Bank of Maharashtra (MahaBank) expects to emerge as a zero non-performing-asset bank by 2007 while its business is slated to grow to Rs 50,000 crore by 2006-07. |
MahaBank has targeted a 1 per cent reduction in net NPA for 2003-04 to 3.8 per cent while it aims to reduce net-NPA levels by around 1.5 per cent in the next couple of years. |
Nevertheless, the bank is faced with a 19 per cent negative asset liability mismatch, which was likely to cross the Reserve Bank of India-stipulated 20 per cent mark in the next couple of years with as much as 85 per cent of its term-deposits slated to mature in three years. |
In addition, the bank was also faced with a Rs 6,979 crore contingent liability, which included Rs 89.75 crore as claims against the bank which was not acknowledged as debts, another Rs 5,362.77 crore as liability on account of outstanding forward exchange contract, Rs 1,221.75 crore as guarantees on behalf of constituents and other obligations of Rs 242.59 crore. |
The management of the bank, however, explained that these huge asset liability mismatch was part of its normal business. |
It also argued that as much as 86 per cent of the outflows in the last five years were term deposits. As much as 72 per cent of the term deposits got renewed on maturity and hence the management did not envisage any liquidity problem. |
The management also mentioned that it has excess liquid investment of Rs 6,589 crore in the form of SLR investments to meet any unforeseen liquidity problems. |
Despite 11 months in the current fiscal having passed, balancing of ledgers for certain accounts such as deposits, advances, suspense, sundry suspense, clearing differences, other assets, liabilities with general ledger were still incomplete in a few branches, branch offices and inter-branch account entries under reconciliation were still pending for the previous fiscal. |
As a result, the auditors have qualified that the capital adequacy ratio could be different than 12.05 per cent "" the figure reported by the bank. |