Gujarat's Co-op banks begin to see some light

Gujarat's co-operative banks are back on the growth trajectory after a long hiatus that followed the collapse of the Madhavpura Mercantile Co-operative Bank.

The Gujarat's co-operative banks expect to grow around 15-20 per cent for fiscal 2007-08.

Jyotindra Mehta, president of Gujarat Urban Co-operative Bank Federation (GUCBF), told Business Standard, "We expect the co-operative banks in Gujarat to register a growth of 15 - 20 per cent in fiscal '07-'08."

According to Mehta, the co-operative banks in Gujarat have came a long way after the collapse of Madhavpura Mercantile Co-operative Bank.

Pre - Madhavpura Mercantile Co-operative Bank collapse, the total deposit of co-operative bank sector in Gujarat stood at over Rs 17,000 crore. "After the Madhavpura scam, the deposit of the co-operative bank sector in Gujarat were below Rs 14,000 crore," says Mehta.

"This year we have seen the growth of deposits in co-operative banking sector crossing the Rs 15,700 crore deposit mark," informs Mehta. He further said, "The co-operative bank has learned a lot after the scam, now the sector is more professional."

According to Mehta, the co-operative sector is gearing up by managing the banks professionally. In post-Madhavpura scam period, the co-operative banks were more inclined on fund raising system for running the banks, while now the co-operative banks have changed its approach as the business model is to raise fund through fee based sources of income.

The banks have tied up with non-life insurance companies for distributing insurance products and collection of premia.

Many of the banks have started collecting electricity bills, entered into stamp vending business and many more such sort of value-added services that helps the bank to generate revenue through fees that it receives from such services.

"Now they have learned to make money from non-fun-based sources," adds Mehta.

The second major change that has been witness to the co-operative banks in Gujarat is the technological revolution. All the banks have adopted to the latest technology by upgrading their computer system, record systems and making it more accessible to the customers of the banks.

"With the latest technology adaptation by the banks, the function has been more fast and swift for the customers then earlier," adds Mehta.

Mehta informed that the GUCBF has taken initiative in the regard as it has set a vision/target to connect all co-operative banks under one roof through interconnectivity of all computer systems of the co-operative banks in Gujarat.

"We are educating the member co-operative banks about the benefit of the connectivity of all the banks computer system," adds Mehta.

According to him, the idea of connecting all the urban co-operative banks will take another one and half or two years period.

While on the revival and restructing of urban co-operative banks, the sector is seeing a revival and restructuring in different forms. And the revival is in the form of merger and take over by larger co-operative banks.

"Already eight mergers have taken place and another 10 are in the pipeline," adds Metha. He further said that consolidation is better for the sector because of the consolidation it is possible to revive the weaker banks and grow further," said Metha.

The GUCBF has also taken a new approach to enhancing the co-operative banks' image through collective branding of the co-operative banks "" "Proudly Co-operative".