Bangiya bank all set to break even

Bangiya Gramin Vikash Bank (BGVB), the largest regional rural bank (RRB) of West Bengal, is likely to have a positive net worth by the first quarter next fiscal, thanks to recapitalisation.

The state government has agreed to invest its share of Rs 40 crore in two phases. "The state government would put Rs 10 crore by March 2008 and the remaining Rs 30 crore in the first quarter of the next fiscal," said Ambarisha Nanda, chairman of BGVB. "As soon as the state government puts its share, the United Bank of India (UBI) and centre would invest their respective portion," he added.

"The total capital of the bank would then become Rs 375 crore (capital of Rs 108 crore and Rs 275 crore from the shareholders), leading to a positive net worth of Rs 3 crore,"

RRBs are jointly owned by the centre, states and sponsor banks in the ratio of 50:15:35.

The bank's current accumulated loss is Rs 370 crore and capital base is Rs 108 crore. The share of the sponsor bank and the centre is Rs 100 crore and Rs 135 crore respectively.

According to the finance ministry, eight states have agreed to pay up their share of recapitalisation in cash and these include Chhattisgarh, Arunachal Pradesh, Tripura, West Bengal, Bihar, Assam, Nagaland and Jharkhand.

The budget proposals for 2007-08 had specified that RRBs having a negative net worth would be recapitalised in a phased manner. A total of 29 RRBs had a negative net worth of Rs 1,857.05 crore in 2006-07.

Speaking with BS, PK Gupta, chairman and managing director of UBI, confirmed that it would follow suit as soon as the state government invests its share.

"As per norms, we would definitely give Rs 100 crore once the state and the centre puts its share," Gupta said.

Meanwhile, BGVB posted an operating profit of Rs 1.16 crore in the first nine months this fiscal. Its total business grew by 15 per cent to around Rs 4,755.09 crore and this included deposits of Rs 3331.34 crore and Rs 1,423.75 crore advances.

"This is a satisfying result compared with last year, when the bank was making losses," the chairman said.

The country's second largest RRB was formed with the amalgamation of five erstwhile RRBs of West Bengal and it has 547 branches in 11 districts of the state.

The bank is also planning to enhance its technology.

"We are preparing an IT plan through which all the branches would be computerised in the first phase and we would roll out core banking solution in the subsequent phase," Nanda added.

The bank has 184 computerised branches and the remaining would be automated by December 2008.

The CBS roll-out would be completed by the end of 2010 and bio-metric ATMs would be introduced in branches with the highest foot fall.

"We are conducting a survey to identify branches with the highest foot fall and bio metric ATMs would be set up in those branches on a pilot basis," Nanda explained.