Reported by: banking|Updated: September 21, 2017
Gopinath Patil Parsik Janata Sahakari Bank, which has a state-wide presence of branches, is comparable to any private bank in its functioning
Gopinath Patil Parsik Janata Sahakari Bank, is a cooperative bank with a distinct but different identity among cooperative banks in the country. Headquartered in the suburb of Kalwa in Thane district of Maharashtra, this 80-branch multi-state cooperative bank is known among cooperative bank customers for its transparency in the first instance and for its new generation banking services too.
“What distinguishes GP Parsik Bank from other cooperative banks is the transparency in all our dealings,” says Sadanand Nayak, CEO of the bank. “As you know, cooperative banking sector has been lagging in this aspect because of various reasons, including favoritism, lack of professional approach in business dealings and to a great extent absence of systems and processes. We at GP Parsik Bank have been able to overcome these professional hazards and the bank’s entire operations are an open book. We have been able to gain a reputation for this aspect and our customers would vouch for this,” he adds.
Nayak says growth in the cooperative banking sector has in general been impacted over the last 3 years. But GP Parsik Bank has been consistent in its growth for the last several years – especially from 2013 onwards. “So, in 2013, we had 39 branches, and today we have 80. We have become a multi-state scheduled bank, with branches in Goa and Karnataka. We will open 11 more branches for which we have license from the RBI. Similarly, we have been making profits all through, and profits have grown in the last 4 years – from Rs 22 crore in 2013 to Rs 47 crore in 2016-17. In 2016-17, we achieved a business mix of Rs 4756.69 crore, which is a growth of 19.13% over the previous year. The growth in advances has been 14.82%, against the growth of 5.08% registered by the banking sector in India. Our deposits too grew during the year, touching Rs 2979.78 crore, against Rs 2445.45 crore in the previous year. These are the factors that distinguish us from the run of the mill banks in the sector,” says he.
2 SETS OF CUSTOMERS
Nayak says the bank services its customers in two very distinct ways. “We have continued to retain the traditional banking facilities to cater to our old generation customers. Some of these customers have been with us ever since we started operations in 1972. For them, we have branches – we do not intend to curtail the number of branches – where they would be attended to in a very personal manner, their needs met by our officers and staff efficiently and in a timely manner. When they come to the branches, they are also introduced to modern banking methods, including new channels like ATM or internet banking and motivated to adopt these facilities. In fact, in most of our branches, we have posted staff members, who handle this aspect, which includes educating the old generation customers in the use of latest channels,” he explains.
And for the new generation customers, which the bank has in abundant numbers, it has introduced the new generation banking in all details. “We have internet banking – we are one of the few cooperative banks in the country allowed by the RBI to have full-fledged internet banking, including transactions – mobile banking, ATMs, RTGS/NEFT, UPI, BHIM, Bharat Bill Payment System (BBPS), etc. These customers can carry out their banking activities from the confines of their offices or homes and the facilities we offer are on par with those offered by the leading private sector banks,” says Nayak.
MSME, RETAIL FOCUS AREAS
MSME and retail financing has been GP Parsik Bank’s forte. While its corporate banking portfolio is very nominal, the MSME portfolio accounts for nearly 55% of advances. Among the sectors that the bank has exposure in the MSME sector, textiles account for a substantial portion. There are many textile units in Bhiwandi and Ichalkaranji in Maharashtra and the bank has a strong presence in these two towns. In retail, the bank offers home loans, vehicle loans and personal loans.
“Since most of the MSME customers belong to the unorganized sector, they faced fund crunch during the period following the demonetization,” says Nayak. “To some extent, this had an impact on our recoveries, but since our system is efficient, there have been no delinquencies.”
Nayak points out something unique about the bank. “Ever since establishment, we have never opted for OTS, that is one-time settlement. Our legal action against a customer in the debt recovery tribunals are also minimal. We have been able to do this because of our better and effective risk management processes. What we believe in is effective loan appraisals, good monitoring and persuasion to repay the loans rather than litigation,” he says.
The bank’s retail loans portfolio too has been trouble-free with little or no delinquencies. However, there have been defaults in repayments of vehicle loans. This is mainly by taxi operators – Ola and Uber – who have availed loans for the purchase of their vehicles. The bank took effective and timely measures to contain these delinquencies. Vehicle loans to Ola and Uber operators have been found to be a problem area and the bank has virtually stopped offering loans to this segment of customers.
“Our gross NPA in 2016-17 has been 2.66% (Rs47.35 crore), which is marginally higher than the 2015-16 figure of 2.49% (Rs38.59 crore), but is among the lowest in the banking sector. Net NPA has all along been 0%,” points out Nayak.
He also adds that the bank has been making enhanced provisions, quite unlike many cooperative banks or for that matter public sector and private banks. Against a statutory provision requirement of Rs 13.20 crore in 2016-17, the bank has made provision to the tune of Rs 91.26 crore, which is equivalent of 192.73% coverage ratio. This is one of the highest in the industry.
Nayak says the technology infrastructure of the bank is so robust and efficient that it is one among the 3 cooperative banks in the country allowed to operate BBPS. In fact, several other cooperative banks have approached the bank for sub-membership of BBPS and the bank is considering offering this facility. This will be a non-interest income and help it to meet the cost of operating BBPS.
“When I talk about technology infrastructure, we are now facing constraints in our CBS system because we have grown, our customer base has grown exponentially and we are offering products and services that the existing system is not capable of handling,” says Nayak. “We are now in the process of migrating to a new CBS – Finacle version 10 from Infosys.”
In doing so, the bank has taken up two important tasks. One is updating the data to be in consonance with the data structure requirements of the new CBS. The bank has a lot of legacy data, which is not structured and it intends to make all the data structured. So, while this job is being undertaken, the bank would also want to accomplish 4 distinct targets. It is getting all the personal data of the customers up-to-date and for this purpose, it is even sending out staff members to the residences of customers so that the data it collects is authentic and error-free. While doing this, it is also seeking customer feedback on products and services and possible shortcomings in the offerings. While the staff members meet and interact with the customers, they are also seeking references from them for potential customers. Finally, it is simultaneously taking up the work of PAN-Aadhaar linkage.
“The second task,” says Nayak, “is upgrading our hardware. We have decided to go for a complete revamp of the systems in our data center in our head office and our DR site at Pune. We have opted for HPE’s systems. The new hardware is also intended to meet the requirements of the proposed CBS migration. There is substantial investment in these upgrades and we hope this will bring in more efficiency, better interaction with customers and better servicing and finally better business for us.”
The bank has engaged consultants to guide its staff in the implementation, while the implementation per se will be handled by the bank’s own IT staff.
Nayak says the bank has implemented a rugged security system to ensure there are no frauds. “This is especially so because we are offering internet banking and data is transmitted on the internet. We had engaged Tata Communications Ltd to set up security information and event management (SIEM) module to cover the entire gamut of cyber security issues we may confront. In fact, the system has been somewhat unique, because experts from NPCI visited us to learn details of the module so that NPCI can have its own system. We have biometrics based access control system and for internet banking we have OTP as the second factor of authentication,” says he.
JP Parsik Bank intends to work with fintechs to bring in several innovative services which it plans to offer. One of the services that Nayak mentions is an app-based loyalty program for its customers. “For example, we may offer loyalty points to a customer who would opt for Digital mode in lieu of manual transfer of funds. Our aim is to have a completely automated program for the purpose,” says Nayak.
Another area where the bank may engage with fintechs is to offer cloud-based services.
Nayak says the bank is progressing towards lesser use of paper for office purposes. It has automated most of the office procedures. Intra and inter-office correspondence is through an intranet. The Loan originating system has reduced paper work. The bank has also delegated authority for loan sanctioning and the process is handled at various levels – at branches, at the HO committee and at the board depending on the amount of the loan. Any loan above Rs 10 crore only has to come to the board.
“In 2013, we launched our Vision 2020 project, basically aiming to achieve a business turnover of Rs 10,000 crore and a network of 100 branches,” says Nayak. “This is an ambitious project which we wanted to accomplish what may come. I am confident we are on the right track. We had a turnover of Rs 2800 crore in 2013 and a branch network of 38. Today, after 4 years, we have almost doubled our turnover and we have a network of 80 branches. In addition, we received the multi-state scheduled bank status. We have also introduced all the new generation banking services, which are highly revenue generating. So, in another three years, we can again double our business volume and set up 100 branches, although we may not require these number of branches. One factor that is advantageous to us in that our NPA levels are negligible. We hope to add more staff to our present strength of 760, which may ultimately touch 900 by 2020,” says he.
The bank has taken up a project making use of Six Sigma processes to ensure customer engagement. Says Nayak: “We have several committees to ensure that a uniform process is adopted by the staff while engaging with a customer. The committees continuously assess the requirements of the customers and evolve methodologies to meet these requirements. While the requirements go on changing, the methodologies to meet the requirements get refined and defined. The staff members are required to follow the principles of the banks scrupulously and ensure that there is no deviation.”
ROLE OF CHAIRMAN, BOARD
“I had mentioned about transparency in all the activities of the bank. I believe this was possible mainly because of vision of the board of directors we have. One noteworthy aspect is that the chairman or members of the board do not intervene in day-to-day decisions. They provide guidance, frame policies and oversee the functioning of the bank. The authority to manage and run the bank, like in a professional organization, is delegated to the Committees, CEO and his staff. Unlike in other cooperative banks, there is no interference in decision-making. What the chairman and board does is to ensure that we the members of the staff follow the RBI specified dos and don’ts for cooperative banks. This does not mean they lack involvement in the running of the bank. They are very much active in ensuring that the bank offers its products and services to the customers in the most effective and efficient way. There are many sub committees of the board, which are actively d in decision making process at corporate level ” says Nayak.
The bank has a strong Human Resources Management function. As in other matters, there is a very transparent policy and decision-making with regard to the people. HR functions are partly automated. Leave sanctioning, attendance, etc are done online. However, appraisals, reviews and related work is done manually. But, the bank has brought in modern methodologies – like an officer should always discuss with his subordinate before he prepares his appraisal report and documents the views of the subordinate in case of a divided opinion.
“We have a unique way in which we bring out the capabilities of our people,” says Nayak. “We have with the help of a professional agency developed Manual of Instructions and sets of questions from the manual for various levels of staff based on 3 distinct topics – deposits, advances and IT. The questions are selected randomly for a candidate. They form the basis of the assessment of the members of the staff. The staff members are expected to undergo and pass these tests, conducted online, if they are aspiring to be considered for a promotion. A staff member must pass tests in all the three topics mentioned above. The tests are for clerks wanting to become officers and for officers wanting to become managers. In addition, we also examine confidential reports and internal assessments of the staff members concerned while deciding on promotion. I tell you the response has been tremendous,” says Nayak.
Skill development is a continuous process in the bank. A staff member must undergo a minimum of one training in a year. Essentially meant for skill upgradation, these trainings are mostly done in-house with the help of external faculty. The bank also deputes selected candidates for training in outside organizations, like RBI’s training institutions and professional training organizations.
Nayak says the bank has an internal union. There has never been a single instance of labor unrest in the last 45 years. There have been no disputes and the wage revision talks always get concluded in 2 sittings without backlog. The involvement and commitment of staff for the good of the bank is beyond question, he adds.