Banking on cooperation

Alongside the 12-foot high entrance doors is a logo not commonly seen in the Fort area — an afarganiu and flame set within a circle. "People find the location of the new branch extremely convenient, in the heart of the central business district of Flora Fountain,” says Farokh Banatwalla, managing director (MD) and chief executive officer (CEO) of The Zoroastrian Co-operative Bank Limited. Located on Veer Nariman Road, next to Akbarallys and the Godrej showroom, the Bank purchased the premises consisting of ground, mezzanine and first floor. "The spaciousness and good décor make a favorable first impression on customers. In the short time since the inauguration on May 29, 2006, we have had several walk-in clients who have opened accounts. We have received large trust deposits too,” Banatwalla adds. Zoroastrian Bank was granted the status of a scheduled bank in 2003 by the Reserve Bank of India (RBI) and business is open to members of all communities, emphasizes Banatwalla.

Speaking at the inauguration, the Bank’s chairman Hoshang Kohina asserted that the new location would help the Bank cater to more corporate clients, with the Flora Fountain area housing a large number of businesses as well as the offices of well-known trusts, advocates and solicitors, chartered accountants, share brokers, etc. "For 79 years, our registered office has been situated on the first floor of the Zoroastrian Association Building at Horniman Circle and the branch there was known as the Mumbai Main branch. But because of changing times and the present banking scenario, we were looking for ground floor premises in a more strategic location to attract greater clientele,” Kohina asserts. On the first floor of the new branch is a newly designed boardroom, large enough to accommodate 40 people in an actively participated conference.

Putting pace into its development over the last few years, the Bank has grown its total business from Rs 52.31 crore in 1996 to Rs 509.65 crore as of March end this year, as per their fact file. "The image of the Bank has much changed,” declares Banatwalla. "As our balance sheet grows in size and stature, we are able to provide more services. Bigger customers come to us. Crossing the Rs 500 crore mark is a matter of great satisfaction.” In November last year, the Bank had been awarded the second prize by The Maharashtra Urban Co-operative Banks’ Federation Limited for good performance in the category of cooperative banks with deposits between Rs 200-Rs 500 crore. Zoroastrian Bank’s net profit has increased from one crore rupees in 1996 to Rs 7.08 crore as of March 31, 2006. "We have been witnessing a steady growth rate of 15-20 percent every year,” states Kohina. "We do not want to go too fast.”

Operating in a crowded yet mature metro market, cooperative banks work under a restrictive environment formulated by the RBI. The CEO explains: "The restrictions applicable to us do not apply to the big private banks (like ICICI Bank or HDFC Bank) or to foreign or nationalized banks. For the last three years, RBI has not been permitting cooperative banks to open new branches. The competition is intense and the bigger banks are taking away a chunk of good business. We are under (some) restrictions for the raising of capital. We cannot lend in a large way to the construction industry. The ratio of priority sector advances to total advances is 40 percent for nationalized and private banks, for us it is 60 percent.”

Though the competition and the restrictions pose a great challenge, each bank finds its own way to do business in its niche areas, says Banatwalla, a professional banker who was earlier with Central Bank of India and Deutsche Bank and who has worked in London, the US and Latin America as well. "We offer the same portfolio of products, without the elaborate packaging! The bigger banks market their car loans or housing loans under a fancy brand name or slogan; our packaging is more simple,” he smilingly adds. Zoroastrian Bank’s strength is its very good, personalized service, as well as its honesty and integrity, says the Bank’s vice chairman Shernaz Mehta, who joined the board of directors in 1992 and who is currently director, financial advisory services, Deloitte Haskins and Sells. The policy matrix is handled by a 19-member board of directors, with several new legal, accounting, banking and IT (Information Technology) professionals being inducted on to the board in the years 2004 and 2005, as per their press handout. "Ours is a professionally run bank, with a strong management team,” states Kohina, a retired banker himself who has been on the board since 1992.

The Bank’s Capital Adequacy Ratio is 19.56 percent as against the RBI’s requirement of nine percent, declares Banatwalla. With zero percent net non-performing assets ("bad/doubtful debts are covered by provision for the same,” asserts the MD) and high "business per employee” and "profit per employee” ratios, Zoroastrian Bank is counted among the well managed banks in the cooperative sector, enjoying an ‘A-star’ grade audit classification. "We are governed by the Maharashtra Co-operative Societies Act, 1960 and an ‘A-star’ rating in the statutory audit is a notch above ‘A,’” Banatwalla explains. Unfortunately, any flare-up or mishap in the functioning of any of the cooperative banks finds further restrictions being imposed on this sector, rues the MD. Because of the scams in other places, we are all being penalized, Mehta concurs.

Zoroastrian Bank currently has a network of 10 branches — at Fort, Tardeo, Dadar, Mahim, Bandra, Andheri (two branches), Borivli (with an Extension Counter at the Rustomjee International School at Dahisar), Thana and Poona. "All branches are fully computerized to offer fast and efficient service. We are looking at Core Banking Solutions and further technological improvements,” Banatwalla elaborates. The Bank also offers extended business hours based on the location of the branches. On the senior management team are Banatwalla, general manager Aspi Katgara, and senior managers Viraf Chinoy, H. M. Shaikh, Hilla Avari, Noshir Paghdiwalla, Bakhtiar Saklat­wala, Aspi Kathawalla, Tehmas Bharucha and Farokh Mistry. The Bank’s corporate headquarters moved in 2003 to spacious premises at Nirlon House, Worli. The registered office was shifted this year from the Zoroastrian Association Building to Nirlon House.

Established way back in 1927 as a cooperative credit bank under the Co-operative Societies Act VII of 1925, the RBI granted Zoroastrian Bank in 1994 a license to carry on banking business. Deposits have increased from Rs 1,596.88 lakh in 1994 to Rs 33,309.53 lakh as on March 31, 2006; reserves have moved from Rs 147.84 lakh to Rs 4,554.30 lakh in the same period. "Six years ago, as per RBI rules we could lend only two crore rupees to a single borrower, today the upper limit is over five-and-a-half crore for a single borrower and Rs 15 crore for group companies. In 1992, the upper limit for single borrowers was but Rs 20 lakh!” elucidates Banat­walla. "Though 50 percent of our depositors are Zoroastrian, 70 percent of our borrowers are non-Zoroastrian. Small borrowers (five lakh rupees to Rs 15 lakh) are very very important to us. If there is a large number of borrowers, the risk is spread. We take adequate security collateral. We are looking to build up priority sector advances which include small-scale industries, small business enterprises, self-employed, professionals, software industry, etc.” With the Indian economy doing well, smaller engineering units who are among the Bank’s customers are now making very handsome profits in the last couple of years, compared to the loss-making situation they were in about four years ago, he adds. We do seek to help community members wherever possible, by way of recruitment, or housing/education loans, encouragement of entrepreneurship, etc, declares Kohina.

Authorized to open NRE (Non-Resident External) accounts, the Bank also has a full fledged money changers’ license. Customers’ requirements in foreign currencies can be delivered to their doorstep, in accordance with RBI rules. The Bank promotes general insurance products with Bajaj Allianz General Insurance Company and life insurance products with Max New York Life Insurance Company Limited, as per their press release.

Restricted by the Co-operative Societies Act from freely sponsoring events/promoting causes in a big way, which would serve to enhance the Bank’s visibility in the public eye, Zoroastrian Bank does associate itself in whatever small way it can with community events and sponsorships, states Banatwalla.