The government has recently conveyed to Nabard that it was prepared to allocate Rs 5 crore or more to MSCB to achieve the CRAR of 4% from 3.95%, as shown by Nabard. Accordingly, a provision has been made and included in the supplementary demands tabled in the state legislature on Thursday. The ball is in now in the court of Nabard and ultimately of RBI to grant banking licence to MSCB." The officer said MSCB’s total risk weighted assets are about Rs 9,902.26 crore.
The official hoped that MSCB would get banking licence by the end of March. “However, as a precautionary measure, MSCB has already sought about two months’ time if it does not get the licence by end of March,” the official informed.
Further, MSCB’s net NPA reported is well below 5% and is at 4.27%, or Rs 375 crore by end of March 2011 and the gross NPA is at Rs 2,584.87 crore (23.52%). The official informed that MSCB has already invoked a total state government guarantee of Rs 2,022 crore.
According to the state cooperation department, MSCB is one of the four state cooperative banks at the national level that are yet to qualify for the licence. Of the 31 state cooperative banks, 25 state cooperative banks have already been granted banking licence.