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BL Research Bureau
The RBI’s directions on the Punjab and Maharashtra Co-operative Bank (PMC) may not be an isolated case, but it definitely is not one of your run-of-the-mill crisis at cooperative banks, given the size of PMC Bank’s balance sheet (Rs 13,600 crore). The bank’s total asset base is larger than many small finance banks and even comparable to say Catholic Syrian Bank (total asset base of about Rs 16,000 crore) which is expected to come out with its IPO soon.
Also read:RBI puts Mumbai-based PMC Bank under directions
Sample this: As of March 2019, PMC Bank has a deposit base of Rs 11,600 crore. This is far higher than the deposit base of say Equitas or Ujjivan Small Finance Bank (Rs 8000-9000 crore).
Of PMC Bank’s total deposits, Rs 2300 crore is savings and current account deposits while Rs 9300 crore is fixed deposits. The bank’s annual report reveals tell-tale signs of stress in FY19, with a sharp Rs 303 crore addition to a bad loan book of Rs 148 crore.
Read more:PMC Bank crisis: Should depositors worry about cooperative banks?
Business performance
PMC Bank’s advances stood at Rs 8383 crore as of March 2019, an increase of about 13 per cent over the previous year. The bank had shifted focus to priority sector advances—MSME loans---to meet the RBI’s regulatory requirement. The bank also has tie-up with National Housing Bank (the Nodal Agency) to provide Credit linked subsidy scheme – Pradhan Mantri Awas Yojana (PMAY). In FY19, a total amount of Rs 3.69 crore of subsidy claims were settled by NHB under the scheme. The bank has Rs 984 crore exposure to advances against real estate, construction and housing.
In the annual report, the bank has highlighted that its stressed assets had gone up during the fiscal and the bank had sold bad loans to CFM Asset Reconstruction for Rs 105 crore.
The bank had a bad loan book (GNPA) of Rs 148 crore in the beginning of FY19 which shot up to Rs 315 crore (3.76 per cent of loans) by the end of the fiscal, leading to a sharp jump in NPA provisioning. Hence the bank’s profit had fallen (marginally though) by 1 per cent to Rs 99 crore in FY19.
The bank has a network of 137 Branches across 7 States---81 in Maharashtra alone.
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