Merger Proposal :
The Amalgamation/Merger proposal submitted by The Cosmos Co-op. Bank Ltd. to merge our Bank with them
was returned by Reserve Bank of India. The Cosmos Co-op. Bank Ltd. and also our Bank submitted revised
proposal to Reserve Bank of India for its consideration on 5 th October 2023.
We would like to bring to your kind notice that till date our 70% of the depositors have authorised our Bank to
convert 35% of their total deposits with the Bank into our Share Capital in order to increase the prospects of
amalgamation. The consolidated / aggregate amount of all these depositors, who have given consent as above is
Rs. 123.17 crores, which is about 70% of the total deposits of our Bank and more than 2/3 rd by value of the
existing depositors.
We are awaiting consent from the remaining depositors, who are small in value. However, we would like to
mention that, no express dissent received from any of them, except 4 shareholders / depositors who have voted
against resolution for amalgamation in Special General Meeting held for specific purpose on 9 th July 2023 (380
shareholders/depositors voted in favour of resolution i.e. 98.96%).
Necessary application to increase in our Share Capital as well as for conversion of deposits into Share Capital
has already been submitted to RBI vide our letter No HO/GM/1009/2023-2021 dated 29 th August 2023. The
approval of the Registrar of Co-operative Societies for the amendment of the Bye-Laws of our bank has also
been secured by us, to accommodate increased conversion of deposit into our Share Capital by permitting Share
Capital upto Rs. 75 crores. Thus we have secured consent of more than 2/3 rd of our depositors in value and the
same shall be converted into share capital of our Bank before the effective date of amalgamation on obtaining
permission from RBI.
It is pertinent to note that RBI has earlier communicated, among others, that the proposal of merger submitted by
MSC Bank does not meet regulatory expectations and also appears incompatible with the core mandate/objective
of MSC Bank and is also incompatible with the licensing conditions for operation of MSC Bank and therefore
the merger proposal has been found to be not feasible and will not be pursued further.
In these circumstances, we have no other option but to pursue the Amalgamation/Merger proposal of Cosmos
Co-operative Bank Ltd. And therefore earnestly request all the depositors to give their consent for converting
35% of their deposits into share capital of the Bank.
Withdrawal under Hardship :
The depositors have withdrawn to the extent of Rs.103.96 crores from their accounts on Hardship
Grounds from the date of All Inclusive Direction (AID) i.e. 18 th April 2018 upto 30 th September
2023.
Payment to Depositors by DICGC :
a) Subsequent to amendment of DICGC Act, an amount equivalent to the deposit outstanding upto maximum
Rs.5.00 lakhs is paid by DICGC. Till today an amount of Rs.230.90 crores is credited in depositors' alternate
Bank Accounts, thus reducing our liability towards depositors. The amount of Deposits of our Bank as on
30.09.2023 is Rs.177.96 crores.
b) In terms of Section 21 of the DICGC Act, we have repaid the first installment of Rs.46.20 crores on 31 st
August 2023 to DICGC
Liquidity :
We have surplus liquidity after maintaining mandatory Cash Reserve Ratio (CRR) and Statutory Liquid Ratio (SLR).
Recovery Position :
During the pandemic the recovery from NPAs was greatly hampered and the regular defaulters have taken undue advantage of the situation and stopped repaying their dues. The defaulters are taking all efforts to stop our recovery initiatives and file appeals in the court. Defualters even have spread rumors stating that the Bank is closed down and therefore the loan should not be repaid.
We have recovered Rs. 117.59 crores from the defaulters of loan repayment from April 2018 to September 2023.
Out of the total outstanding advances of Rs.154.21 crores we have assets of realisable value of Rs. 71.04 crores approx. Remaining amount can be written off with the permission of appropriate authority reserving our rights to recover the amount from the defaulters, inspite of writing off. We have Bad and Doubtful Debts Reserve to the extent of Rs.150.70 crores.
We have taken few properties/premises of defaulters in our possession. We have also filed criminal complaints with Economic Offence Wing of Mumbai, Police against Ex-CEOs and other Officials of the bank, defaulters, valuers, etc. They have recently arrested an Ex. CEO and Ex. Branch Manager alongwith three defaulters of our Bank and their interrogation is going on.
Cost Cutting Measures :
Staff Cost :
Voluntary Retirement Scheme
After formulating Voluntary Retirement Scheme for our employees, we have obtained approval from Registrar Co-operative Societies, as advised by Reserve Bank of India. We have complied with all the conditions laid down by RCS in this respect. In compliance therewith, we have relieved 3 employees under this scheme thus reducing the salary (burden) expenses of Rs.13.02 lakhs per anum. We had once again introduced the VRS Scheme and we have relieved 6 staff members reducing the staff expenses of Rs. 26.70 lakhs per anum.
Freezing Salaries
Although, we pay salary to staff members regularly but have discontinued to pay yearly bonus, annual increments, all allowances such as functional allowances, leave travel assistance, Medical Allowance, etc.
No recruitment
We have not recruited any staff members in place of 54 staff members who have either retired/ resigned from the Bank since April 2018.
Saving in Staff Cost
By taking the above decision, the monthly average Staff Cost of Rs.74.09 lakhs on 31.03.2018 is now reduced to Rs.26.14 lakhs as on 30.09.2023
Other Expenses :
a). Inorder to curtail the expenses, we have decided to run our Mira Road Branch in a small premises and have surrendered the excess rental units to the landlords and surrendered three Units of Thane Branch and shifted the Branch in a smaller premiss thus saving the rent expenses of Rs.13,350/- per month, since March 2023.
b). We have also surrendered the rental premises to the owners of our Fort Branch, having rent of Rs. 4,79,711/ per month and shift the Branch to our old small premises in the same area, having rent of Rs. 9,681/- per month.
Reduction in accumulated loss :
After transfering excess provision of Bad and Doubtful Debts, Investment Depriciation Reserve etc.accumulated loss is reduced to the extent of Rs.21.87 as of half yearl ending on 30th Sept 2023