Karad UCB: Creating leadership for another century

Reported by: |Updated: August 28, 2017

Another urban cooperative bank achieves a milestone of a 100 years:

Subhash Erram

Karad Urban Co-operative Bank completed 100 years of its existence on 24th January 2017. This remarkable bank has not only completed a century, but has grown by any standard of size & quality. Very few cooperative banks have a history of a centenary in India. Dr. Subhash Erram, a surgeon, is the chairman of the bank. Subhashrao Joshi, an industrialist, is part of the Board of Directors and is regarded as ‘head of the urban family’. Joshi is also the executive chairman of the Maharashtra State Co-operative Bank’s Association, Mumbai.

Expanding Branches, ATMs

As on 31st March 2017, Karad UCB operates 48 branches along with 1 extension counter. The branches are spread across urban, semi urban and rural areas of Satara, Sangli, Pune, Solapur, Kolhapur, Ratnagiri, Raigad and New Mumbai and Mumbai. The head office of the bank is located at Karad. Dr. Subhash Erram, Chairman, says: “Out of 48 branches, 38 branches have onsite ATMs. We are exploring the opportunity of being multi-state in coming years.”

Strength in HR

As on 31st March 2017, the total strength human resource strength of the bank is 689. Out of this, 674 people are permanent employees of the bank and 15 are on probation. CA Dilip Gurav is looking the affairs of the bank as Chief Executive Officer. 5 deputy CEOs assist him as head of various departments. There are 11 HOD/HOR, 60 managers, 38 assistant managers, 181 senior & junior officers, 160 clerks and 233 peons, drivers & watchmen. Proactive vision of the management started well equipped residential staff training and research center in 1999.

Erram bifurcates: “Around 21% staff has professional qualification which includes 8 chartered accountants, 2 cost & works accountants, 21 MBAs, 4 LLBs & LLMs. Around 73% staff is graduate and 27% staff is under graduate, which includes mostly the employees coming under sub staff category. We also possess the expert team of chartered accounts, tax consultants, legal advisors, training faculties etc. to assist bank as per requirement in auditing, taxation and legal matters. These services are outsourced. There is also a sports club for our employees.”

Increasing Customer Base

As on March 2017 total customer base of Karad UCB is 325,751. The bank has set target to growth in customer base by 25% per year and is marching towards fulfillment of targets. The customer service of the bank differentiates itself from other co-operative and commercial banks operating in the area. Erram explains: “From the past experience of the bank, we can proudly say that, customer slippages of the bank are on the very lower side. The takeover of a Ajinkyatara Sahakari Bank and Ajinkyatara Mahila Sahakari Bank, Satara with 14 branches and a business mix of Rs200 crores on 29th May 2017, will facilitate to expand the business and reach to new customers. We regularly conduct business development camps for new entrepreneurs.”

Participation of bank in various social activities, highly professional management, strong customer base, efficient manpower, pleasing and adequate infrastructure, technologically upgraded internal system etc, are some of the highlights of the bank. Every year bank does a variety of social activities such as tree plantation, free medical checkups, free camps for polio victims and providing various aids such as tricycles & caliper, drama competition, etc. The bank has been winning a number of awards for last many years.

Growth in Deposits, Credit

The bank’s deposits increased to Rs2,850.48 cr, registering y/y growth of 11.63% as on 31st March 2017 and its advances increased to Rs1745.57 crore, registering y/y growth of 6.49%. Business mix in 2007 was Rs955.71 crores, which rose up to Rs4,596.04 crores at the end of March 2017 despite no branch expansion. The bank has decentralized processes since 2014 in view of business expansion. Per employee business of bank as on 31st March 2017 is Rs6.67 crores.

Erram says: “Small enterprises, vehicles and housing & development were the top 3 sectors receiving loans from the bank as on March 2017. However, loans to small enterprises and housing & development decreased by 7.53% (Rs373.94 cr) and 3.77% (Rs192.80cr), whereas vehicle loans grew by 4.47% (Rs105.91 cr) in the last FY. The bank 17% CAGR during the last 10 years. 2017 is the centenary year of the bank; hence bank has launched various deposits & advances schemes for financial inclusion of various strata in the mainstream of banking.”

IT & CBS Infrastructure

The new IT applications added as well as improvement in infrastructure made in the last 12 months are eCommerce, IMPS, EJ-Pulling, Cyberoam internet firewall, DC UPS batteries replacement and DR site employed with full utilization capacity.

Several upgradations are in the pipeline. Erram reveals: “IT applications & improvement in infrastructure proposed in next 12 months include ATM, Dynamic Key Exchange, value add-on services – C2C, cheque book & statement request, datacenter devices monitoring tool – BMS application upgradation, network monitoring tool implementation, MPLS bandwidth upgradation, solar / windmill implementation for green data center, DC health monitoring on 42” LED screen at data center, DC UPS upgradation from 60 KVA to 100 KVA, SSL VPN additional 100 user licenses purchasing, 100 KVA oil cooled stabilizer replacement and server hardware & software upgradation.”

ATM Transactions Up

TBA used earlier was Cyber Bank developed by Pune based Compusoft Services. The bank has switched to iCBS system developed by Ahmedabad based Virmati Software & Telecommunications Ltd (VSTL). The IT team is mixture of software, hardware & networking skill-sets. The bank has deployed NCR & Wincor ATMs. It generates card printing data in secured zone and the data file is sent to the vendor through SFTP to the vendor M-Tech Innovations. Erram adds: “Presently 42 IT professionals are working with bank in IT team. On average 6800 transactions take place per day from our 38 ATMs. Average number of transactions per ATM per day is 179. The average for POS transaction per day is 650, which indicates increasing trend.”

Main IT vendors to the bank are IBM, Cisco, Microsoft, Oracle, Sonic, Symantec, Blue-Star, Reliance, Vodafone and BSNL. Virmati Software & Telecommunications Ltd has developed software modules; iCBS, AML, MIS & CAMS.net. SMSR (Scalable Modular Server Room) is made from metallic sheets, which are non-conducting, fire proof, rust proof & easy to install & dismantle. SMSR has total 7 racks for servers. We use 5 racks. 1 rack is occupied by network devices like core router, core switch, MPLS routers, etc. The last rack is for UPS which has 60 KV (30 +30) capacities.

In light of attacks on customers at ATMs, the bank has employed the full time armed security guards at all ATM counters. Security guards are working in 3 shifts as determined by the administration department of bank.

Karad Urban Co-operative Bank, and Maharashtra State Co-operative Banks’ Association jointly organized one day national level ‘IT Conference for Co-operative Banks’ in June, 2017 at Karad. Suresh Prabhu, central railway minister inaugurated the conference and gave key note address. 400 participants from 110 banks from all over Maharashtra attended the conference.

Containing NPAs

Gross & Net NPA of the bank as on 31/03/2017 was 8.48% & 4.85% respectively, compared to 6.79% & 3.67% respectively the previous year. The bank has made recovery of Rs 11.11 crore in FY 2016-17. During the financial year 2016-17, numbers of accounts in NPA increased from 593 to 753 and amount increased from Rs111.30 crores to Rs148.10 crores. Erram argues: “The recovery system of the bank is satisfactory. During the year fresh slippages in few accounts with heavy outstanding amount occurred. The fact behind this is recession in industry and due to unavoidable circumstances in concerned NPA accounts. However, the bank has already started efforts for increasing recovery in NPAs and reduction in the quantum of NPA.”

Bright Future for UCB

UCBs with their deep-rooted connections with specific communities can easily inspire the trust of small savers and borrower. UCBs are a most competent tool for financial inclusion and over the time they have proven their ability to provide credit at the grass root level effectively. Erram feels: “By virtue of being local in nature and intricately interwoven with the local community, the UCBs have a clear advantage over commercial banks. UCBs can implement new technology what today’s generation of customers need. The labor costs of UCBs are considerably less than that of commercials banks and generally the operating costs are also minimal. Future of UCBs in India is bright and good. Co-operative bank is a better choice as compared to the commercial banks if run on trust, honesty and confidence.”

Secrets of Success

This institution started with the thoughts of a few freedom fighters to build financial strength in native common men. Freedom of nation was ultimate aim in the minds of promoters. A few coins worth Rs80 and 10-12 devoted social workers who knew nothing of banking sowed the seeds of the bank, which has stood the test of time.

Erram says proudly: “The ability to know the need of needy people without their documented credentials is a qualification of the management. Though managing body members are not scholars in finance and modern banking science, Karad UCB has acquired and very effectively applied all the modern concepts of banking, technology and social science.”

Before RBI compelled banks to computerize, KUCB started use of computers in daily small saving collection system (pigmy) by inventing mobile computer for pigmy collectors. RBI praised and circulated KUCB’s use of pigmy collecting computer as an innovative idea.

There are several unique features of the bank. Erram reveals: “There has been no workers’ union, no election of managing committee since last 25 years. No change in the chairman in the last 10 years. Only 15 Chairmen in 100 years have led the bank. KUCB has a planning committee to plan a road map for 5 years’ preparing a vision document and review it is reviewed every quarter. Our long term vision has been redefined by ‘Vision 2025′. We are creating leadership for best future of another century to remain with ‘Karad Urban Culture’ through ‘Karad Urban Family’.

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