Visakhapatnam Cooperative Bank net dips 50%

Visakhapatnam Cooperative Bank (VCB), which has the highest share capital of Rs 13.32 crore among all the cooperative urban banks in the state, registered a fall in its net profit by 50 per cent during 2004-05 as compared to the preceding year.

VCB earned a net profit of Rs 2.02 crore in 2004-05 as compared to Rs 4 crore in the previous year. It announced a 10 per cent dividend (5 per cent interest on share capital and 5 per cent dividend) for the year 2004-05 on Sunday.

"VCB had announced a 20 per cent dividend for 2003-04 but till date it has not been distributed because of the Reserve Bank of India's restrictions. Now the bank has proposed to merge this 20 per cent dividend with its share capital. Close to Rs 1.14 crore will be distributed from October 1 as 10 per cent dividend for the year 2004-05," Manam Anjaneyulu, chairman, VCB, told Business Standard.

"Currently, we have more than Rs 18 crore reserves. To comply with the RBI guidelines, we plan to come up with some welfare schemes for our shareholders with the bank's expenditure," he said.

"We reduced our interest rates by 1-2 per cent on all types of advances during last fiscal, and at the same time increased our interest rates on deposits for the benefit of our customers. Owing to these reasons, our bottomline was severely affected. Apart from this, due to the state government's circular, all the local cooperative societies withdrew their deposits from urban cooperative banks. Our bank too lost about Rs 25 crore deposits in 2003-04 and 2004-05. This was also one of the reasons for the decline in our business," he said.