Visakhapatnam-based Kanakamahalakshmi Cooperative has decided to take over the loss-making Palakol Cooperative Urban Bank.
“The 42-year-old bank has been in losses owing to the inefficiency of management. Hence, we have decided to merge it with Kanakamahalakshmi,” T Raghunadha Rao, chairman, Kanakamahalakshmi Bank, told Business Standard.
Kanakamahalakshmi expects RBI’s approval in this regard by September-end, he added.
Palakol incurred a net loss of over Rs 1 crore. Its deposits stood at Rs 5.89 crore while advances were at Rs 2.19 crore. Due to losses, the bank had to close five of its branches to reduce the overhead cost and is currently operating just one branch at Palakol.
“Once we receive the approval, we plan to shift the closed branches to important locations like Bhimavaram, Eluru, Tadepalligudem and Tanuku in West Godavari district,” he said. The bank plans to reopen these branches by the end of this fiscal.
Kanakamahalakshmi bank currently operates a single branch at Akkayyapalem in Visakhapatnam. Last fiscal, it earned a gross profit of Rs 1.47 crore while its deposits and advances stood at Rs 43 crore and Rs 32 crore respectively.
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“As of March 2008, the bank’s non-performing assets stood at 1.02 per cent, and we will reduce it further by the end of this fiscal,” he said.
The bank is also planning to open a few more branches in Visakhapatnam during the next financial year.