Banking Frontiers – July 2019

Cooperative

While the bank has operational constraints, it is effectively utilizing its

available resources:

M

umbai-based the Municipal

Cooperative Bank functions with

the sole objective of catering to

financial needs of the staff of the Municipal

Corporation of Greater Mumbai (MCGM),

especially the class IV employees. It is a

salary earner’s non-scheduled, primary

urban cooperative bank, the municipal

employees being its members. Advances are

restricted to full time employees of MCGM,

but the general public an avail of other

banking facilities. Its area of operation is

the city of Mumbai and it does not cater to

the needs of farmers.

According to Milin Sawant, chairman

of the bank, the bank has a customer

base 166,962 as on 31 March 2019, of

which members are 84,976. It added

3839 members in the past financial year.

However, retirements and deaths of

members the number got is reduced by

4366. The rest are non-members, who are
      either general public or retired employees
      of the municipal corporation, who entrust
      their terminal/retirement funds with the
      bank. Sawant adds these members can
      open their pension savings accounts with
      the bank.

GROWTH: DEPOSITS 8%, LOANS 3%

The bank’s members generally need

consumption loans, which are termed

as ‘medium term loans’, in order to

meet their family needs like children’s

school fees, repairs and renovation of

residential premises, marriages in the

family, hospitalization expenses for critical

ailment/major diseases, higher education

of children/wards, purchase of certain

items to increase standard of living, etc.

Says Sawant: “Our total of deposits in 2018-

19 stood at `34.81 billion and deposits

collected in 2018-19 are of the order of

`2.55 billion, out of which `1.39 billion is

towards CASA, which comes to 29.77%. On

yoy basis, the growth in deposits is 7.91%.

The total amount of advances is `24.09

billion, signifying a 2.91% yoy increase.”

The bank follows a simple process for

credit appraisals. It has its internal rules

for sanction of loans and recoveries are

through salary deductions. It has developed

a loan origination module, through which

all data is fetched related to loans and past

salaries of the members. If the borrower

member fulfils the bank’s parameters,

his/her loan application with all relevant

documents are prepared at the branch level

and the completed forms are then sent to

sub-committee of the board of directors

for sanction and upon sanction, the loan

amount is disbursed centrally. A person can

get loans up to `1.25 million and provided

the documentation is proper, he can get the

loan within 3 days of application.

Sawant says since the implementation

of 7th pay commission in MCGM, the

advances have come down as compared

to growth in the last year. “However, we

are hopeful that once they start spending

with higher income in their hand and

consumption pattern changes as there is

more income at disposal and they tend to

go for lifestyle products shopping, there will

be a boost demand for advances in the near

future,” he adds.

The bank offers housing loans at interest

rate of 8.5% per annum and one can get up

to `7 million Sawant says the home loan

portfolio of the bank is at `120 million in

the last financial year. However, the bank

does not offer home loans in case of joint

applicants, and when the joint applicant is

not a member of the bank.

The investments of the bank have risen

to `15.83 billion, recording yoy growth

of 9.49% and interest on investments

increased to `1.15 billion with yoy growth

of 11.05%.

NO NETWORK EXPANSION

The bank has 22 branches and 10 ATMs,

including 8 onsite ATMs. During the last

financial year, it could not add any new

branch or ATM. Sawant says instead

of spending much on branch and ATM

infrastructure, the bank is now focusing on

alternate channels. The bank is providing

24x7 security at all ATMs with round the

clock CCTV surveillance systems.

STAFF REDEPLOYMENT

One of the major sources of revenue for the

bank had been the octroi collection in the

city. However, post the implementation

of GST and abolition of octroi, the bank

had 86 excess staff but it did not get rid

of these people as they were reassigned to

handle certain tasks, which were hitherto

outsourced after a cost benefit analysis.

However, the staff cost has marginally

decreased to `398.8 million in 2018-19

from `408.4 million in its previous year.

Milin Sawant explains that

Municipal Cooperative Bank is

shifting focus from branches

and ATMs to alternate

channels

Municipal Cooperative Bank shifts

focus to alternate channels