Re-deployment of staff, judicious utilisation of assets mortgaged by defaulters, seeking financial and technical support from the National Bank for Agriculture and Rural Development (Nabard) and shutting down unproductive branches were some of the key initiatives considered to revive the financially strained Puducherry State Cooperative Society (PSCS) Bank. These decisions were taken at a high-level meeting.
With an accumulated non-performing assets (NPA) of about ₹64 crore, the risk-asset ratio of the bank had dipped to 8.52%, which is below the mandatory ratio recommended by the Reserve Bank of India.
As per the banking norms, the risk-asset ratio should not go below 9%, said a senior government official who deals with the PSCS Bank.
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As an immediate solution, the bank sought permission from the Nabard, the inspecting authority, to show 10% of its NPA in the balance sheet to tide over the crisis.
Loan amount
Nabard agreed to provide a loan to the government so that the amount could be parked in the cooperative society.
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The loan amount could be invested in the bank as government share so that it had adequate capital to deal with the risk. The inspecting authority had agreed to depute two of its staff as General Manager and Managing Director. Hitherto, the bank was functioning without the two important posts, the official said.
A proposal was being mooted to utilise the assets of the Pondicherry State Weavers’ Cooperative Society, The Pondicherry Cooperative Handloom Export Development Project, sugar mills and spinning mills. These were considered main defaulters who had pledged their property as collateral for the loans availed.
The Registrar of Cooperative Societies had been directed to insist that various defaulting societies should route their financial transactions through the PSCS.
Another key decision was to close down some of the newly opened branches.
Except the one at Tirunallar, branches at Kirumampakkam, Thavalakuppam, Sorapet, and Sederapet are loss-making units.
The unviable branches would be merged with nearby units and the manpower re-deployed, said the official. The inspecting authority had agreed to help the bank in proper re-deployment of the 282 employees working with 28 branches across the Union Territory.
All these proposals would be sent to the Cabinet for approval. “The Cabinet is the final authority in deciding on the proposals,” said the official.
On Monday, Lieutenant Governor Kiran Bedi chaired a meeting with officials from the Nabard, the Reserve Bank of India and senior officials to find a way to revive and professionally run the PSCS.
Ms. Bedi, in a message, said the bank was on the road to adopting total professional management. “It was a productive meeting. It is on the road to total professional management,” she said.