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GSCB: The road ahead

With several new developments on the way, the road ahead for Goa State Co-operative Bank (GSCB) looks interesting, says
Shoma Patnaik

For Goa State Co-operative Bank (GSCB) that is presently in stabilizing mode the current year 2019-20 is important in many ways.

The bank looks on the verge of a final turnaround after two years of successful restructuring. A hat trick in profits achieved during the year could see GSCB wiping off its accumulated losses and finally turning financially solvent. 

Another significant event coming up is elections for the board of directors as ordered by the high court. With a change in management year 2019 overall looks significant for GSCB as it braces itself for the action ahead.

Previous year 2018-19, ended on a good note for GSCB as deposits and advances grew satisfactorily to Rs 2450.4 crore and Rs 1567.1 crore respectively. Due to strong grip on costs the net profit jumped to Rs 34.6 crore from Rs 10.8 crore in 2017-18. The share capital that at one time was nearly wiped off is at reassuring Rs 80.4 crore. The shortfall in capital-to-risk-adequacy-ratio (CRAR) however remains at 6.5 per cent vis-à-vis the stipulated norm of nine per cent.

GSCB is presently under government control with powers vested in the hands of a three-member committee of administrators since September 1 2017. However a writ petition filed in the High Court of Bombay at Goa ruled that elections must be held within four months. While the government had pleaded that until the accumulated loss of Rs 22 crore is converted into profit the term of the committee should be allowed to continue, the court ruled in favour of the petitioners who had appealed for elections. The order by the High Court of Bombay at Goa was on May 2 2019.

Prabhu Verlekar, chairman, administrator committee, says that, for the last two years the committee members have worked hard towards putting things in order. Expressing confidence that the measures implemented for revival will help in maintaining the future momentum of profits, he says, “In 2019-20 the net profit is expected to increase. It will wipe off the accumulated loss and make the bank compliant on CRAR.”

According to Verlekar, the challenges ahead are coping with the restrictions imposed by the RBI. “Thanks to the restrictions the bank cannot advance loans more than Rs 25 lakh to its shareholders. It is not able to obtain refinance at concessional rates and also not allowed to invest in NABARD bonds which carry a higher interest rate,” he says 

On the NPA front that was Rs 69 crore in 2017-18, Verlekar explains that, recovery measures are on to cut down the bad loans. In future the bank is planning to exert strict check on credit worthiness of borrowers before extending loans. “The bank now is targeting government employees for business. Salaried class with regular income and who will not default on loan repayments,” says

Meanwhile, GSCB also has on agenda the bifurcation of its Daman & Diu branches. The process of bifurcation was started about five years back but is put on hold now as the RBI has withdrawn permission to it until CRAR compliance.

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