The Maharashtra State Cooperative Bank (MSCB) has announced 10 per cent dividend for its shareholders for the financial year 2023-24. The Bank that had been in deep losses of around Rs 1,100 crore in 2010 touched the landmarks Rs 57,265 crore annual turnover, Rs 615 crore net profit, Rs 6,530 crore of owned funds and net worth of Rs 4,618 crore for the first time in 113 years of its operations. In an interview to The Perfect Voice’s Political Editor Abhijit Mulye the Chairman of the administrative board Vidyadhar Anaskar narrates the bank’s success story. Excerpts…
How the MSCB earned profit after being ruined?
Big Co-Operative institutions, that too primarily the Co-Operative Sugar Mills in the state are our primary customers. The bank had traditionally followed the principle of surety-based loans. It sounds good that Rs 100 crore have been lent against Rs 800 crore worth of a sugar mill. But, when loans turned bad it was realised that realising the surety property was not feasible. Hence, we took a different approach. We tried to raise the repayment capacity of our customers. For that we taught financial discipline to sugar mills. We developed a rating system and charged differential rates to the mills based on their ratings for financial discipline. This improved their financial health and our recovery. Secondly, we recovered Rs 1049 crore towards the default guarantee given to the sugar mills by the state government. This quickly brought drown our losses. But, that was not all. We had to work on several other aspects also.
You are the only cooperative bank in the country, which has announced pension to its employees. How?
Among the several steps that we took to put the bank back on the profit track majority were related to the employees. There were 3200 employees in the bank when I took the charge as the administrator. We brought in an attractive VRS scheme and now we have a total of 752 staff. After VRS we recruited some new staff also. We needed new skills and well educated staff. We gave them an extensive training. Then we brought in the pension scheme to ensure that the employees won’t leave. We have been setting aside some funds, around 0.25 per cent of our net profits, for the employee benefits. We used those funds to be able to give Rs 10,000 as pension for the employees.
What lessons did you learn from the previous mistakes?
As I earlier said all our loans used to be surety-based loans. But, we realised that it was easier to go in for out of court settlements than pursuing legal procedure to get back the lent money. We started ensuring the repayment capacity of our customers. We brought in a rating model for our customers based on their financial discipline, wherein they would get loans on lowest rates if they have very well maintained financial discipline. Initially people were weary of the scheme. But, once they realised the benefits, and they are huge since even one percent rate cut means huge when loans are in hundreds of crore rupees, they started falling in line.
Are you still providing loans to sugar mills?
As lenders, we now don’t just look at the assets they are holding. But we ensure that they have robust systems in place to be able to repay loans. We also realised that since the cooperative sugar mills are part of an ecosystem, it is difficult to sell them off. And only buyers one would get are from private sector. So, we came up with a new system of renting the sugar mills. We gave them back to the stakeholders on long term leases of 20-25 years while ensuring that they have good financial discipline in place. That way the ecosystem keeps working, rural economy keeps rolling and the rent we get goes directly to the repayment kitty, means we don’t have to worry about that. Once all this was set, we even came out with Atmanirbhar Scheme to disburse loans to all sugar mills, cotton ginning and pressing mills. With this scheme we lent support to them when they needed it the most and won their trust. Most of those loans have already been recovered.
There was allegedly a scam called MSCB scam. What is it?
I wonder from where the figure of Rs 25,000 crore was brought in. Scam can happen in disbursal of loans. If we consider that all loans disbursed during that period were ‘scam’ then the total loans disbursed during that period are around Rs 7,997 crore. If that is so, how can there be a scam of Rs 25,000 crore. I frankly feel that if they wanted to act against a particular political leader, they should have called it XYZ scam instead of calling it MSCB scam. It unnecessarily tarnished our image and several of our staff had to live under unnecessary stress for a long time.
What kind of help do you expect from government?
If Co-Operatives is brought under concurrent list much of our headache will be reduced. Also, the subject needs to be made a part of the school curriculum. Unless we do that the future for the Co-Operatives sector is bleak.
What are the future plans?
We at MSCB now have very strong financials. We are the top performer as per the performance assessment norms developed by the NABARD. And we are very close to the Bank Of Maharashtra in terms of financials. So, I would like us to compete with and surpass the nationalised bank. That is our target as of now.
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