Maharashtra State Cooperative Bank's (MSCB) balance sheet, which was approved by its auditors Batliboi & Purohit, shows its capital funds risk weighted assets ratio rose to 5.5 per cent from -1.5 per cent in 2009-10. The bank has thus taken a significant step towards securing a banking licence from the Reserve Bank of India (RBI).
MSCB's accounts for 2010-11 show the bank's statutory liquidity ratio stands at 35 per cent, against the mandatory requirement of 25 per cent. However, the bank's deposits fell to Rs 13,343.39 crore in 2010-11, from Rs 17,677.54 crore in 2009-10, owing to the withdrawal of money by several district central cooperative banks. The bank's contingent liabilities rose to Rs 195.51 crore and net worth turned positive at Rs 238.14 crore.
A state government official, while speaking on the condition on anonymity, told Business Standard, “With the finalisation of accounts, MSCB would convene a general body meeting. However, in view of the commencement of the monsoon session of the state legislature, two administrators — S K Goyal and Sudhir Shrivastav — would be busy handling legislative business. The bank would therefore, send an appeal to RBI and National Bank for Agriculture & Rural Development (Nabard) soon to allow it to hold its general body meeting in next three months.”
The official said Nabard was yet to complete its inspection report for 2010-11 accounts. A Nabard official said the inspection was underway. He, however, declined to give any timeline for the inspection.
The official also said a comprehensive inspection carried out by Nabard for MSCB's balance accounts for 2009-10 had cited procedural lapses, including deterioration in net worth, a high level of impaired credits, continued deficit in making adequate provisions for items and liabilities and non adherence to banking prudence and financial discipline. Nabard had also said MSCB’s profitability was declining. “Had the bank made requisite provisions according to income recognition, asset classification norms, it would have incurred a net loss of Rs 775.98 crore for 2009-10 instead of a net profit of Rs 2.87 crore, as reported by the bank,” Nabard had said in its inspection report.
RBI had, while citing the inspection report, recommend that the bank’s 44-member board of directors be superseded. The state registrar of cooperatives had then superseded the board and subsequently, two administrators had taken over on May 7.