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Saraswat Coop Bank rules out looking for a bank licence

Tuesday, September 12, 2017

The country's largest urban co- operative lender Saraswat Bank yesterday said it is not interested in turning itself into a commercial bank, but will focus on stronger bottomline with a healthy loan book.

At multiple occasions in the past, the bank was reported to have been keen on turning itself into a scheduled bank which entails changing the character to turning private. "We have grown in the last 100 years as a cooperative bank and it is in our DNA. Turning private is not on our horizon," chairman Gautam Thakur told reporters.

He said the only factor which can drive a lender like it towards privatisation is capital requirement, but the lender is comfortable on that front as well with a capital adequacy of 14%.

"We have mapped capital adequacy for the next few years and have found that we're comfortable," he said, adding it's resorting to raising tier-II capital from under the long- term deposits where it mopped up Rs 250 crore in FY17.

Thakur said the bank, which has been aggressively growing in the last two decades, will go slow on business expansion which entails lower capital burning, to focus on having a book which is very healthy. Its net non-performing assets ratio stood at 1.83%, while gross NPAs were at 4.63% at the end of March this year, and Thakur said the bank would like to maintain the stressed assets at same levels.

Thakur said because of the overall weak business climate -- he expects a turnaround at least years away -- has resulted in this decision. In FY17, its profit grew 57% to over Rs 234 crore driven majorly by treasury gains, while the loan book growth was only 6%. Under its growth plan, it had set a  target of total business growth of Rs 75,000 crore in 2016, but closed FY17 with over Rs 55,000 crore.

The lender was targeting to take its overall business to Rs 1 trillion by 2021 under the same plan, but Thakur hinted that the timelines may be pushed by a few years because of the focus on asset quality and profitability. The bank will open not more than 10 branches per year over its present strength of 220, and would like to focus the states where it already has a presence for branch expansion, he said, adding it is not keen on ATM roll out either.

It will be launching a credit card and prepaid card very soon and starting its centenary celebrations later this week. A journey spanning a hundred years is quite a feat in the history of any organization.

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