'Ability of big banks and agility of small banks'. That's how the Karnataka-based Sri Raghavendra Sahakara Bank, an urban cooperative bank, described itself. The bank saw an aggressive growth both in deposits and advances over the last five years. In fact, the deposits as well as advances grew at a compounded rate of over 22 per cent over the last five years. In a credit freeze situation post IL&FS debacle and amid the slowdown in the economy, most of lending institutions were caught with asset liability mismatches. In many cases , the money has been extended to groups or companies with not-so-good credentials. The cooperative banking lending practices are also coming under the scanner as they are not able to pay back the depositors because of money stuck in bad assets.
Sri Raghavendra is the newest urban cooperative bank to have come under the Reserve Bank of India's (RBI) monitoring. Let's look at the financial details of the bank.
The bank has a deposit base of around Rs 1,600 crore. It has almost trebled its deposit base over the last five years. The deposit grew from Rs 500 crore in 2013-14 to Rs 1,600 crore in 2017-18. This was mainly because of higher savings and fixed deposit rates. The bank has several fixed deposit schemes offering 7.50 -8 per cent per annum. The RBI has now restricted the withdrawal of deposits to only Rs 35,000 for savings and current account holders.
Loans and Advances
The bank's website doesn't have any details of loan and advances or the loan products where it would utilise the deposits. There is no mention of retail or business loans. While there are reports of dud lending accounts, the RBI investigations would reveal the real picture. Currently , the RBI has directed the bank not to renew any loans & advances or incur any new liability.
The bank initially started with higher gross NPAs of 3.10 per cent in 2008-09. In fact , the highest NPAs were in 2009-10 when it reported 4.67 per cent gross NPAs. But later the NPAs started falling. Part of the reason was higher denominator effect as lending expanded big time. As per the audited figures for 2017-18 , the bank had a meagre NPA of 0.45 per cent in 2017-18. The clear picture of NPAs would emerge only after the RBI fully inspects its books. In case of Punjab and Maharashtra (PMC) Bank, the investigating agencies found money was diverted to a select business house. The PMC Bank, too, showed the lowest NPAs before the RBI took it under its fold.
Profits and dividends
The bank has been paying annual dividend of 16 per cent since 2013-14. The dividend has remained in the range of 12-15 per cent since 2008-09. The bank's profits jumped from Rs 7 crore in 2013-14 to Rs 28.32 crore in 2017-18. The bank has been consistently making money over the last decade.