Cosmos Bank bags NAFCUB Award

The fastest growing Multistate Co-operative Scheduled Bank, the Cosmos Co-operative Bank  was awarded as ‘India’s oldest Co-operative Bank’  at Annual General Meeting of ‘National Federation of Urban Co-operative Banks and Credit Societies Ltd (NAFCUB) in New Delhi.

The Vice Chairman of Cosmos Bank, Mr Krishnakumar Goyal was honored with a trophy by Mr H K Patil, the President of ‘NAFCUB’.

The Cosmos Bank with its history of 106 years of glory was specially honored at this occasion.

Cosmos Bank is the leading Co-operative Bank in Co-operative sector of India with 119 branches and extension counters in 6 states. At present Bank has a total financial set-up of more than Rs. 21,800 cr.

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Courtesy : www.indiancooperative.com

Malegam Report to be implemented soon: RBI

Participating in a Punjab and Maharashtra cooperative bank event in Bombay H R Khan Deputy Governor of the RBI said the apex bank would soon implement the suggestions made by the Malegam Committee on the cooperative banks.

The committee, among other things, has recommended a dual approach of having a board of directors   appoint a board of management to run the cooperative banks and a relaxation of entry norms for the cooperative banks in the areas not yet covered by banking services, the RBI deputy added.

Mr Khan urged the cooperative banks to put in their utmost efforts to expand their business as their growth thus far leaves a lot to be desired. The share of the cooperative banks in banking business has gone down from six percent to a mere two percent, he noted.

However, the RBI deputy governor lauded the cooperative banking sector for improving its assets   quality and accomplishing mergers of weaker links with stronger ones in its chain.

Main recommendations of Malegam Report

UCBs play a useful role and there is need for a greater presence of UCBs in unbanked districts and in centers having population less than 5 lakh. It is necessary to encourage new entrants to open banks and branches in States and Districts which are unbanked or inadequately banked. It is equally necessary to discourage new entrants from opening branches in Districts and population centers which are already adequately banked.

The existing well managed co-operative credit societies meeting certain financial criteria like profits, capital adequacy, NPAs’ proportion etc. should be given priority for granting licenses as urban co-operative banks particularly in unbanked or inadequately banked centers.

Organization Structure of New UCBs

There should be segregation of the ownership of the UCB as a co-operative society from its functioning as a bank. The new organization structure shall consist of a Board of Management in addition to the Board of Directors.

The Board of Directors (BoD) would be elected in accordance with the provisions of the respective Co-operative Societies Acts and would be regulated and controlled by the RCS / CRCS.

The (BoD) will establish a Board of Management (BoM), consisting of persons with professional skills, which shall be entrusted with the responsibility for the control and direction of the affairs of the Bank assisted by a CEO who shall have the responsibility for the management of the Bank.

RBI would have unfettered powers to control and regulate the functioning of the UCB and of its BoM and of the CEO in exactly the same way as it controls and regulates the functioning of the Board of Directors and the Chief Executive in the case of a commercial bank.

It should be made a condition of the license that every new UCB should be required to have a Board of Management (BoM) to be appointed by the Board of Directors (BoD) and a Chief Executive Officer (CEO) to be appointed by the BoM. While the BoD will be responsible for laying down the broad contours of strategy, the BoM will be vested with the mandate to direct and control the day-to-day operations of the UCB within the limits set by the BoD. At least 51 per cent of the members of the BoM should have special knowledge or practical experience in the matters specified in Section 10 A(2) of the B. R. Act, 1949.

Members of the BoD can be members of the BOM provided they fulfill the conditions specified. Members of the BoM can be paid such sitting fees as the BOD may decide subject to a ceiling to be specified by RBI. The BoM to follow a Code of Corporate Governance to be specified by RBI.

The CEO shall be responsible for the management of the whole or substantially the whole of the affairs of the UCB but shall be subject to the control and direction of the BoM. The appointment of the CEO shall be subject to the prior approval of RBI.

Audit by a Chartered Accountant to be appointed by the BoM from out of a panel of approved auditors maintained by RBI and subject to rotation after four years.

Umbrella Organization

There should be two separate Umbrella Organizations viz. a national level organization which provides payments and settlement services and other services normally provided by central banks as also liquidity support to its members; and one or more organizations which provide the management, IT, training and other services which the UCB sector needs.

The national level UO should preferably be in the form of a multi-state UCB with membership being restricted to and mandatory for all UCBs other than scheduled UCBs.

Member UCBs should be required to maintain their CRR in the form of deposits with the UO.

The UO should invest its funds only in the form of balances with RBI, deposits with commercial banks or in SLR securities and in no other form.

The UO should offer Repos and Reverse Repos facilities to UCBs in the same manner as RBI offers to commercial banks and at the same rates of interest.  In turn, it should enjoy Repos and Reverse Repos facilities with RBI.

UCBs can avail of Repos facilities only to the extent of their excess SLR holdings.

Until the Payments and Settlements facilities are provided directly to UCBs, the UO will act as a gateway to provide these services for a fee to UCBs. In turn, the UO will be a member of the Payments and Settlement System.

Being a UCB, the UO would have a Board of Management and will be subject to the regulation, supervision and inspection of RBI.

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Courtesy : www.indiancooperative.com

PSU, other banks flock to portal for resolution of NPAs

AHMEDABAD, OCT 3: 

Indian banks and financial institutions, which had cumulative non-performing assets (NPAs) worth about Rs 1.25 lakh crore by March 2012, are seeking help from a dedicated portal for resolution of their NPAs.

Public sector banks such as State Bank of India, Bank of India, Indian Overseas Bank and others including IDBI Bank and Nabard, have started posting their NPA recovery notices on the portal NPAsource.com in the hope of an early resolution, Mr Devendra Jain, Chairman of Atishya Group, which floated the dedicated portal last year, toldBusiness Line here.

Between March 2011 and March 2012, the cumulative NPAs of banks and financial institutions (FIs) in India increased from Rs 94,000 crore to Rs 1.25 lakh crore, he said. Banks and FIs post their advertisements and notices on the portal, for a fee, expecting a global response to their efforts at resolution unlike newspaper advertisements which have a short-time, local exposure. “We also track the developments on these NPAs.”

A month ago, NPAsource.com opened an office in Dubai where it is in talks with some Gulf-based banks as well for utilising the portal’s services to resolve their NPAs and get their corporate clients to consider buying NPA properties in India. The portal plans to go global with its branches in the USA and Europe, besides New Delhi and Bangalore, in the next one year, and would also appoint franchisees across 30 major cities in India.

Jain said with more banks joining the league and sharing more details on their NPAs, the portal expects that these banks could get better value for their NPA resolutions.

NPAsource.com, that offers as an alternative to the banks and FIs to resolve their NPAs through dedicated service, is the third such portal in India, the other two being BankDRT and foreclosureindia.com. The portal offers a one-stop-solution to all stakeholders including lenders, borrowers, investors and facilitators who can access data on a single platform for resolution of NPAs.

In one year of its existence, NPAsource.com has generated resolutions worth Rs 1,000 crore and expects to increase it to Rs 5,000 crore in a couple of years, he said. Besides, he said, the portal is also helping in the revival of some enterprises through restructuring of debt etc.

The Gujarat Urban Cooperative Bank Federation (GUCBF), the apex cooperative body for the 244 urban cooperative banks in the state, has recommended to its member banks to use the facilities offered by NPAsource.com to resolve their NPA-related problems, Jain added.

The portal currently has more than 1,000 registered users comprising banks, corporates, chartered accountants’ firms, lawyers, tax consultants and real estate brokers. NPAsource.com has registered NPA properties worth over Rs 13,000 crore in the first year of its operations.

Courtesy : The Hindu Business Line

Peons are managers at Rajasthan co-op bank

Living in the times of recession, 'staff crunch' is a term which one gets to hear pretty often, as offices go for downsizing to save cost. 

However, the Ajmer Urban Co-operative Bank has taken this to another level. Two of its branches located in Kekri and Bijainagar, some 80 km and 65 km from Ajmer, respectively, are being run by peons ever since the managers retired on July 31. 

The group IV employees (peons) in these two branches of the bank, the only two to be located outside the city, double up as cashiers as well as branch managers after the Ajmer Urban Co-operative Bank, set up in 1923, decided not to fill up the posts which had fallen vacant recently. 

Enlarge 

MISMANAGERS? Prem Chand Chauhan (L) and Kailash Chandra Vijayvargiya.

The bank's decision, to a certain respect, was influenced by the fact that the Reserve Bank of India (RBI) had put it on the watch list two years back because of financial irregularities. 

The RBI had also dissolved the bank's board of directors and introduced certain riders on the functioning of the bank. 

However, the RBI did allow the bank to make payments on the fixed deposits upon maturity while it was also allowed to recover outstanding loans from its clients, said Kailash Chandra Vijayvargiya, the peon at the Kekri branch of the bank. 

Vijayvargiya, 43, who took over from Dinesh Gupta, who retired on July 31 as its manager, said ever since, he has been managing the 2,000 savings accounts and around 100 loan accounts with the branch, besides a large number of fixed deposits. 

The total deposits with the branch are over Rs 2 crore, he added. 

Similarly, Prem Chand Chauhan, also a class IV employee, has been managing the affairs of the Bijainagar branch ever since branch manager Babu Lal Marodhia retired on July 31. 

This branch has deposits to the tune of over Rs 1.5 crore. Mukul Kashyap, the managing director of the co-operative bank, conceded the two branches of the bank were being run by peons. 

'We don't have the staff. Those who were working earlier retired over a period of time. If granted permission, the two branches would be closed down,' Kashyap said. 

Joint registrar in the co-operative department, Shakeel Ahmad, said though as per rules peons are not entitled to run branches, in the absence of proper staff there was no alternative left.

Now that the managing director of the bank is not interested in running the two branches, he has been asked to submit a proposal accordingly, he added.

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courtesy : www.dailymail.co.uk

Reserve Bank of India : Working Group on Cloud computing option for small size UCBs

The Reserve Bank of India has today placed on its website, the report of the Working Group on Cloud computing option for small size Urban Co-operative Banks (UCBs). The Working Group comprising senior officers from the Reserve Bank, experts from the software industry and eminent professors from academia was set up in July 2012. The Working Group reviewed the profile of the sector, technological trends in Cloud Computing and use of cloud like solutions within UCBs. Based on the analysis, the Working Group has suggested its approach for Cloud computing option.

The study observed that many Urban Cooperative banks have been providing IT support to other cooperative banks which included sharing of Data Centre and DR sites, Automated Teller Machines and Payment Gateways. Some of these banks were also providing their software solutions as outright sale or fees based ASP model. It was observed that two leading software company had been also offering cloud like services which included core banking as well as many other solutions such as HR solutions, e-mail, storage, etc which the banks could choose. These services were mostly on private cloud like set up.

The Working Group has recommended caution while adopting cloud computing solutions by the Urban Cooperative banks till such time that all issues related to its standards and technology management processes are understood and resolved. In cases where such innovative solutions are already adopted, the Working Group has recommended that the issues identified in this report may be examined on the lines indicated in the report to ensure adequacy of risk mitigation measures and to address concern regarding data security and data privacy in the multi-tenancy environment. Finally the Working Group has identified the need for further study in the area of Cloud Governance, Cloud Audit, Cloud Management and Cloud Security Technology.

R. R. Sinha

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Courtesy : www.4-traders.com

RBI to take up deposit-to-equity proposals by UCBs

MUMBAI, SEPT 26: 

The Reserve Bank of India will consider financial restructuring proposals of stressed urban co-operative banks (UCBs) involving conversion of deposits into equity or debt instruments.

This move comes as financially stronger banks are unwilling to acquire weak UCBs, where the deposit erosion is large. In such situations, restructuring of the liabilities (deposits) of the weak UCB may be a viable proposition, said the RBI

The conversion of deposits will be considered even if the lenders’ networth (equity plus reserves) does not become positive post-conversion, said a central bank circular.

However, the conversion of deposits will be subject to the consent of depositors, including small depositors, the Reserve Bank of India (RBI) said in a notification.

Earlier, the RBI did not permit conversion into equity in the case of small depositors, i.e. depositor having deposit up to Rupees one lakh.

NET WORTH

Further, it had stipulated that the proportion of deposits converted into equity / debt instruments should be such that the net worth of the bank after reconstruction turns positive.

According to Jyotindra Mehta, Chairman, Gujarat Urban Co-operative Banks’ Federation. “Once deposits get converted into equity, a weak UCB’s liability will go down and its networth will increase. This move will help in its revival.”

Depositors, especially above Rs one lakh, may stand to gain from restructuring compared to what they would be entitled to receive from the Deposit Insurance Credit Guarantee Corporation in case of liquidation of the bank.

The RBI said the clause in the earlier notification whereby a portion of the deposit of individual depositors above Rs one lakh may be converted into equity holds good.

INSTITUTIONAL DEPOSITORS

Likewise, a portion of the deposits of the institutional depositors may be converted into Innovative Perpetual Debt Instrument (IPDI), which is eligible for inclusion as Tier I capital.

The total amount raised by a bank through IPDIs cannot exceed 15 per cent of its core capital. These are perpetual instruments with no maturity. The interest payable to the investors is either at a fixed rate or at a floating rate referenced to a market determined rupee interest benchmark rate.

IPDIs come only with call option, which can be exercised by the bank after 10 years.

Courtesy : The Hindu Business Line

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More news on the subject :

http://articles.economictimes.indiatimes.com/2012-09-26/news/34101906_1_ipdi-urban-co-operative-banks-depositors

http://www.moneylife.in/article/rbi-to-consider-financial-restructuring-proposals-of-ucbs/28699.html