Despite best efforts by the RBI-appointed committee, headed by Satyaprakash Pathak, Mumbai-based Abhyudaya Cooperative Bank continues to be in the red, with losses accumulating to Rs 371.50 crore. Supporters of the bank argue that the new team has had little time to bring about the turnaround, as the RBI superseded Abhyudaya Co-op Bank’s board only in November 2023.
The latest figures for the financial year reveal that its deposits and advances have declined to around Rs 2,300 crore, with a accumulated loss of Rs 371.50 crore. The bank’s gross NPA (Non-Performing Assets) and net NPA stand at 20.40% and 9.70%, respectively.
A committee appointed by the RBI, chaired by Satyaprakash Pathak, former Chief General Manager of the State Bank of India, managed to stabilize performance for the 2023-24 fiscal year. However, the committee was unable to bring about a significant improvement in the bank’s financial health as it got little time, say insiders..
The bank’s deposits fell from Rs 10,776.06 crore in the 2022-23 fiscal year to Rs 9,118.40 crore as of March 31, 2024, reflecting a reduction of Rs 1,657.66 crore or 15.38%. Similarly, advances dropped from Rs 6,281.07 crore on March 31, 2023, to Rs 5,590.86 crore, a reduction of Rs 690.21 crore or 10.99%. Consequently, the total business decreased from Rs 17,057.13 crore in 2022-23 to Rs 14,709.26 crore as of March 31, 2024, amounting to a decline of Rs 2,347.87 crore.
During its 61st Annual General Meeting, held on September 26, 2024, in Navi Mumbai, the administrator’s committee, led by Pathak, reassured shareholders of their commitment to improving the bank’s standing in the years ahead.
Former chairman Sandeep Ghandat raised concerns at the meeting, particularly highlighting a recent amendment that disqualifies any board member of a superseded multi-state cooperative society or bank from serving as a director for five years.
As of the end of the fiscal year, the bank’s Capital to Risk-Weighted Assets Ratio (CRAR) stood at 2.11%, and its net worth was recorded at Rs -223.52 crore, according to the bank’s annual report.
The committee managed to generate an operating profit of Rs 39.84 crore during the year, a marked improvement from Rs 13.98 crore the previous year. While the bank recorded a net loss, it was slightly reduced compared to the previous year. For the 2023-24 fiscal year, the bank earned gross income of Rs 879.33 crore, down from Rs 905.53 crore the year before.
The bank made provisions totaling Rs 399.21 crore, which included Rs 93.27 crore for BDDR (Bad and Doubtful Debts Reserve), Rs 25.62 crore for investment depreciation, Rs 278.51 crore for security receipts (of which Rs 193.13 crore related to prior years), and Rs 1.81 crore for contingent liabilities. As a result, a accumulated loss of Rs 371.50 crore was carried forward to the balance sheet, compared to a net loss of Rs 193.57 crore in 2022-23.
The 61st annual report revealed that the former board, chaired by Ghandat, had failed to make necessary provisions in previous years. Had the provisions been made in the 2022-23 fiscal year, the net loss, which is currently Rs 236.40 crore, would have been Rs 457.60 crore. In 2023-24, the net loss stood at Rs 224.15 crore.
On a positive note, the number of shareholders increased from 247,601 to 254,640, with 7,355 new members joining and 316 members exiting. The paid-up share capital rose from Rs 215.86 crore in 2023-24 to Rs 235.35 crore by March 31, 2024.
The committee expressed regret for not being able to recommend dividends to shareholders and PNCPS (Perpetual Non-Cumulative Preference Shares) holders for the 2023-24 fiscal year. The bank has not paid a dividend since the 2014-15 fiscal year, except for a 5% dividend in 2018-19.
To increase its deposit base and enhance its loan portfolio, the committee introduced new deposit and loan schemes offering special concessional interest rates. The committee is focused on preventing new slippages and is confident of reducing both gross and net NPAs by March 31, 2025. A provision of Rs 650.97 crore was made towards BDDR in the 2023-24 fiscal year, in line with the required provision of Rs 650.93 crore.
During the year, no accounts were written off, and the bank recovered Rs 4.92 crore from previously written-off accounts. As of March 31, 2024, the gross NPA and net NPA were at 20.40% and 9.70%, respectively.
The bank also sold five premises for a total of Rs 13.46 crore, against a reserved price of Rs 11.33 crore. However, it did not open any new branches during the year and closed three, merging them with others.
(Several of our readers reacted to the original piece, stating that it failed to acknowledge the efforts made by the RBI-appointed committee. They argue that the new team has had little time to make significant changes and that our news portal has always supported the efforts of a well-meaning team. In response to our readers, we have aimed to provide more context and clarity.)