Tuesday , 25 September 2018

“There has to be objectivity in granting loans”

Umesh Zantye, director, Bicholim Urban Cooperative Bank is a veteran in Goa’s co-operative sector. In his long years of association, he has seen cooperative banks grow from the initial years of trying to enroll shareholders to the hyper busy period of the mining boom and the current phase of coping with tighter controls and competition. In the interview with Shoma Patnaik, he discusses issues impacting the working of cooperatives and his bank’s strong financial position. Zantye has been adjudged as the best chairman in Goa’s cooperative industry during the Cooperative Week 2017 celebrations starting November 14-20 and he is very happy with the citation

  1. Most of Goa’s urban cooperative banks and credit societies that run on people’s money have turned financially weak. Why?

I should not comment being a part of the industry but it could be because of the directors and the chairmen. They play a very important role in the strength and stability of the bank. They have to be sincere in their roles, especially the chairman on whose shoulders rests the final responsibility. People should have confidence and faith in the chairman. There has to be objectivity in granting loans. There can be no kickbacks.  Because if there are kickbacks how can you insist on regular payment of premium. Poor recoveries and non performing assets (NPAs) are the main problem in cooperative banks and credit societies. But I should not be discussing others. Further not all are financially unstable. Ours is a strong bank proved by RBI’s ‘A’ rating in the last audit,  conducted about four months back.  It is because of people’s faith in me as the chairman. We are strong in service, sincerity and professional management.


  1. Do you think cooperative banks and credit societies need increased supervision?

Yes, especially the urban credit societies that are too many and not being adequately regulated because of the numbers. In Bicholim alone there are 10-15 urban credit societies. Coming to urban banks, supervision on them in Goa has increased after the RBI set up a local office. Thanks to the local office of the RBI urban banks are being audited every year which is actually a good thing.


  1. What is your opinion on the capital adequacy framework stipulated by the RBI which is making all banks, including urban cooperative banks, go into the red?

They are stringent but it has to be followed. In a way it is good because we are on the toes with recoveries.  Overall we take RBI’s recommendation in our stride and try to implement it.

  1. What is Bicholim Urban’s NPAs as of now?

Our gross NPA is 4.6 per cent of the advances and net NPA 1.2 per cent. By March 31 2017 we are aiming for zero NPAs. We have two sticky loan accounts of mining machinery which we expect to recover as the party is expected to settle up.  We were the first to put a halt to mining exposure during the period of boom because we felt that the bubble could burst anytime.  Our loan process is very objective. Each application is scrutinized and passed only after the recommendation of the branch manager. There is never any interference from the board in the passing of loans.


  1. Which are the key areas of your advances and what is the credit-deposit (CD) ratio?

We have exposure in all segments excluding loans to builders. We also do not do loan against gold jewelry which according to me is another problem area. We are fairly confident of deposits and look for quality advances in all segments, including housing loans, auto finance, etc.  Our deposits as on September 30 2017 is Rs 477.8 crore, advances Rs 298.1 crore which implies CD ratio of 62 per cent.


  1. So, what are Bicholim Urban’s plans for the future?

We plan to open more ATMs. At present there are six ATMs and the seventh is coming up at Curchorem. There are no plans of new branches and the existing network is of 11 branches. We are going to focus on mobile banking and digital. We are looking out for a portfolio manager to manage the surplus funds that is invested in permitted securities. Our plans are to emphasize professional management. We are always looking for talent from nationalised banks to infuse additional professionalism in the working.

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