The Maharashtra State Cooperative Bank (MSCB), which is under administrator’s rule since May, has missed the March 31 deadline for getting a banking licence from the Reserve Bank of India.
The state cooperation department confirmed this development saying that the delay was due to procedural issues. The department said it hoped RBI to issue the licence on Monday or this week, as it has reconfirmed fulfilment of necessary criteria with RBI and Nabard. The banking licence for MSCB was made mandatory according to the Rakesh Mohan Committee report.
There are 134 banks that have not received licences from RBI. MSCB was one of the four state cooperative banks yet to qualify for licence reissue. Of the 31 state cooperative banks, 25 have got licences. If the banks are unable to get licence, they have to either become a cooperative credit society or merge with another bank.
However, a senior government official told Business Standard, “MSCB has already sought two month from the RBI if it does not receive banking licence by March 31. Banking licence for MSCB is crucial for the bank to regain is past glory and enhance credibility.
This would also facilitate MSCB getting better credit rating by the banking regulator, auditors and the state government. Banking licence will help MSCB to establish ATMs. MSCB’s forex operations will gain as some relaxations are expected from overseas bankers. Risk management parameters by other banks can be modified.”
The official said the bank has fulfilled all requirements relating to positive net worth, 4 per cent capital to risk assets ratio (CRAR) as mandated by RBI and National Bank for Agriculture and Rural Development.
“MSCB has achieved CRAR of 5.76 per cent. The government has provided Rs 50 crore in the supplementary demands presented to the state legislature on March 17. This has helped MSCB to fulfill Nabard’s condition of achieving 4 per cent CRAR as Nabard in its audit report for 2010-11 had shown 3.95 per cent CRAR.”
However, the official informed that MSCB’s risk weighted assets are worth Rs 9,902.26 crore. Further, MSCB’s net NPA reported well below 5 per cent at 4.27 per cent which is Rs 375 crore by end of March 2011 and the gross NPA at Rs 2,584.87 crore (23.52 per cent). The official said that MSCB has already invoked a state government guarantee of Rs 2,022 crore.
