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Our mission is to serve the lowest strata of society with the best products at the best prices and the best technology-driven services, while at the same time being a model employer for the national industry and emerging as a global role model in the small banking sector.
Shivalik Mercantile Co-operative Bank Limited18th Annual Report 2014-15
Shivalik Mercantile Co-operative Bank LimitedRegd. Office: 13/1207, Ansari Road, Saharanpur - 247001, Uttar Pradesh
Head Office: Hakikat Nagar, Saharanpur - 247001, Uttar Pradesh
Telefax: (0132) 2726125, 2726147, 9927135550
E-mail: info@shivalikbank.com
Visit us at: www.shivalikbank.com
Like us at: www.facebook.com/shivalikbank
A PRODUCTinfo@trisyscom.com
At Shivalik Mercantile Co‑operative Bank Limited, we are at an inflection point.
In the journey of the past 16 years, we had successfully achieved nearly H400 crore in deposits; going ahead, we intended to replicate the same in just one year.
Making us one of the most exciting stories in India’s co‑operative banking space.
ContentsAbout us .........................................................................2
Directors of the Bank ..............................................5
Corporate background .........................................6
Highlights 2014-15 ...............................................10
Chairman’s review .................................................12
Our pillars of success ...........................................21
Statutory section....................................................22
Financial section .....................................................29
About usRBI license no. UBD. UP. 1468 P. dtd. 20 Sept. 1997.
IFS code IBKL0236SMB
Date of commencement 5th Sept. 1998 (as Primary Urban Coop. Bank)
Area of operation Uttar Pradesh and five districts of Madhya Pradesh
Registered under Multi-state Co-operative Societies Act, 2002Registration no. MSCS/CR/365/2010 dtd. 14 Sept. 2010
Mergers and Acquisitions 1. In 2010 – Bhoj Nagarik Sahakari Bank Maryadit, Dhar, MP2. In 2012 – Malwa Commercial Coop. Bank Ltd., Indore, MP
Head Office Hakikat Nagar, Saharanpur-247001 (UP)Telefax: 0132-2726125; 2726147; 9927135550info@shivalikbank.comwww.shivalikbank.comwww.facebook.com/shivalikbank
Registered office 13/1207, Ansari Road, Saharanpur-247001 (U.P.)Telefax: 0132-2612381; 2612382; 9927145550
Chairman Er. Yashvir Kumar Gupta
MD & CEO Er. Suveer Kumar Gupta
General Managers 1. Mr. Chandra Prakash Agrawal2. Mr. Gaurav Mittal3. Mr. Suneet Kumar Gupta
No. of branches 21 branches in 3 clusters1. Cluster 1: 07 branches in NCR 2. Cluster 2: 12 branches in District Saharanpur3. Cluster 3: 02 branches in MP
Business correspondent offices 12 - Affiliated with and working under various branches.
Banking hours 10 a.m. to 4.00 p.m.
No. of ATMs 25 (all branches and 4 BC offices)
No. of CDMs 25 (all branches and 4 BC offices)
CBS platform in use CBS solution, ‘Profile’ by FIS
ATM-cum-debit cards RuPay powered cards can be used anywhere in India at all RuPay enabled ATMs. Online shopping through Billdesk enabled. Card can be used at all merchant establishments equipped with Point of Sale (PoS)
terminals. Free accidental insurance on each active card is available.
Shivalik Mercantile Co-operative Bank Limited2
Products and Services
Demand deposits Savings Bank Account in various versions - Normal (No-frills)/Basic (reduced KYC)/Classic/Silver/Gold/Diamond/Platinum/Institutional/Scholarship/Fee accounts
Current Account in various versions (Normal/Classic/Silver/Gold/Diamond versions)
Term deposits Short deposits for less than 6 months. Monthly/quarterly income certificates Reinvestment certificate Recurring deposit Recurring flexi deposit Daily deposit account
Loans & Advances Loans to individuals for personal use (housing loan, personal loan, gold loan, vehicle loan, loan against NSC/KVP/LIC/Bank’s own term deposits, education loan, loan against lease rental, loan for solar panels, etc.)
Loans to individuals for business use (traders/ businessmen/ self-employed persons/ professionals) Loans to non-individuals for business use (term loan for plant, machinery and equipment/ business
assets/ business premises, Working capital finance by way of revolving credit limits & term loans, Loan for commercial vehicles, loan against warehouse receipts etc.)
Long term and short term loans to farmers Loans to self-help groups Bank guarantees
Ancillary services Lockers Inland remittances (NEFT/RTGS/DD Issue anywhere in India/Pay Orders) Foreign exchange remittances (inward/outward) Foreign currency sale and purchase Insurance of property & vehicles (general insurance) Health insurance for individuals and family Life insurance (coming soon) PM’s Jeevan Jyoti Bima Yojna PM’s Suraksha Bima Yojna
Other services Electronic clearing services SMS banking: Several services can be invoked through SMS Net banking: Non-financial transactions are available through net banking PoS machines for our banks retailer customers Home banking Phone banking Free SMS alerts in operational accounts Tablet banking Micro ATMs (coming soon) Bulk note acceptors Passbook printer kiosks (coming soon) Camera, copiers and scanners at each branch for the convenience of customers Stamp papers readily available at branches for the convenience of borrower customers Currency counting machines at each branch
Annual Report 2014-15 3
Our Branch, BC and ATM Network (All branches are equipped with ATMs/CDMs)Cluster 1: NCR Region
Noida 27: Bhoja Mkt., Nr. Vinayak Hospital, Sector 27, Noida-201301 Telefax: (0120) 2555333/5334, 09540407222
Noida 135: WA 68, Sector 135, Noida Mobile: 99901 06135
Ghaziabad: G.T. Road, Nr. Bhatia Mod, Ghaziabad-201001 Telefax: (0120) 2860003, 8750037222
Indirapuram Branch: Raison Shopping Complex, Ahinsa Khand-II, Indirapuram Ghaziabad
Tele: (0120) 2651717, 95408 12228
Meerut Branch: C-2/6, Nai Sadak, Shastri Nagar, Meerut-250001 Telefax: (0121) 2604364, 9690563000
Khatauli Branch: Ward No. 8, Ganeshpuri, G.T. Road, Khatauli-251201, Dist.
Muzaffarnagar
Mobile: 95689 25000
Muzaffarnagar Branch: South Bhopa Road, Nai Mandi, Muzaffarnagar-251001 Mobile: 98374 00037
BC Offices: Barola, Nithari & Sadarpur (affiliated to Noida 27 Branch), Mawana,
Hastinapur, Maliyana (affliated to Meerut Branch)
Cluster 2: District Saharanpur
Head Office & Branch: Hakikat Nagar, Saharanpur-247001 Telefax: (0132) 2726125, 2726147, 9927135550
Ansari Road Branch: 13/1207, Ansari Road, Saharanpur-247001 Telefax: (0132) 2612381, 2612382, 9927145550
Ambehta Branch: Main Road, Ambehta, Saharanpur-247340 Telefax: (01331) 225311, 9927165550
Chilkana Road Branch: Chilkana Road, Saharanpur-247001 Telefax: (0132) 2650021, 9690990033
Gangoh Branch: Rambagh Road, Gangoh-247341 Telefax: (01331) 234437, 234438, 9927116660
Sarsawa Branch: Main Market, Sarsawa Telefax: (01331) 246125, 9690004994
Deoband: Manglore Chowki, G.T. Road, Deoband-247554 Telefax: (01336) 222808, 9568880001
Nagal Branch: G.T. Road, Nagal Telefax: (01336) 231112, 9690004794
Nanauta Branch: Deoband Road, Nanauta Telefax: (01336) 253125, 9927986125
Rampur Branch: Moh. Mahajanan, Rampur Maniharan Telefax: (01336) 252125, 9927007125
Sharda Nagar: Near Flyover, Khalasi Line, Saharanpur-247001 Mobile: 84770 06125
Madhav Nagar: Nr. Telephone Exchange, Madhav Nagar, Saharanpur-247001 Mobile: 9837060380
BC Offices: Nakur (affiliated to Ambehta Branch), Chhutmalpur (affiliated to
Hakikat Nagar Branch), and Chilkana (affiliated to Chilkana Road Branch)
Cluster 3: MP Region
Dhar Branch: Mandi Samiti Road, Opp. Dhareshwar Temple, Dhar (MP) PIN 454001
Telefax: (07292) 222413, 9644165550
Indore Branch: Bhagwati Palace, Pooja Dairy Lane, 100 Jaora Compound, Indore-452001 (MP)
Telefax: (0731) 2704268, 7354115550
BC Office: Patnipura, Indore (affiliated to Indore Branch)
Shivalik Mercantile Co-operative Bank Limited4
Directors of the Bank S.
No.Name Designation Address
Office Residence
1. Sh. Yashvir Kumar
Gupta
Chairman Devendra Service Station, Ambehta,
Distt. Saharanpur
Tel.: (01331) 225204, 225206
13/1207, Ansari Road, Saharanpur
Tel.: (0132) 2644586
Mob.: 9837050500
2. Sh. Shiv Puran
Gulati
Vice-
Chairman
City Railway Booking Agency
Railway Road, Saharanpur
Tel.: (0132) 2724346 2643862
‘Ashirwad’ Gill Colony, Saharanpur
Tel.: (0132) 2727228, 2722638
Mob.: 9719217802
3. Sh. D. K. Mittal Director B-71, Sector 44, Noida
Distt. G.B. Nagar 201301 (U.P.)
Tel.: (0120) 4222439
B-71, Sector 44, Noida
Distt. G.B. Nagar 201301 (U.P.)
Tel.: (0120) 4222439
4. Sh. Sudhakar
Agarwal
Director Indian Herbs Research & Supply Co. Ltd.
Sharda Nagar, Saharanpur
Tel.: (0132) 2727920
B-85 Avas Vikas Colony
Delhi Road, Saharanpur
Tel.: (0132) 2760931, 9837010385
5. Sh. Sanjay Gupta
Chartered
Accountant
Director 15 Kishore Bagh, Delhi Road, Saharanpur
Tel.: (0132) 2762856, 2763530
15, Kishore bagh, Delhi Road, Saharanpur
Tel.: (0132)2762856, 2763530
Mob.: 9837029705
6. Dr. Sanjeev Mittal Director Janakpuri Chowk, Dehradun Road
Saharanpur
Tel.: (0132) 2661399
Janakpuri Chowk, Dehradun Road
Saharanpur
Mob.: 9837058835
7. Sh. Sarvesh
Singhal
Advocate
Director Opp. H.D.F.C. Bank, 1st Floor
Court Road, Saharanpur
5 Phase-II Pant Vihar, Saharanpur
Tel.: (0132) 2765464
Mob.: 9837260747
8. Sh. Pradeep
Kumar Garg
Director Daas Service Station
Deoband, Distt. Saharanpur
Tel.: (01336) 222253, 222248
Moh. Chahparas, Deoband, Distt. Saharanpur
Tel.: (01336) 222348
Mob.: 9837365258
9. Dr. Kamal Kant Director Moh. Baburai
Gangoh, Distt. Saharanpur
Tel.: (01331) 232225
Moh. Baburai, Gangoh
Distt. Saharanpur
Tel.: (01331) 232225, 9412557048
10. Sh. Anvesh Garg Director Om Rice Mill, Main Road
Ambehta, Distt. Saharanpur
Tel.: (01331) 225221
Moh. Bazar Kala
Gangoh, Distt. Saharanpur
Tel.: (01331) 232055, 9412557239
11. Sh. Vijay Kumar
Dhingra
Director C/o Jai Bharat Auto Engineers
G.T. Road, Near Flyover, Ghaziabad
Tel.: (0120) 4165463, 9311585595
Parshvnath Majestic Floors T-II
203-A Indirapuram, Ghaziabad
Mob.: 9310461900
12. Sh. Satyasheel
Rao Pawar
Director Satya Villa, Ratlam Road,
Naugaon, Dhar (MP)
Tel.: (07292) 233370
Satya Villa, Ratlam Road,
Naugaon, Dhar (MP)
Tel.: (07292) 233370
Annual Report 2014-15 5
Shivalik Bank is the largest urban co‑operative bank in Uttar Pradesh.
Rated among the best co‑operative banks in Uttar Pradesh.
Associated with 6,000 self‑help groups, among the highest among co‑operative banks in India.
Reported approximately 55% compounded profit growth in the 17 years leading to 2014‑15.
Corporate backgroundShivalik Mercantile Co-operative Bank was registered as a co-operative
society in 1997 as per the tenets of the Uttar Pradesh Co-operative
Societies Act, 1965. The Bank was granted the license to conduct banking
business as a primary urban co-operative bank in the district of Saharanpur
by the Reserve Bank of India in September, 1997. The Bank commenced
operations in September, 1998. The Bank was converted to a multi-state
urban co-operative bank in October, 2010 following the merger of the
erstwhile Bhoj Nagrik Sahakari Bank Maryadit at Dhar, Madhya Pradesh.
In 2010, The Bank became the first Multi-State Co-operative Bank of Uttar
Pradesh upon de-registering from Uttar Pradesh and registering itself
under Multi-state Co-operative Societies Act, 2002.
The Bank subsequently merged erstwhile Malwa Commercial Co-operative
Bank Limited at Indore in 2012 and thus came up with a second branch
in Madhya Pradesh. The present area of operation of the Bank is complete
state of Uttar Pradesh and five districts of Madhya Pradesh.
FocusShivalik Mercantile Co-operative
Bank offers loan products (personal
use, professional use, business
use, micro-finance), deposit
products (like savings account,
current account, fixed deposit
among others) and services like
remittances, lockers, ATM cards,
insurance, forex and modern
payment systems, among others.
Presence Shivalik Mercantile Co-operative
Bank is headquartered in
Saharanpur (Uttar Pradesh) and
operates through 21 branches
across two states. During the
financial year under review, the
Bank opened five branches in Uttar
Pradesh – (two in Saharanpur -
Sharda Nagar and Madhav Nagar),
two branches in Muzaffarnagar
(Muzaffarnagar city and Khatauli)
and one in Indirapuram
(Ghaziabad), thus widening its
network from 16 to 21 branches.
Shivalik Mercantile Co-operative Bank Limited6
Differentiators• The first and largest multi-state
urban co-operative bank of Uttar
Pradesh
• An urban co-operative bank with
the best technology in North India
• Among the top 20 co-operative
banks with regards to technology
• The only UCB with more than 5%
lending towards micro-finance
through women SHGs
• Running a highly successful
micro-finance programme in
western Uttar Pradesh and parts of
Madhya Pradesh
Products and offerings The Bank offers state-of-the art
banking solutions to customers
in line with contemporary
technologies and facilities. The
Bank offers customers various
deposit schemes (savings/current
accounts, fixed and recurring
deposits). The Bank meets the
credit requirements of clients by
offering demand loans, term loans,
overdrafts and financial guarantees
against tangible and intangible
securities. The Bank also offers
additional financial services like
insurance, remittances through
NEFT and RTGS as well as ATM/
CDM facilities.
The Bank has partnered Janhit
Foundation to provide micro-
financial services to self-help
groups of women.
Values Since inception, the Bank abides
by a set of values.
Ethical banking• No hidden/pre-payment charges
• Transparent interest rates and
charges
• Strict vigilance to ensure
avoidance of malpractice
• Robust grievance redressal
system
Professionalism• Streamlined systems and
procedures
• Good infrastructure and business
environment
• Good corporate governance
• Adherence to all statutory and
regulatory norms
Transparency• Full-fledged and routinely
updated website displaying
financial results, rates, charges and
product features, among others
• Multi-tier decision-making
process for sanctioning loans
Green banking• Going paperless in the near future
• Invested in solar energy to run
ATMs and CDMs
Vision In the technology-driven future of
banking and economy, we see ourselves
as the natural and obvious choice of our
constituents by offering the best technology
and the best personalised care.
Mission To serve the lowest strata of society
with the best products at the best prices
and the best technology-driven customer
service, at the same time being a model
employer for the national industry and
emerging as a global role model in
the small banking sector.
Annual Report 2014-15 7
Our differentiated business model has translated into attractive growth
19 98
l Shivalik Bank’s
first branch starts
functioning in
Saharanpur 20 10
l Becomes a Tier-II bank
(deposit base of more than
H100 crore), covering the
entire Uttar Pradesh
l Becomes the first and
only multi-state co-
operative bank of Uttar
Pradesh
l Opens a branch in Dhar
(Madhya Pradesh) by
taking over the erstwhile
Bhoj Nagarik Sahkari Bank
Maryadit, Dhar, Madhya
Pradesh
l Achieves full CBS status
19 99
l Achieves full branch
computerisation, first
in Saharanpur district
Loan products
Deposit products
Our offerings
Personal use
Savings account
Daily deposits
Microfinance
Fixed deposit
Business use
Current account
Professional use
Flexi RD
Shivalik Mercantile Co-operative Bank Limited8
20 12
l Opens a branch in
Indore by taking over
the erstwhile Malwa
Commercial Co-operative
Bank Limited, Indore,
Madhya Pradesh
20 13
l Starts issuing RuPay-powered
ATM cards
l Starts opening business
correspondent offices in remote
Uttar Pradesh and Madhya Pradesh
locations
l Installs ATMs at all branches
l Changes CBS platform to world-
class Profile software, developed by
FIS, a Fortune 500 company and a
world leader in banking technology
20 14
l Completes installation of
CDMs and ATMs across all
branches and select BC offices
l Becomes the first
co-operative bank in northern
India to issue debit cards for
online/PoS shopping
l Starts associating
with various merchant
establishments using in-house
PoS devices for shopping
l Launches SMS-based enquiry
applications
20 15
l Launches
net banking
Our services
Pan card service
Lockers
Insurance
Remittances
ATM cards
Others
l DD/Pay order l NEFT and RTGS l ECS and NACH
l ATMs and CDMs l PoS l Internet and e‑commerce
l SMS‑based mobile application
l General insurance l Health insurance l Life insurance (coming soon) l PMJJB Yojana l PMSB Yojana
Annual Report 2014-15 9
The experts said that a co‑operative bank would do worse in a weak economy.We did better, much better.
The critics said that a small bank would struggle for profitability in a challenging 2014‑15.Shivalik Bank strengthened profit after tax to H4.95 crore in 2014‑15, continuing its journey of profit growth.
The doubters said that a small bank could never be adequately liquid.Shivalik Bank achieved a capital adequacy ratio of 13.75% in 2014‑15, higher than the 9% stipulated by the RBI.
The experts said that a small bank would be deluged with non‑performing assets in a weakening economy.Shivalik Bank moderated net non‑performing assets by 95 bps to 0.14% in 2014‑15, well below the country’s banking average.
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
1,33
0.35
1,88
5.63
3,05
8.74
5,19
4.43
5,71
3.72
Net worth (H in lac)
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
18,0
96.6
6
24,5
78.1
0
31,8
46.1
8
39,8
85.7
4
77,5
58.7
3
Deposits (H in lac)
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
9,37
8.09
14,5
18.7
4
22,0
08.0
5
28,3
96.9
3
55,7
09.0
5
Advances (H in lac)20
10-1
1
2011
-12
2012
-13
2013
-14
2014
-15
108.
31
201.
85
217.
12
522.
01
494.
85
Profit after tax (H in lac)
Shivalik Mercantile Co-operative Bank Limited10
The naysayers said that in a high interest economy, net interest margin would trend lower.Shivalik Bank strengthened its net interest margin to 4.22% in 2014‑15.
The doubters said a small bank would never be able to collect receivables on time in a weak economy.Shivalik Bank strengthened Gross NPA by 102 bps to 0.48% in 2014‑15.
Shivalik Bank is more than an intermediary addressing the realities of the day...It is an institution engaged in delighting customers and reversing the inequity of centuries.
Shivalik Bank is more than a bank with a focus on capital efficiency...It is an organisation with a focus on customer and societal productivity.
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
13.3
5
13.2
4
14.2
8
16.1
5
13.7
5
Capital adequacy ratio (%)
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
1.94
0.24
0.23
1.50
0.14
Net non‑performing assets (%)
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
2.87
2.81
3.20
4.28
4.22
Net interest margin (%) 20
10-1
1
2011
-12
2012
-13
2013
-14
2014
-15
6 7 15 16 21
Branches
Annual Report 2014-15 11
I take pride in stating that Shivalik Bank
has raised the bar for co-operative
banks across India by creating a
network of 21 branches and mobilising
H775.58 crore in deposits across only
17 years.
If there is one word that faithfully
describes the
performance
of Shivalik Bank
during the 2014-15
fiscal, it would be
‘outperformance’.
Shivalik Bank
outperformed
the broad Indian
economy’s growth of
7.3% with a 94.45%
growth in deposits
during the year under
review.
The Bank’s visionAt the end of FY2013-
14, we outlined a
target to create (and maintain for a
year) a deposit base of H750 crore –
something that was imperative to our
pursuit of a Scheduled Bank status.
Since the Bank had managed to
accumulate a deposit base of H398.55
crore in 2013-14, achieving an 88%
increase in just 12 months appeared
challenging.
At Shivalik Bank, we addressed this
challenge head-on through a number
of initiatives.
One, we improved our interest rates,
resulting in enhanced depositor
retention, and increase in new deposit
acquisitions and a favourable word-of-
mouth that increased the number of
retail account holders by approximately
150%.
Two, in addition to basic savings
bank accounts, we offered cash
deposit machines and ATM-cum-
debit cards, which could be used for
shopping throughout all merchant
establishments.
Three, we enhanced customer
convenience by selecting to open
H398.55 crore end of fiscal 2013-14
H775.58 crore end of fiscal 2014-15
Retail banking proportion (2014-15)
Fixed deposits
Current deposits
Savings deposits
82.14%
14.96%
2.90%
Shivalik Mercantile Co-operative Bank Limited12
five new branches at Saharanpur,
Muzaffarnagar, Khatauli and
Ghaziabad. We also opened business
correspondent offices in rural areas
supported by our branches to address
customers outside the ambit of the
country’s organised banking network.
Four, we engaged with various
associations and vyapaar mandals,
offering them attractive interest rates.
We also reached out to automobile
dealers with financing options they
could offer their customers following
purchase.
The result is that the Bank grew its
deposit base by 94.45% – from H398.55
crore at the end of fiscal 2013-14 to
H775 crore at the close of 2014-15.
The implications of gaining scheduled statusAt Shivalik Bank, a Scheduled
Bank status will alter our identity
momentously.
It will facilitate access to sizeable CASA
(current account and savings account)
funds that help widen our footprint
and sustain our financial growth.
It will provide us the opportunity to
forge ties with government institutions
and make institutional business
accessible.
It will enhance access to various
agencies that provide refinance to
scheduled banks. The Bank also intends
to convert to a commercial bank.
Implications of conversion to a Commercial BankThe RBI recently released its Report
of the High Powered Committee on
Urban Co-operative Banks (UCBs).
Shivalik Bank looks to attain Scheduled
Commercial Bank status and the
recommendations will have a far-
reaching effect.
Shivalik Bank will be able to extend
into banking functions (like offering
credit cards), which was not previously
possible as a co-operative bank. As a
scheduled commercial bank, it will be
possible for the Bank’s shares to be
listed and traded on stock exchanges,
resulting in better capital mobilisation
opportunities.
As a commercial bank, Shivalik
Bank can expect greater freedom in
operations, which can translate into a
superior brand, stronger governance
and robust business development. In
line with growing professionalism and
compliance, there would be stronger
customer trust.
Performance reviewI am pleased to state that Shivalik Bank
has adequately prepared itself for a
timely graduation in scale and scope.
Total business grew by 93.31% to
H1,545.02 crore (H775.59 crore in
deposits, H557.09 crore in advances
and H212.34 crore in investments) in
2014-15 compared to H799.26 crore in
2013-14.
Owned funds increased from H0.18
crore in 1999 to H7.08 crore in 2008 to
H57.13 crore in 2014-15.
Net profit stood at H4.95 crore in
2014-15. It remained low due to excess
provision made towards bad and
doubtful debts as a prudent practice.
Net NPA declined by 95 bps to 0.14% in
2014-15.
Strengthening the businessShivalik Bank did not just report better
numbers during the year under review;
it strengthened its business model as
well.
The Bank reached out to small
depositors and borrowers previously
excluded from the organised
banking system due to inadequate
documentation.
The Bank focused on cross-selling,
widened its bouquet of offerings
As a commercial bank, Shivalik Bank can expect greater freedom in operations, which can translate into a superior brand, stronger governance and robust business development.
Lending portfolio, 2014-15 (without loans against Bank’s own deposit)
Large lending (>H30 lacs)
Small lending (upto H30 lacs)
57.56%
42.44%
Annual Report 2014-15 13
and marketed the concept of ‘family
banking’, by virtue of which it opened
accounts for a customer’s entire
family. The coming together of these
measures allowed us to augment our
customer base and promote the much-
neglected cause of financial inclusion.
The Bank shrank customer turnaround
time by launching net banking, SMS
banking, ATMs and CDMs in branches,
allowing customers to avail banking
services beyond normal working hours.
The Bank also invested in best-in-class
CBS software to enhance operational
efficiency.
OptimismAbout half of India’s 1.2 billion-strong
population is eligible to open bank
accounts but is still unbanked. (Source:
KPMG). India is home to the largest
number of unbanked families (more
than 145 million). There is only one
bank branch per 14,000 people,
suggesting a vast untapped potential
(Source: RBI). The total number of
villages in the country is estimated at
more than 6,00,000, but the number of
scheduled commercial banks and that
of regional rural banks stands at only
33,495, underlining the skew that has
lasted in the market for far too long.
The Bank aims to plug these market
gaps and capitalise on emerging
opportunities.
PrioritiesThe Indian economy is likely to report
a growth of 8.1% during the 2015-16
fiscal following a keen emphasis on
infrastructure investments, increased
consumer spending, lower inflation
and a gradual improvement in market
sentiment (Source: Moneycontrol).
Going ahead, Shivalik Bank plans to
generate a 20% growth in 2015-16.
The Bank intends to reduce the cost of
deposits by increasing the proportion
of CASA deposits, increase non-interest
income by cross-selling products,
reduce NPAs, moderate expenditure
and focus on high-yielding retail loans.
Furthermore, the Bank will focus on
creating a deposit base of H900 crore
by 31st March 2016 in order to be
deemed a Scheduled Bank by the RBI.
At Shivalik Bank, emerging as a
Scheduled Commercial Bank in due
course would be a decisive step
towards the Bank’s vision of emerging
as a respectable financial institution
with a sizeable corpus of H5,000 crore in
deposits and advances by 2020.
Regards,
Yashvir Kumar Gupta
Chairman
Extensive regulatory compliancel The Bank strictly follows RBI
guidelines across operations.
l The Bank maintains a capital-to-risk
ratio at more than 12% (mandated 9%).
l The Bank maintained statutory
liquidity ratio at mandated level
through investments in government
securities.
l The Bank maintained the required
priority sector lending ratio at 40%
of its total financing; priority sector
advance ratio was 89.06%.
Shivalik Bank is more than a co‑operative bank providing the usual range of banking services...It is a bank providing micro‑finance as well.
Shivalik Mercantile Co-operative Bank Limited14
Growing relentlessly.
H1,545.02 crore in business
during FY2014‑15 as compared to H799.26 crore in
FY2013‑14.
Broadening horizons.
2 states.
21 branches.
12 business correspondent
centres.
Marching ahead.
To attain a Scheduled Bank
status in 2016 and subsequent
conversion to Commercial Bank.
Transcending boundaries.
H5,000 crore+ in total business
by 2020.
Annual Report 2014-15 15
Focus areas l Increase the CASA ratio from 17.86% in 2014‑15 to 25% in 2015‑16l Emphasise on ‘family banking’ by opening accounts of the customer’s family membersl Offer retail lending services by giving out loans to small customersl Add new customers and retain existing ones through a superior service propositionl Maintain interest rates at par with other banksl Cater to the unbanked population by foraying into areas where it is currently not present
Shivalik Mercantile Co-operative Bank Limited16
At Shivalik Bank, we are raising the bar through superior service
At Shivalik Bank, we strengthened our service, inspired customer trust,
widened our presence, reduced our turnaround time, deepened our
offerings and graduated to a digitised platform.
Even as Shivalik Bank had targeted at the end of FY13-14 to become a
Scheduled Bank, for which it was required to create a deposit base of H750
crore (to be subsequently maintained for a year before it could apply for
the necessary permission), the challenges were considerable. The Bank
leveraged its brand that helped enhance retail and institutional customers in
and outside Saharanpur. The result is that the Bank crossed its target before
schedule and finished the year under review with deposits of H775 crore.
The Bank expanded its deposit base without compromising its Balance
Sheet. The result was that non-performing assets declined and non-interest
income grew significantly even as the volume of business grew.
Besides, the Bank strengthened compliance with stringent norms laid
down by the RBI; it enriched its Board of Directors with eminent individuals
(industrialists, agriculturists, chartered accountants and senior retired bank
professionals, among others).
The Bank intends to apply for a Scheduled Bank status, wishes to be
converted to a Commercial Bank and mobilise H5,000 crore business by
2020.
The graduation of Shivalik Bank to a Scheduled Commercial Bank is
expected to widen opportunities in funds sourcing, profitable deployment
and overall visibility.
Prompt service Shivalik Bank enhanced
customer satisfaction through
an SMS-based service where the
customer can send a text message to
a mobile number that simply reads
‘unhappy’. This triggers an alert,
helping the Bank resolve the
grievance within 48 hours.
Annual Report 2014-15 17
At Shivalik Bank, we catalyse the economy grassroots up
Shivalik Mercantile Co-operative Bank Limited18
At Shivalik Bank, we believe we are in business to transform
destinies and catalyse prosperity.
Over the years, we have lived this philosophy by not only extending
first-rate service to our usual banking customers but by extending
services across the unbanked of the country.
The latter extension has been particularly challenging; we needed
to extend loans to individuals drawn from the weakest sections of
the society (below the poverty line, especially those belonging to
scheduled castes, tribes and other backward classes) through self-
help groups.
The result is that Shivalik Bank has not only extended loans to
these individuals, it has helped engage them within the country’s
mainstream financial system for the first time.
The Bank entered an agreement with Janhit Foundation for
consultancy services in 2010. The Janhit Foundation specialises in the
formation of self-help groups, opening savings accounts and onward
disbursal. After a self-help group has run for four months, it becomes
eligible for financial assistance, for inter-loaning among members of
the group.
The Janhit Foundation provides vocational training to the hitherto
unbanked in responsible loan use – how to operate their bank
account, how to keep transaction records, how to conduct periodical
meetings and how to make the most of their monetary assets.
Shivalik Bank has linked 6,000 self-help groups, touching the lives of
more than 90,000 individuals and disbursing more than H40 crore.
These self-help group members are engaged in dairy farming,
garment making, retail as well as village and cottage industries. These
programmes have helped increase family incomes, enhance literacy,
inculcate responsible banking habits and increase confidence. Best of
all, this form of funding, considered risky, attracted an NPA rate of less
than 1%, which was well below the country’s average.
The Bank plans to introduce fully-equipped BC rural centres and
disburse more than H50 crore to self-help groups by end-FY16.
PartnershipThe Janhit Foundation
provides vocational training to the
hitherto unbanked in responsible
loan use – how to operate their bank
account, how to keep transaction
records, how to conduct periodical
meetings and how to make the
most of their monetary
assets.
Annual Report 2014-15 19
Percentage of the world’s poor who
are women
70“Microcredit plays a critical role in empowering women, helps deliver new‑found respect, independence, and participation for women in their communities and in their households.” - Juan Somavia, Director-General, ILO
‘Teejanbai. From village Bandukheri, block Nakur, district Saharanpur. Needed a H50,000 loan. No one was willing to provide her one.’There are thousands of Teejanbais
in India.
Women who possess a simple
understanding of village realities
and how to profit from them.
For instance, how to address a
village shortage of milk supply.
Which cows to buy. What
quantum of milk supply can plug
demand. Where to market that
milk. And at what price.
These Teejanbais have
market access. They possess
the knowledge. They enjoy
entrepreneurial drive.
All they need is someone who
can provide them with a loan.
Someone like Shivalik Mercantile
Co-operative Bank Limited.
Several studies suggest that when women gain control over spending, less family money is devoted to instant gratification and more for education and starting small businesses.
At commercial banks where middle class men are the primary borrowers, repayment rates are typically less than 70%. Women borrowers at the Grameen Bank have repayment rates that have been 97% year‑after‑year.
“I lend money to poor women! I give $30 loans. And when she holds this money, she shakes, she trembles, she cannot stand still. She cannot believe anybody could give such huge money in her hand. She never, not only held this money, she never saw such an amount of money in her life. And tears will roll down her eyes, not believing this is true. And then she starts feeling that if anybody has trusted her with such an enormous amount of money, $30 or $35, she will give her life to make sure that trust is kept.” - Md Yunus, Founder of Grameen Bank
Shivalik Mercantile Co-operative Bank Limited20
Our pillars of success
Experience Shivalik Bank possesses
a rich experience of 17 years
in the Indian banking industry
translating into timely solutions at the
right place and at the lowest cost . This
leads to complete stakeholder trust. The
Bank comprises experienced bankers and
enthusiastic aspirants with an average
management cadre age of less
than 45 years.
Multi‑locational presence
Shivalik Bank was the first
co-operative bank of Uttar Pradesh to
extend beyond its state, setting up 21
branches across two states. All branches
are in prime locations, strategically
positioned to capture a large slice of
the client base.
Robust financials Shivalik Bank’s credit-deposit
ratio was 71.83% as on 31st March
2015; net interest margin was an
attractive 4.22% and capital adequacy
ratio 13.75% (as against the RBI-
mandated 9%).
Extensive portfolio Shivalik Bank’s product basket
addresses existing and evolving
customer needs. Conventional banking
services are coupled with services addressing
unbanked segment needs. Consequently, the
Bank offers products like recurring deposit
schemes (minimum deposit H10 per
month) and SME loans (up to H10
lac).
Niche services Shivalik Bank offers lockers,
PAN card-related services and
remittance services. Some of its
services for the unbanked populace
have been simplified, widening
inclusion.
Customer base Shivalik Bank provides innovative
and customer-friendly services (home
banking, tele-banking, prompt remittance
instrument issue, quick local clearing, prompt
outstation collection and extended working
hours). The result: the Bank’s retail customer
base exceeded 1.50 lacs in 2014-15.
Stringent compliance
Shivalik Bank complies with demanding
RBI guidelines. The Bank possesses an
impeccable record of compliances across
regulatory agencies, strengthening customer
confidence.
State‑of‑the‑art infrastructure
Shivalik Bank’s branches are fully
computerised. The Bank implemented
the state-of-the-art Core Banking System
software, integrating all its branches. The
Bank’s best-in-class IT department trains
executives and keeps them abreast of
technological advancements.
Annual Report 2014-15 21
NoticeNotice is hereby given that the 18th
Annual General Meeting of the Members
of Shivalik Mercantile Co-operative
Bank Ltd. will be held on Sunday, the
27th September, 2015 at 10:00 hrs at
Hotel Royal Residency, Ambala Road,
Saharanpur - 247001, to transact the
following business:
1. To confirm quorum of the meeting.
2. To grant Leave of Absence to
members of the Bank other than those
whose names appear in the Attendance
Register of this 18th Annual General
Meeting.
3. To confirm the minutes of the 17th
Annual General Meeting and minutes
of the Special General Meeting of the
members of the Bank which were held
on 24th August, 2014 and 12th May,
2015 respectively.
4. To take note of the loans and advances
outstanding against the Directors and
their relatives during the year 2014-15.
By Order of the Board of Directors
Regd. Office:
13/1207, Ansari Road,
Saharanpur, UP – 247001 Sd/-
Suveer Kumar Gupta7th September, 2015 Chief Executive Officer
5. To present the list of employees who
are relatives of members of the board or
of the Chief Executive.
6. To consider and approve the
amendments to Bank’s Bye-Laws No. 7
regarding ‘Raising of Funds’.
7. To consider and approve the
amendments to Bank’s Bye-Laws No 9.1
regarding ‘Authorised Share Capital’.
8. To consider and approve the
amendments to Bank’s Bye-Laws No.
56.1 regarding ‘Loans & Advances’.
9. To consider and approve the
amendments to Bank’s Bye-Laws No.
17.3 regarding ‘Withdrawal & Resignation
of the Member’.
10. To consider conversion of the bank
to a Commercial Bank and apply to RBI
and Central Registrar of Co-operative
Societies for permission to convert.
11. To consider and approve the Annual
Accounts, which consist of the Report of
the Board of Directors, the Report of the
Statutory Auditors, the Balance Sheet
and the Profit & Loss Account, for the
year ended 31st March, 2015.
12. To review actual utilisation of reserves
and other funds for the year 2014-15.
13. To appoint the Statutory Auditors for
2015-16 and to authorise the Board of
Directors to fix their remuneration.
14. To consider and approve the Budget
for 2016-17.
15. To consider and approve the long-
term perspective plan of the bank and
the annual operation plan for 2016-17.
16. To appropriate net profit and to ratify
the payment of interim dividend of
4% on the paid up share capital and to
declare final dividend as recommended
by the Board of Directors for the
Financial Year 2014-15.
17. Any other item with the permission
of Chair.
Shivalik Mercantile Co-operative Bank Limited22
Amendments to bye‑lawsThe existing Bye-Laws No. 7, 9.1, 17.3 & 56.1 and proposed amendments therein
S. No. Existing bye‑law Proposed amendment
7. RAISING OF FUNDSThe funds of the Bank shall be raised in the following manner:7.1 Share Capital;7.2 Admission fees;7.3 Subscriptions;7.4 Deposits;7.5 Loans, credits, advances and overdrafts from
financial institutions;7.6 Grants, aids and donations, and subsidies;7.7 Contributions;7.8 Member’s assets contributory deposits;7.9 Member’s acquisition of interest as specified;7.10 Borrowing from different agencies;7.11 Debentures;7.12 Refinance facilities/line of credit;7.13 Other monetary instruments as approved by RBI;7.14 ProfitThe funds of the bank shall be applied to achieve the objectives of the bank.
RAISING OF FUNDSThe funds of the Bank shall be raised in the following manner:7.1 Share Capital;7.2 Admission fees;7.3 Subscriptions;7.4 Deposits;7.5 Loans, credits, advances and overdrafts from financial institutions;7.6 Grants, aids and donations, and subsidies;7.7 Contributions;7.8 Member’s assets contributory deposits;7.9 Member’s acquisition of interest as specified;7.10 Borrowing from different agencies;7.11 Debentures;7.12 Refinance facilities/line of credit;7.13 Other monetary instruments as approved by RBI;7.14 Profit7.15 Perpetual Non‑cumulative Preference Shares (PNCPs);7.16 Perpetual Cumulative Preference Shares (PCPs);7.17 Redeemable Non‑cumulative Preference Shares (RNCPs);7.18 Redeemable Cumulative Preference Shares (RCPs);7.19 Long Term (Subordinate) Deposits.The funds of the bank shall be applied to achieve the objectives of the bank.
9. AUTHORISED SHARE CAPITAL9.1 The authorised share capital of the Bank shall be
J50 crores divided into 50 lac shares of the face value of H100 each.
AUTHORISED SHARE CAPITAL9.1 The authorised share capital of the Bank shall be J100 crores divided
into 1 crore shares of the face value of H100 each.
17. WITHDRAWAL AND RESIGNATION OF THE MEMBER17.3 During any co-operative year, the aggregate
withdrawal should not exceed 10 percent of the total paid‑up share capital as at 31st March of the preceding year provided the real or exchangeable value of paid up share capital and reserves does not stand reduced to less than H1.00 lac as per section 11(1) of the Banking Regulation Act, 1949 (As Applicable to co-operative Societies) as a result of such withdrawals.
WITHDRAWAL AND RESIGNATION OF THE MEMBER17.3 During any co-operative year, the aggregate withdrawal should be
such that the real or exchangeable value of paid up share capital and reserves does not stand reduced to less than H1.00 lac as per section 11(1) of the Banking Regulation Act, 1949 (As Applicable to co-operative Societies) as a result of such withdrawals.
56. LOANS AND ADVANCES56.1 Loans, cash credits and/or overdrafts on current
accounts may be granted to members on security mentioned below or other security or securities approved by the Board of Directors or without security, subject to the directives issued by the Reserve Bank of India from time to time:
56.1.4 Pledge of government, trustee securities, shares of approved companies, debentures and fixed deposits with the bank.
LOANS AND ADVANCES56.1 Loans, cash credits and/or overdrafts on current accounts may be
granted to members on security mentioned below or other security or securities approved by the Board of Directors or without security, subject to the directives issued by the Reserve Bank of India from time to time:
56.1.4 Pledge of government, trustee securities, shares of approved companies, debentures and fixed deposits with the bank. However, the loan against the security of deposit with the bank may also be granted to a non‑member.
Annual Report 2014-15 23
At Shivalik Bank, governance is everything
At Shivalik Bank, we believe that
business sustainability is derived from
trust and trust, in turn, is earned from
responsible governance.
At our Bank, governance is simply
described as the right way of doing
things. In turn, this benefits all our
stakeholders.
At our Bank, responsible governance is
a combination of intent, content and
discipline.
Intent: At Shivalik Bank, we wish to
grow at a pace dictated by the strength
of our Balance Sheet – never too fast
to compromise our risk appetite and
never too slow to underperform our
rich potential. Our business model
addresses the banking needs of usual
customers on the one hand and the
needs of unbanked customers on the
other. In doing so, we make it possible
to enhance customer and societal
productivity. The Bank invested in a
governance structure that is committed
Report of Board of Directors
from H398.86 crore and H283.97 crore
respectively as on 31st March, 2014
to H775.60 crore and H557.09 crore
respectively as on 31st March, 2015. Net
worth of the Bank has gone up from
H51.93 crore to H57.13 crore as on 31st
March, 2015. Net profit stood at H4.95
crore during FY14-15. The decrease in
profit is due to excess provision made
towards Bad & Doubtful Debts, as a
prudent practice. As the provision was
decided & made after the balance-sheet
was duly audited, the balance-sheet was
revised to effect this change. Gross NPA
of the Bank came down from H4.25 crore
to H2.66 crore, while net NPA reduced by
73.87% from H3.10 crore to H0.81 crore
respectively, and gross NPAs and net
It is indeed our proud privilege to
present, on behalf of the Board of
Directors, the 18th Annual Report on
the business and operations of Shivalik
Mercantile Co-operative Bank Limited
and its Audited Statements of Accounts
for the year ended 31st March, 2015,
together with the Auditors’ Report. FY14-
15 has been a year of achievements for
your Bank as it performed exceedingly
well in almost all the areas of its
activities. Salient highlights with respect
to the performance of your Bank during
FY2014-15 are as below: total business
(deposit+advances) increased to H1,332
crore as on 31st March, 2015, reflecting
a robust growth of 95.30%. Deposit and
advances of the Bank have gone up
Dear Members,NPAs at 0.48% and 0.14% respectively
are much below the permitted level of
7% and 3% respectively. The business
per employee of the Bank in 2014-15
has registered an impressive growth of
53.30% from H3.52 crore to H5.40 crore.
Bank’s capital adequacy ratio, at 13.75%,
is higher than the RBI’s mandated 9%.
Credit-deposit ratio stood at 71.83% as
against 64.85% last year. Your Bank paid
interim dividend of H4.00 per share. The
Board of Directors has recommended
additional dividend of H4.00 per share
(4%) post-AGM. The Board has also
proposed an interim dividend of 4%
again in March, 2016.
Shivalik Mercantile Co-operative Bank Limited24
Treasury management
to extend beyond the letter of the law.
The result was that even as the Bank
is unlisted, a number of its actions are
benchmarked with the governance
standard of listed companies directed
towards benefiting stakeholders.
Content: As a fast-growing multi-state
cooperative bank, we provide clients
with myriad products and services. At
Shivalik Bank, we extended our presence
from deposit activities to various loan
products -gold loans, loans against
property, car loans, working capital loans
and housing loans, among others. This
widening presence helped broaden
revenues, spread risks, capitalise on fast
growing financing segments, enhance
cross-sell and upsell opportunities,
evolve the brand of the Bank from core
banking to services and solutions. The
result is that the proportion of non-core
banking revenues increased from
H3.88 crore in 2013-14 to H5.70 crore
in 2014-15.
Discipline: In an industry where the
Reserve Bank of India is increasing the
role and extent of compliances, Shivalik
Bank is proud to state that it has proved
itself to be a responsible organisation
that complies completely with complex
regulatory and legal requirements. We
respect the growing role of consistent
vigilance through concurrent audits,
transaction monitoring and other
precautions. Our management and
employees share a responsibility to
strengthen our compliance with local,
regional and national regulations,
professional codes and industry
practices. The Bank has put in place a
seamless system of checks and balances
to identify, assess and mitigate risks.
The Bank follows a well-formulated
approach to guarantee an optimal
risk-return ratio. The Bank has ensured
rigorous compliance with guidelines
issued by the central regulatory body;
the Bank’s operations were time and
again appreciated by RBI officials during
inspections.
H2.54crore
Income from treasury operations (2014-15)
13.75%
Capital adequacy ratio (2014-15)
7.28%
Average cost of funds (2014-15)
H1.49crore
Income from treasury operations (2013-14)
16.15%
Capital adequacy ratio (2013-14)
7.18%
Average cost of funds (2013-14)
Annual Report 2014-15 25
OverviewAt the Bank, the role of the treasury
department is to safeguard
organisational liquidity, protect or
enhance Balance Sheet integrity,
mitigate risks and maximise return
on capital; the function enhances the
capital efficiency of assets and liabilities
while managing liquidity.
Since the core business of the Bank is
accepting deposits and providing loans,
a shortage of liquidity can affect growth.
The Bank’s proactive treasury
department utilises funds in best
profitable manner and at the same time
ensures adequate liquidity.
The Bank has in place an investment
policy, which is reviewed in accordance
with guidelines issued by RBI.
Investment operations, funds and
liquidity management operations are
reviewed by the Investment Committee
of the Board. A concurrent audit of the
investment portfolio is undertaken by
the auditors. Optimising the yield on
the Bank’s investment portfolio and
managing market risk is given top
priority.
Highlights, 2014-15 Sustained a capital adequacy ratio
of 13.75%, well above the statutory
requirement of 9% stipulated by the RBI
Maintained Statutory Liquidity Ratio at
prescribed levels entirely in the G-Secs
portfolio
Maintained its net interest margin at
4.22% through the competitive sourcing
of funds and their subsequent disbursal
at a profit
Performed timely treasury operations,
which maximised profits and maintained
adequate liquidity
OutlookGoing ahead, the Bank expects to
grow the scale of resource mobilisation
and loans disbursal while investing in
government securities to maximise
returns.
OverviewAn efficient credit management function
ensures loanees pay on time, credit costs
are moderated and delayed payments
are recovered.
The credit management team assesses
the viability of the customer’s business
model, expansion plans and repayment
ability. The Bank has created a structured
approach to establish credit-worthiness,
including visiting the customer for an
analysis of the business and collateral
offered, followed by loan disbursal and
engagement through the repayment
period.
This function is supported by a
competent legal team that ensures
asset repossession and engages in legal
remedies for loan recovery.
Highlights, 2014-15 Introduced products like short-term
demand loans and agriculture loans,
widening the portfolio.
Credit management
H33.89crore
Average applications per month (2014-15)
H5.85 lac
Average size of loans (2014-15)
57.56%
*Small lending exposure as % of overall (2014-15)
H12.87crore
Average applications per month (2013-14)
H3.26 lac
Average size of loans (2013-14)
55.33%
*Small lending exposure as % of overall (2013-14)
* without loans against bank’s own deposit
Shivalik Mercantile Co-operative Bank Limited26
Increased disbursements 263% from
H154.48 crore in 2013-14 to H406.64 crore
in 2014-15; average ticket size of the
loan increased from H3.26 lac to H5.85 lac
in 2014-15.
Decentralised the credit team by
authorising branches to disburse lower
ticket loans, shrinking the turnaround
time.
Recruited competent professionals
(chartered accountants and MBAs) with
sectoral understanding.
Strengthened policies to assess
customer eligibility, enhancing process
transparency; checked CIBIL scores
of the customer, guarantor and co-
borrower to ascertain credit-worthiness.
Created focused committees (Micro
Committee, Head Office Committee and
Chairman’s Committee) to accelerate
decision-making; reduced turnaround
time in making customer loan sanctions
from 10 days to 7 days.
Emphasised retail lending in line with
rising consumer purchasing power.
Strengthened asset quality of
advances through stronger checks
during disbursements, assessing
customer credibility, ascertaining
funds use by inspecting documents
and implementing post-disbursement
checks.
Strengthened the credit rating
mechanism to assess the loan eligibility
of customers (financial parameters,
customer relations, guarantees,
customer security as well as the
submission of reports and statements);
offered attractive interest rates to
customers who scored between 85 and
100 (AAA-rated) on the credit rating
mechanism.
OutlookGoing ahead, the Bank plans to increase
core advances from H390 crore to H600
crore, emphasise retail lending, maintain
a high asset quality and graduate
newly-commissioned branches towards
profitability.
Collections management
0.14%
Net NPA (2014-15)
1.10%
Net NPA (2013-14)
OverviewIn the business of financing, collection
efficiency ensures that loans or interest
payments are collected on time, any
inefficiency which can potentially create
an asset-liability mismatch.
The Bank has in place a seamless
collection process reinforced by a legal
team. The Bank strengthened collection
efficiency through various initiatives
(SMS and calling) to intimate customers
about forthcoming due dates and
repayments. The Bank set collection
targets for officers with periodic
appraisal. The Bank examined reasons for
delay (situational, intentional or habitual)
for customised responsiveness.
The Bank’s alert system tracks defaulters
for suitable action; the system is set
into motion whenever there is a delay
of 15 days, leading to automated
reminders being sent; a delay of 30-
60 days is followed by a legal notice
(to the borrower and guarantor) and
physical visit by a recovery officer; a
delay of more than 60 days is classified
as high stress account, resulting in
the concerted action of the collection
and legal teams and further a delay of
90 days classifies the account as NPA
resulting in loan recall notice being sent.
Highlights, 2014-15 Segregated the collections team as
per geographies, strengthening better
collections efficiency.
Recovered 31 NPA accounts as a
result of the combined initiative of the
collection and legal teams.
The Bank, to strengthen the
collections team, recruited staff from the
geographies of its presence, ensuring
that the Bank was able to gauge local
customer aspirations better.
OutlookGoing ahead, the Bank plans to improve
collections efficiency, strengthen its
alert system and delegate collections
responsibility based on employee
expertise.
Annual Report 2014-15 27
Information technology
Over the years, the Bank invested
proactively in infrastructure, people and
processes to capture, protect and transmit
information with speed and accuracy. This
graduated the Bank’s service to a modern
standard, leading to customer retention
and accretion.
Highlights, 2014-15 Partnered FIS – the world’s largest
financial technology services provider - to
reduce operational costs.
Invested in Core Banking Solution
technology outsourced from FIS, the
world’s leading CBS provider, which
strengthened the Bank’s ability to offer
diverse services like ATM-cum-debit-
cards, ATMs and CDMs, net banking,
SMS banking, among others. The Bank’s
branches were connected through a
protected network, making it possible to
capture information in real-time.
The Bank’s intranet helped access
information in real-time and assess
the papers of the customers, making it
possible to decide immediately whether
it intended to finance specific cases or
not compared to a conventional decision-
making cycle of two days.
Became the first co-operative bank in
Northern India and the 19th co-operative
bank in India to launch ATM-cum-debit
cards managed by RuPay; the Bank was
recognised by NPCI for this achievement.
Engaged with bill desks which enabled
online shopping, bill payments and online
bookings, among others.
Started tablet-based account opening
services, where the bank executive visits
the customer and provides the account
number instantly, making it possible to
activate the account within 24 hours.
Initiated an Aadhar-based payment
system, utilising the twelve-digit individual
identification number issued by the
Government of India as proof of identity
and address.
Set up Cash Deposit Machines across all
branches so that cash deposited would be
reflected in real-time.
Introduced a Lead Management System
to follow up on leads and updating them
in the system.
Developed a GPS-based Information
System accessible via the internet and
intranet to obtain geographical analysis of
customer information at any point.
Installed a biometric attendance system
as well as an e-register for recording
transaction details to reduce human error.
Initiated an SMS-based service for
customers to instantly resolve customer
issues.
Launched the Instant Mobile Payment
System through which money can be
transferred by sharing the MMID and
mobile number.
Sends transaction alerts through text
messages following every transaction.
Launched NACH and NECS which
helps customers to send the money
from Shivalik Bank to any other bank in
India on a regular basis and vice versa. By
implementing this, customers may get
direct credit for their insurance policy/child
policy/mutual funds payment and any
other policy payments as well as dividend
of shares through companies, registered in
SEBI and can easily pay the EMI of all these
services with his/her Shivalik bank account
number.
Introduced the ‘Unhappy’ concept so
that customer grievances may be escalated
directly to the senior management and
resolved quickly.
Implemented an online complaint
management system for its staff and
customers.
OutlookGoing ahead, the Bank plans to launch
SMS banking for fixed deposits, helping
save time for customers. A bulk note
acceptor will make it possible to accept
an amount of H2 lac at one go. The Bank
intends to expand the IMPS service
whereby customers will be able to send or
transfer money to others. The Bank aims to
introduce an Android-based application,
employee portal and complaint
management system on its website.
The Bank plans to launch a micro ATM
concept by which it can reach the doors
of customers who are still unadressed
by banks. It will provide services like
opening accounts through EKYC, financial
transactions like credit and debit, transfer
of funds, non-financial transaction like mini
statement and balance enquiry, Aadhar-
enabled payments, Biller recharge, among
others.
The Bank plans to implement a Loan
Origination System for better credit
services and to put a transparent system in
place. The Bank is in the process of Direct
RTGS connectivity with RBI.
The Bank also plans to implement a
system so that PAN card, voter ID card,
CIBIL, among others can be checked
automatically by CBS at the time of
opening an account, which shall help
strengthen the KYC process.
Responsible banking: Shivalik Bank
intends to go paperless and use solar
energy to power ATMs and CDMs.
Shivalik Mercantile Co-operative Bank Limited28
Annual Report 2014-15 29
Financial Section
Shivalik Mercantile Co-operative Bank Limited30
Independent Auditor’s Report
To.
The Members of
Shivalik Mercantile Co-operative Bank Ltd.
Report on the Financial Statements
1. We have audited the accompanying financial statements of
M/s SHIVALIK MERCANTILE CO-OPERATIVE BANK LTD., having
registered office at Ansari Road, Saharanpur- 247001 which
comprise the Balance Sheet as at March 31, 2015, the statement of
Profit and Loss Account for the year ended on 31st March 2015 and
a summary of significant accounting policies and other explanatory
information incorporated in these financial statements of the Bank
along with the branches audited by us for the period from 01st
April, 2014 to 31st March, 2015.
Management’s Responsibility for the Financial Statements
2. Management is responsible for the preparation of these ¬financial
statements that give a true and fair view of the financial position and
financial statements of the Bank in accordance with the Banking
Regulation Act, 1949, Multi State Co-operative Societies Act, 2002
and Rules made there-under. This responsibility includes the design,
implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the Institute
of Chartered Accountants of India. Those Standards require that
we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement, whether due to
fraud or error.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgement, including
the assessment of the risk of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
Bank’s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Bank’s internal control. An audit also
includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the
financial statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion and to the best of our information and according
to the explanations given to us, the said accounts together with
the notes thereon give the information required by the Banking
Regulation Act, 1949 as well as Multi State Co-operative Societies
Act, 2002 and rules made there-under, in the manner so required
for the Urban Co-operative Banks subject to our comments
and observations contained in Audit Memorandum, give the
Annual Report 2014-15 31
information so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the
Bank as at March 31, 2015;
(b) In the case of the Profit and Loss Account, of the profit for the
year ended on that date.
7. Emphasis of Matter: The original audit report dated 11th April, 2015
is being revised by this report due to adoption of prudent practice
by the Board of Directors of the bank to increase the provision of
bad and doubtful debts relating to FY 2014-15 by `50 Lacs, which
leads to change in the financial statements pertaining to the said
financial year. The above change has been approved by the board in
their meeting dated 9th September, 2015. As such, our audit report
has been revised to give effect of this change.
Report On Other Legal and Regulatory Requirements
a. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of
our audit and have found them to be satisfactory.
b. In our opinion, proper books of account as required by law have
been kept by the Bank so far as appears from our examination of
those books and proper returns adequate for the purpose of our
audit have been received from the branches not visited by us.
c. The Balance Sheet, the Profit and Loss Account dealt with by this
report are in agreement with the books of account and returns.
d. In our opinion, the Balance Sheet and the Profit and Loss Account
comply with the Accounting Standards issued by Institute of
Chartered Accountants of India (ICAI) to the extent applicable.
e. In our opinion and according to information given to us, there has
been no material impropriety or irregularity in the expenditure or in
the realisation of money due to the bank;
f. In our opinion and according to information given to us, the
transactions of the Bank, which have come to our notice, have been
within the competence of the Bank.
g. Bank has adequate internal financial control system in place and
financial internal control system is effective.
h. The Bank has undertaken Information System Audit as per the
RBI circular dated 11.06.2014. The audit report has been received
in bank. The bank is in the process of Compliance of the audit
comment.
Memorandum of Changes: NIL
For M R S & CO.
Chartered Accountants
Firm Registration Number:- 016610N
Ram Kumar Dhiman
Place: Saharanpur Partner
Date: 10th September 2015 Membership No. 096852
Shivalik Mercantile Co-operative Bank Limited32
Balance Sheet as at 31st March 2015
(Amount in C)
Schedule Current Year 31.03.2015
Previous Year 31.03.2014
CAPITAL & LIABILITIES
(1) Capital 1 44,66,06,300.00 41,33,23,700.00
(2) Reserve fund & other reserves 2 9,78,32,720.00 6,77,81,150.00
(3) Deposits & other accounts 3 7,75,58,73,272.21 3,98,85,74,117.62
(4) Borrowings - – 90,00,000.00
(5) Bills for collection being bills receivable as per contra - 23,044.00 1,70,034.00
(6) Branch adjustments - – –
(7) Overdue interest reserves (on NPA) - 53,95,509.67 13,31,799.84
(8) Interest payable (on term deposits) - 96,36,430.37 –
(9) Other liabilities & provisions 4 9,23,84,380.37 6,84,05,876.14
(10) Profit & loss 5 4,06,77,851.79 5,99,71,672.93
Grand total 8,44,84,29,508.41 4,60,85,58,350.53
Contingent liabilities - 93,98,600.00 1,17,24,800.00
PROPERTY & ASSETS
(1) Cash in hand & balance with RBI - 3,79,69,952.00 3,99,85,893.00
(2) Balances with other banks 6 55,05,11,110.90 38,34,58,785.21
(3) Money at call & short notice - – –
(4) Investments 7 2,12,34,32,289.00 1,16,43,37,011.00
(5) Advances 8 5,57,09,05,071.42 2,83,96,93,079.37
(6) Interest receivable 9 2,51,98,500.67 8,14,24,452.40
Of which overdue (on NPA) 53,95,509.67 13,31,799.84
(7) Bills receivable being bills for collection as per contra - 23,044.00 1,70,034.00
(8) Fixed assets less depreciation 10 6,27,51,311.00 4,42,98,750.35
(9) Other assets 11 7,76,38,229.42 5,51,90,345.20
Grand total 8,44,84,29,508.41 4,60,85,58,350.53
As per our report of even date attached
For M R S & Co. Suveer Kumar Gupta Sarvesh Singhal
Chartered Accountants Managing Director & CEO Director
(Firm Regn. No. 016610N)
Ram Kumar Dhiman Dr. Sanjeev Mittal Sudhakar Agarwal Shiv Puran Gulati
Partner (M. No. 096852) Director Director Vice Chairman
Saharanpur: 10th September, 2015
Note:
The Balance-sheet as on 31st March, 2015 was audited on 11th April, 2015. Subsequently, as a prudent practice the Board of Directors decided to
increase the Provision for Bad & Doubtful Debts relating to FY 2014-15 by `50 lacs. This increase was affected by debit to Profit & Loss account for
FY 2014-15 and approved by the Board in its meeting dated 9th September, 2015. As such, the audited Balance-sheet and Profit & Loss Account have
been revised to give effect of this change.
Annual Report 2014-15 33
Profit and Loss Account for the year ended 31st March 2015
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
EXPENDITURE
(1) Interest on deposits, borrowings etc.
i) Interest on deposits 40,17,89,791.52 27,97,51,559.11
ii) Interest on borrowings 19,27,089.00 16,68,379.00
iii) Interest - others 1,040.00 8,244.00
Total 40,37,17,920.52 28,14,28,182.11
(2) Salaries, allowances, provident fund, bonus & gratuity etc. 7,60,40,204.32 4,81,41,880.11
(3) Rent, taxes, insurance, lighting etc.
i) Building rent 1,23,27,802.00 86,85,828.00
ii) Taxes 33,31,833.50 18,77,230.34
iii) Insurance 58,30,530.67 45,80,194.00
iv) Lighting 66,85,380.03 45,57,239.73
Total 2,81,75,546.20 1,97,00,492.07
(4) Law charges 5,48,804.10 4,99,063.00
(5) Postage and telephone charges
i) Postage 3,70,438.56 82,365.00
ii) Telephone 9,49,371.57 5,67,056.42
iii) Computer networking, connectivity & hostage 69,40,399.76 22,72,061.63
Total 82,60,209.89 29,21,483.05
(6) Audit & consultancy fees 2,18,35,193.17 1,31,67,062.00
(7) Depreciation and repairs
i) Depreciation 1,06,54,130.51 74,77,966.50
ii) Written off/ impaired assets 1,214.00 95,233.00
iii) Repairs 43,05,667.87 30,96,136.80
Total 1,49,61,012.38 1,06,69,336.30
(8) Stationery, printing and advertisement
i) Printing & stationery 31,73,128.72 17,06,038.69
ii) Advertisement 31,93,190.75 15,06,952.46
Total 63,66,319.47 32,12,991.15
Contd…
Shivalik Mercantile Co-operative Bank Limited34
Profit and Loss Account for the year ended 31st March 2015
(Amount in C) Current Year 31.03.2015
Previous Year 31.03.2014
EXPENDITURE (9) Other expenditure
i) Subscription 5,90,668.04 2,86,704.65
ii) Training & development of staff 45,765.00 22,660.00
iii) AGM & conference 2,27,398.00 1,78,267.00
iv) Security 34,06,106.62 21,91,019.00
v) Business promotion & gifts 16,29,912.16 78,949.00
vi) Staff welfare 17,20,093.57 11,33,633.00
vii) Travel & transport 30,57,841.53 19,34,711.50
viii) Commission on daily deposit 13,87,902.72 13,72,767.00
ix) Banking correspondent expenditure 25,57,329.00 –
x) Charges paid to other banks 6,67,247.92 3,90,151.34
xi) Amortization on investments 9,45,572.00 4,95,199.00
xii) Miscellaneous expenses 10,17,509.49 4,74,321.29
Total 1,72,53,346.05 85,58,382.78
(10) Loss from sale of non-banking assets – 5,782.00
(11) Provisions
i) Contingent provision on standard assets 45,26,779.00 7,02,730.00
ii) Provision for bad & doubtful debts (NPA) 70,90,848.00 62,00,000.00
iii) Special reserve u/s 36(1)(viii) of income tax act 23,52,098.00 26,15,047.00
iv) Provision for current income tax 2,80,73,398.00 2,31,44,848.00
v) Provision for deferred tax for current year 6,00,115.00 2,14,291.00
Total 4,26,43,238.00 3,28,76,916.00
(12) Balance of profit 4,94,85,072.86 5,22,01,492.83
Grand total 66,92,86,866.96 47,33,83,063.40
Explanatory note:
Transferred to investment fluctuation reserve 17,83,645.00 –
Contd… from previous page
Contd…
Note:
The Balance-sheet as on 31st March, 2015 was audited on 11th April, 2015. Subsequently, as a prudent practice the Board of Directors decided to
increase the Provision for Bad & Doubtful Debts relating to FY 2014-15 by `50 lacs. This increase was affected by debit to Profit & Loss account for
FY 2014-15 and approved by the Board in its meeting dated 9th September, 2015. As such, the audited Balance-sheet and Profit & Loss Account have
been revised to give effect of this change.
Annual Report 2014-15 35
Profit and Loss Account for the year ended 31st March 2015
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
INCOME
(1) Interest & discount
i) Interest on loans & advances 45,84,03,988.72 32,87,88,592.70
ii) Interest on investments 12,83,38,819.22 9,71,70,752.16
iii) Income on investment in mutual funds 2,54,45,552.76 85,67,079.08
Total 61,21,88,360.70 43,45,26,423.94
(2) Commission, exchange & brokerage 5,39,228.63 5,07,886.10
(3) Profit from sale of non-banking assets 38,214.00 –
(4) Profit on sale of securities 2,54,34,136.00 1,48,29,478.00
(5) Other receipts
i) Loan processing charges 1,72,95,959.79 1,04,49,495.40
ii) Incidental charges 21,72,523.99 21,87,905.59
iii) Locker rent 24,28,174.69 18,30,016.00
iv) Dividend from mutual funds 60.00 17,090.00
V) Bad debts recovered 21,59,000.00 37,74,000.00
vi) Commission from insurance business 5,20,187.00 –
vii) Miscellaneous income 65,11,022.16 52,60,768.37
Total 3,10,86,927.63 2,35,19,275.36
Grand total 66,92,86,866.96 47,33,83,063.40
Explanatory note:
Contingent prov. against depreciation in investments 17,83,645.00 –
Contd… from previous page
As per our report of even date attached
For M R S & Co. Suveer Kumar Gupta Sarvesh Singhal
Chartered Accountants Managing Director & CEO Director
(Firm Regn. No. 016610N)
Ram Kumar Dhiman Dr. Sanjeev Mittal Sudhakar Agarwal Shiv Puran Gulati
Partner (M. No. 096852) Director Director Vice Chairman
Saharanpur: 10th September, 2015
Shivalik Mercantile Co-operative Bank Limited36
Schedules to Balance Sheet as at 31st March 2015
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
i) Authorized capital
50,00,000 shares of `100/= each 50,00,00,000.00 50,00,00,000.00
ii) Subscribed capital
44,66,063 shares of `100/= each (Previous Year 41,33,237 Shares of `100/- each) 44,66,06,300.00 41,33,23,700.00
iii) Amount called up 44,66,06,300.00 41,33,23,700.00
On 44,66,063 shares at `100/= each
Of (iii) above, held by
(a) Individuals & Others 44,66,06,300.00 41,33,23,700.00
(b) Co-operative institutions – –
(c) Government – –
Schedule 1: CAPITAL
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
i) Statutory reserve 5,41,38,308.00 4,05,23,497.00
ii) Investment fluctuation reserve 63,43,728.00 20,05,995.00
iii) Other funds and reserves
(a) Share transfer fund 50,00,000.00 50,00,000.00
(b) Provision on standard assets 1,24,78,400.00 79,51,621.00
(c) Special reserve u/s 36(1)(viii) of I.T. Act 79,88,039.00 56,35,941.00
(d) Contingency reserve 1,18,84,245.00 66,64,096.00
Total 3,73,50,684.00 2,52,51,658.00
Grand total 9,78,32,720.00 6,77,81,150.00
Schedule 2: RESERVE FUND & OTHER RESERVES
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
i) Fixed deposits
a) Individuals & others 6,37,04,54,281.17 3,01,99,68,524.70
b) Central co-operative banks – –
c) Other societies – –
Total 6,37,04,54,281.17 3,01,99,68,524.70
ii) Savings bank deposit
a) Individuals & others 1,16,05,18,489.54 79,58,07,809.28
b) Central co-operative banks – –
c) Other societies – –
Total 1,16,05,18,489.54 79,58,07,809.28
iii) Current deposits
a) Individuals & others 22,49,00,501.50 17,27,97,783.64
b) Central co-operative banks – –
c) Other societies – –
Total 22,49,00,501.50 17,27,97,783.64
iv) Money at call and short notice – –
Grand total 7,75,58,73,272.21 3,98,85,74,117.62
Schedule 3: DEPOSIT & OTHER ACCOUNTS
Annual Report 2014-15 37
Schedules to Balance Sheet as at 31st March 2015
(Amount in C)
Current Year
31.03.2015
Previous Year
31.03.2014
i) Bills payable (DDs/POs issued but not yet presented for payment) 1,01,35,411.31 75,23,446.19
ii) Unclaimed dividends 79,01,305.00 8,87,413.00
iii) Sundries 1,93,26,512.02 1,90,87,954.75
iv) Provision for bonus 18,46,633.00 12,59,650.00
v) Provision for income tax 2,80,73,398.00 2,31,44,848.00
vi) Deferred tax liability 13,31,871.00 7,31,756.00
vii) Tax deducted at source 32,46,133.84 5,96,595.00
viii) Provision for audit fees 2,02,500.00 2,00,000.00
ix) Provision for bad & doubtful debts (NPA) 1,85,57,116.20 1,14,66,268.20
x) Paid-up capital (collection account) of Erstwhile Bhoj Nagrik Sahakari Bank Ltd., Dhar,
& Erstwhile Malwa Bank, Indore
17,63,500.00 17,24,300.00
xi) Investment depreciation reserve – 17,83,645.00
Total 9,23,84,380.37 6,84,05,876.14
Schedule 4: OTHER LIABILITIES & PROVISIONS
(Amount in C)
Current Year
31.03.2015
Previous Year
31.03.2014
i) Profit as per last balance-sheet 5,99,71,672.93 3,05,18,087.10
ii) Less: Appropriations of profit for last year
Statutory reserve 1,30,50,373.00 54,28,041.00
Co-operative education fund 5,22,015.00 2,17,122.00
Share transfer fund – –
Contingency reserve 52,20,149.00 21,71,216.00
Investment fluctuation reserve 30,00,000.00 –
Bad & doubtful debts reserve – –
Contingent prov. on standard assets – –
Dividend @ 12% 2,80,17,096.00 1,49,31,528.00
MOC adjustment for fy 2013-14 1,818.00 –
Self assessment tax for fy 2013-14 22,59,670.00 –
Income tax adjustments of past years (32,339.00) –
Share capital of borrowers/guarantors of Erstwhile Malwa Bank recreated 69,600.00 –
Total (5,21,08,382.00) (2,27,47,907.00)
iii) Add: Profit of the year b/f from P&L a/c 4,94,85,072.86 5,22,01,492.83
Less: interim diviend paid for FY 2014-15 (1,66,70,512.00) –
Grand total 4,06,77,851.79 5,99,71,672.93
Schedule 5: PROFIT & LOSS
Shivalik Mercantile Co-operative Bank Limited38
Schedules to Balance Sheet as at 31st March 2015
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
i) Current deposits a) District co-operative bank ltd 7,63,38,068.43 3,63,85,004.69 b) SBI & subsidiary banks 91,90,102.59 1,27,35,205.65 c) Other public sector banks 16,48,28,957.52 3,47,72,739.22 d) Other scheduled banks 82,33,586.80 14,73,85,094.65
Total 25,85,90,715.34 23,12,78,044.21 ii) Savings bank deposits – – iii) Fixed deposits a) district co-operative bank ltd. – 40,00,000.00 b) sbi & subsidiary banks – – c) other public sector & scheduled banks 29,19,20,395.56 14,81,80,741.00
Total 29,19,20,395.56 15,21,80,741.00 Grand total 55,05,11,110.90 38,34,58,785.21
Schedule 6: BALANCES WITH OTHER BANKS
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
i) In central & state government securities 1,72,59,58,289.00 1,00,38,63,011.00 Market value: 1,73,07,81,450.00 1,00,23,33,382.00 Face value: 1,71,00,00,000.00 1,01,00,00,000.00 ii) Other trustee securities – – iii) Shares in co-operative institutions 2,000.00 2,000.00 iv) Other investments 39,74,72,000.00 16,04,72,000.00 Grand total 2,12,34,32,289.00 1,16,43,37,011.00
Schedule 7: INVESTMENTS
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
i) Short term loans, cash credits overdrafts and bills discounted of which secured
against
3,30,57,25,173.28 1,60,08,61,463.97
a) Govt. & other approved securities – – b) Other tangible securities 3,30,57,25,173.28 1,60,08,61,463.97 Of the advances, amt. due from individuals 3,30,57,25,173.28 1,60,08,61,463.97 Of the advances, amount overdue 1,43,71,492.05 37,68,661.30 Considered bad & doubtful of recovery (fully provided for) 1,08,63,571.00 – ii) Medium term loans of which secured against 45,42,54,269.18 30,87,01,002.48 a) Govt. & other approved securities – – b) Other tangible securities 45,42,54,269.18 30,87,01,002.48 Of the advances, amt. due from individuals 45,42,54,269.18 30,87,01,002.48 Of the advances, amount overdue 85,64,899.22 43,86,879.25 Considered bad & doubtful of recovery (fully provided for) 9,49,173.55 9,44,744.87 iii) Long term loans of which secured against 1,81,09,25,628.96 93,01,30,612.92 a) Govt. & other approved securities – – b) Other tangible securities 1,81,09,25,628.96 93,01,30,612.92 Of the advances, amt. due from individuals 1,81,09,25,628.96 93,01,30,612.92 Of the advances, amount overdue 36,73,326.32 1,16,17,290.47 Considered bad & doubtful of recovery (fully provided for) – 1,50,300.00 Grand total 5,57,09,05,071.42 2,83,96,93,079.37
Schedule 8: ADVANCES
Annual Report 2014-15 39
Schedules to Balance Sheet as at 31st March 2015
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
i) Interest receivable on investments (accrued)
a) Government securities 1,80,96,451.00 1,56,48,601.00
b) Bank FDRs – 6,44,44,051.56
c) Other investments 17,06,540.00 –
Total 1,98,02,991.00 8,00,92,652.56
ii) Interest receivable on NPA (overdue) 53,95,509.67 13,31,799.84
Total 2,51,98,500.67 8,14,24,452.40
Schedule 9: INTEREST RECEIVABLE
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
As on 01.04.2014 4,42,98,750.35 3,55,80,671.59
Additions during the year 2,95,03,891.49 1,63,05,060.26
Less: Sale/adjustments (3,97,200.33) (1,09,015.00)
Less: Depreciation for current year (1,06,54,130.51) (74,77,966.50)
Written down value as on 31.03.2015 6,27,51,311.00 4,42,98,750.35
Schedule 10: FIXED ASSETS
(Amount in C)
Current Year 31.03.2015
Previous Year 31.03.2014
i) Refundable securities 12,45,095.00 11,24,095.00
ii) Stock of printed stationery 12,01,331.98 7,21,354.20
iii) Miscellaneous receivables 3,32,00,778.44 1,87,30,419.00
iv) Tax deducted at source 1,44,208.00 70,875.00
v) Income tax refundable 58,06,776.00 57,03,562.00
vi) Advance income tax paid 2,64,00,000.00 1,92,00,000.00
vii) Non-banking assets acquired under sarfaesi 96,40,040.00 96,40,040.00
Total 7,76,38,229.42 5,51,90,345.20
Schedule 11: OTHER ASSETS
As per our report of even date attached
For M R S & Co. Suveer Kumar Gupta Sarvesh Singhal
Chartered Accountants Managing Director & CEO Director
(Firm Regn. No. 016610N)
Ram Kumar Dhiman Dr. Sanjeev Mittal Sudhakar Agarwal Shiv Puran Gulati
Partner (M. No. 096852) Director Director Vice Chairman
Saharanpur: 10th September, 2015
Shivalik Mercantile Co-operative Bank Limited40
(A) BACKGROUND AND OPERATIONS:1. Shivalik Mercantile Co-operative Bank Ltd. was registered in 1997 under Uttar Pradesh Co-operative Societies Act 1965 and started operations in
September, 1998. After achieving a deposit base of `100 crores on 31.03.2010, the Bank became a Tier II bank and expanded its area of operation to whole of the state of Uttar Pradesh. Subsequently Bhoj Nagrik Sahakari Bank Maryadit, Dhar, Madhya Pradesh was merged into Shivalik Bank with effect from 1st November, 2010. Consequent upon this inter-state merger, Shivalik Mercantile Co-operative Bank Ltd. was deregistered under Uttar Pradesh Co-operative Societies Act, 1965 and was re-registered under the Multi State Co-operative Societies Act, 2002, in September 2010, as a Multi-State Urban Co-operative Bank. The Bank again merged erstwhile Malwa Commercial Co-operative Bank Ltd., Indore with effect from 1st September, 2012. The Bank also continues to open new branches and presently has twenty one branches, twelve in District Saharanpur, two in District Muzaffarnagar, one in Meerut, two in Ghaziabad & two in Noida, U.P., and one each in Indore & Dhar, M.P. The Bank provides complete retail and corporate banking services. Bank has applied to RBI for license to open seven more branches, five in UP & two in MP.
2. Merger of Malwa Commercial Co-operative Bank Ltd. with our bank: Malwa Commercial Co-operative Bank Ltd., Indore, M.P. (Target Bank) merged with Shivalik Mercantile Co-operative Bank Ltd. (Acquirer Bank)
with effect from 1st September, 2012. In accordance with the scheme of merger, the Share Capital of the Target Bank was kept in Collection Account in the books of the Acquirer Bank for a period of 1 year from the date of merger. On the expiry of the period of one year the balance amount (less, held by borrowers & guarantors) remaining in collection account was transferred to General Reserve. During the year only an amount of `61,600 remains in the books of the bank that pertains to share capital held by borrowers & guarantors.
3. Merger of Bhoj Nagrik Sahakari Bank with our bank: a. Bhoj Nagrik Sahakari Bank Maryadit, Dhar, M.P. (Target Bank) merged with Shivalik Mercantile Co-operative Bank Ltd. (Acquirer Bank) with
effect from 1st November, 2010. As per the scheme of merger, the Share Capital of the Target Bank is being treated as Collection Account in the books of the Acquirer Bank and will remain so for a period of 10 years from the date of merger. During this period any share-holder of the Target bank desiring to withdraw his/her shares shall be paid back the amount at par. After the expiry of 10 years’ period, the amount remaining unpaid shall be converted to the share capital of the equivalent amount of Shivalik Bank. The current balance in the said account is `17,01,900.
b. As a part of the prudential practice the non-performing loans of the Target Bank which remained unrealized till 31st March, 2012 were written off as bad debts in the F.Y. 2011-12. During the current year, `21.59 lacs has been recovered and credited to current year’s Profit & Loss Account. The further efforts for recovery of these loans will continue and recoveries, if any, shall be considered as income for the year in which the recoveries are made.
(B) SIGNIFICANT ACCOUNTING POLICIES:-1. Accounting Convention The financial statements have been prepared in accordance with the historical cost convention and on going concern concept and in accordance
with the generally accepted accounting principles and the statutory provisions prescribed in Banking Regulation Act 1949, the Multi State Co-operative Societies Act, 2002, circulars and guidelines issued by the Reserve Bank of India from time to time, and the Accounting Standards issued by the Institute of Chartered Accountants of India and practices prevailing within the banking industry in the country, except as otherwise stated.
2. Use of estimates The preparation of the financial statements, in conformity with generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent liabilities at the date of the financial statements. Actual results could differ from those estimates. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Any revisions to the accounting estimates are recognized prospectively
3. Foreign Exchange Transactions The bank has not done any foreign exchange business, nor does it have any foreign exchange assets/liabilities.
4. Investments 4.1. In accordance with the extant instructions issued by Reserve Bank of India for the purpose of valuation of Investments, the Bank has
classified its Investment portfolio as at 31st March 2015 into the following three categories:
(a) Held To Maturity (HTM): Investments under this category are carried at their book value. Any premium on acquisition of a security is amortized over the balance period to maturity.
Significant Accounting Policies, Disclosures and Notes on Accounts (Schedule annexed to and forming part of the Balance Sheet as on 31st March, 2015 and Profit & Loss Account for the year ended 31st March, 2015)
Annual Report 2014-15 41
(b) Available For Sale (AFS): Investments in the category are valued at market rate and net depreciation in the category, if any, is provided
for. Net appreciation, if any, is ignored.
(c) Held For Trading (HFT): Investments in the category are valued at market rate and net depreciation in the category, if any, is provided
for. Net appreciation, if any, is ignored.
4.2. The Investments have been disclosed in the Balance Sheet as under:
SLR: (a) Central and State Government Securities
Non-SLR: (a) Other Trustee Securities
(b) Shares of Co-operative Institutions
(c) Other Investments
4.3. Market Value of Central and State Government Securities is determined in terms of Yield to Maturity method indicated by Fixed Income
Money Market Dealers Association (FIMMDA).
4.4. The Amortization of premium on investments in HTM category is calculated on days basis to maturity.
4.5. No provision is required to be made for depreciation on Investments under AFS & HFT categories as on 31st March, 2015 (previous year
`15,29,629). An amount of 17,83,645, held on account of Contingent Provision against depreciation in Investments (past years) is being
transferred back to IFR, through profit & loss account, by showing it below the line. Further, 25% of this amount (`4,45,912) is taken to
Statutory Reserve to compensate for less amount transferred in the year this provision was created and only the net amount (`13,37,733) is
taken to IFR.
4.6. Investment Fluctuation Reserve is being created as per the extant instructions of RBI.
5. Loans and Advances 5.1. (a) The classification of advances into Standard, Sub-standard, Doubtful & Loss assets as well as provision on non-performing advances
has been arrived at in accordance with the extant instructions issued by the Reserve Bank of India with regard to Income Recognition
and Assets Classification (IRAC) from time to time and as applicable for preparation of this Balance Sheet.
(b) In addition to this, a general provision on standard assets is also made as per the extant instructions issued by Reserve Bank of India
i.e. @ 0.40% of the outstanding amount on a portfolio basis except in the case of direct advances to agricultural and SME sector
which has been @0.25%, advance under Commercial Real Estate sector for housing needs, which attract provisioning @0.75% and
advance under Commercial Real Estate sector for commercial needs, which attract provisioning @1%. Further, advances against bank’s
deposits/NSCs/KVPs/LIC Policies do not attract any provision.
5.2. The overdue interest in respect of non-performing advances is provided separately under “Overdue Interest Reserve” in accordance with the
extant instructions issued by Reserve Bank of India.
6. Fixed Assets and Depreciation 6.1. Fixed Assets are stated and carried in the Balance Sheet at written down value, purchase/ additions during the year less depreciation for the
year thereon. Cost includes incidental expenses incurred on acquisition of assets.
6.2. Fixed Assets are depreciated at the rates mentioned below:
(a) Furniture and Fixtures: 15% (W.D.V.)
(b) Office Equipments: 15% (W.D.V.)
(c) Office Vehicles: 15% (W.D.V.)
(d) Safe, Locker Steel Almirah: 2.5% (W.D.V.)
(e) Computer Hardware & Software: 33.33% (Straight Line)
(f ) Temporary Structures: 100%
Significant Accounting Policies, Disclosures and Notes on Accounts (Schedule annexed to and forming part of the Balance Sheet as on 31st March, 2015 and Profit & Loss Account for the year ended 31st March, 2015)
Shivalik Mercantile Co-operative Bank Limited42
6.3. Depreciation on assets purchased in the first 6 months of the year is provided at full rates. Depreciation at 50% rates is provided for fixed
assets purchased in the last 6 months of the financial year. Depreciation on assets sold during the year is charged up to the date of sale.
6.4. Depreciation on assets, where cost of each item is below `5,000/- is provided @ 100% in the year of purchase itself.
6.5. There has been no change in method and rates of providing depreciation as compared to the previous year.
7. Revenue Recognition (Accounting Standard AS-9)
7.1. Items of income and expenditure are generally accounted for on accrual basis.
7.2. Income from non-performing assets is recognized to the extent realized, as per the extant instructions issued by Reserve Bank of India.
7.3. Dividend received from shares of co-operative institutions is accounted on receipt basis.
7.4. Interest on overdue fixed deposits is provided on ad-hoc basis in accordance with the extant instructions of RBI. Actual interest expense is
accounted for at the time of renewal of FDR
7.5. There are no material prior period item’s included in Profit and Loss account.
7.6. Certain items of income such as Locker Rent, loan processing fee are recognized on cash basis. The quantum of such income is not material.
8. Non-Performing Assets
8.1. Non-Performing assets of the bank have been identified and provision thereon has been made as per the extant instructions of Reserve
Bank of India.
8.2. Any advance including Bills Discounted, which became Non Performing Assets at the close of the year, interest accrued and credited to
income account is reversed or provided for, if the same is not realized.
8.3. Interest accrued on NPA is not shown as income but shown as “Overdue Interest Reserve” in the Balance-sheet.
9. Employee Benefits (Accounting Standard AS-15)
9.1. The liability towards gratuity is assessed and calculated on actuarial valuation and paid every year to L.I.C. of India as Employees Group
Gratuity Scheme.
9.2. Bank’s Contribution towards provident fund is paid every month to Commissioner of Provident Fund in accordance with the provisions of
Employees Provident Fund Scheme, 1952 and Employees Pension Fund Scheme, 1995.
9.3. Leave encashment is accounted on actual payment basis.
9.4. The bank does not have any scheme of LTC for its employees, however a regular taxable allowance in this regard is being paid as a part of
salary.
10. Reserve Fund and Other Reserves
10.1. Dividend remaining unclaimed over 3 years are transferred to Statutory Reserve Fund a/c.
10.2. Nominal Membership and Entrance Fees are transferred to Statutory Reserve Fund every year.
11. Taxation
11.1. Income Tax expense comprises of Current Tax. Current Tax is provided on the Taxable Income using applicable Tax Rates and Tax Laws.
11.2. Deferred Tax Liability in accordance with AS-22 (Accounting for Taxes on Income) has been recognized, as per the details given below:
Due to Depreciation
For period up to 31st March 2014 7,31,756
For the year 2014-15 6,00,115
As on 31st March 2015 13,31,871
Significant Accounting Policies, Disclosures and Notes on Accounts (Schedule annexed to and forming part of the Balance Sheet as on 31st March, 2015 and Profit & Loss Account for the year ended 31st March, 2015)
Annual Report 2014-15 43
(C) DISCLOSURES AND NOTES ON ACCOUNTS:
1. Disclosure As Per the extant instructions of Reserve Bank of India: (Amount in `/Lacs)
Sr. No. Particular 31.03.2015 31.03.2014
1.1. Capital to Risk Asset Ratio (CRAR) 13.75% 16.15%
1.2. a. Movement of CRAR (Basis Points) -240 187
b. Risk Weighted Assets 41542.17 31743.19
1.3. Values of Investments are as under:
A. Government /Approved Securities (SLR)
a. HELD TO MATURITY
Face Value 11390.00 8390.00
Book Value 11547.43 8398.17
b. AVAILABLE FOR SALE
Face Value 1710.00 1710.00
Book Value 1682.00 1640.47
Market Value 1698.79 1625.17
c. HELD FOR TRADING
Face Value 4000.00 –
Book Value 4030.15 –
Market Value 4034.96 –
B. Other Investments (Non-SLR)
Shares of Co-operative Institution 0.02 0.02
Others (Book Value) 3974.72 1604.74
Others (Market Value) 3977.67 1605.62
1.4. Advances against Shares & Debenture NIL NIL
(Amount in `/Lacs)
Sr. No. Particular 31.03.2015 31.03.2014
1.6. Average Cost of Deposits 8.20% 7.98%
1.7. a. Gross NPAs 266.10 424.70
b. Net NPAs 80.53 310.04
1.8. Movement in NPA
Opening Balance 424.69 50.99
Add : Additions during the year 260.01 560.09
Less : Closed/ Recovered /Written off 418.60 186.39
Closing Balance 266.10 424.69
1.5. Advances of `5,57,09.05 Lacs (Previous year `2,83,96.93 Lacs) shown in the Balance Sheet include: (` In lacs)
ParticularsFUND BASED NON- FUND BASED
31.03.2015 31.03.2014 31.03.2015 31.03.2014
i) Advances against Real Estate, Construction
Business, Housing
14,055.30 14,652.25 Nil Nil
ii) Advance to Directors Nil Nil Nil Nil
iii) Advances to Relatives of Directors &
Companies/ firms in which they are interested
Nil Nil Nil Nil
iv) Advances to Chairman Nil Nil Nil Nil
Significant Accounting Policies, Disclosures and Notes on Accounts (Schedule annexed to and forming part of the Balance Sheet as on 31st March, 2015 and Profit & Loss Account for the year ended 31st March, 2015)
Shivalik Mercantile Co-operative Bank Limited44
(Amount in `/Lacs)
Sr. No. Particular 31.03.2015 31.03.20141.9. a. Interest income as a percentage of working funds 10.58% 10.87%
b. Non-Interest income as percentage of working funds 1.49% 1.21%c. Operating profit as a percentage of working funds 1.85% 2.17%d. Return on Assets 1.49% 1.81%e. Business (Deposits + Advances) per employee 539.55 351.97f. Profit per employee (Before Tax) 3.14 3.87g. Profit per employee (After Tax) 2.00 2.68
1.10. a. Provision on NPAs required to be made 135.57 45.61b. Provision on NPAs actually made 185.57 114.66c. Provisions on depreciation in investments required to be made – 17.84d. Provisions on depreciation in investments – 17.84e. Provision on Standard Assets required to be made 124.78 79.42f. Provision on Standard Assets actually made 124.78 79.52
1.11. No restructuring of Loans & Advances accounts has been made in the year.1.12. No fixed assets were revalued in the year.
Significant Accounting Policies, Disclosures and Notes on Accounts (Schedule annexed to and forming part of the Balance Sheet as on 31st March, 2015 and Profit & Loss Account for the year ended 31st March, 2015)
1. Related Party Disclosure (Accounting Standard AS-18) A. List of the related parties and their relationship
Name of the party Relationshipa. Key Managerial Personnel
1. Shri Yashvir Kumar Gupta Chairmanb Relatives of the Key Managerial Personnel
1. Shri Suveer Kumar Gupta Son of Shri Yashvir Kumar Gupta2. Smt. Swarn Lata Gupta Wife of Shri Yashvir Kumar Gupta3. M/s Yashvir Kumar Gupta HUF HUF of Shri Yashvir Kumar Gupta
B. Details of transactions with the relateD parties carrieD out on an arm’s length Basis. (Amount in `/Lacs)
Sr. No. Nature of the transactionsRelatives of Key
Managerial PersonnelRelatives of Key
Managerial Personnel31.03.2015 31.03.2014
1. Salary paid 19,09,666 16,06,0402. Rent paid 14,13,000 9,86,000
3. Leases (Accounting Standard AS-19) The bank has cancelable operating lease and the disclosures under AS 19 on ‘Leases’ issued by ICAI are as follows:
i) Lease rent payments of `1,23,27,802/- (Previous Year `86,85,828/-) have been recognized in the statement of profit and loss for the year ended March, 2015.
ii) The lease agreements entered into pertain to use of premises by the bank. The lease agreements do not have any undue restrictive or onerous clauses other than those normally prevalent in similar agreements.
4. Intangible Assets (Accounting Standard AS-26) Details of Computer Software included in Other Assets in accordance with AS-26 on Intangible Assets issued by the ICAI are as under:
(Amount in `/Lacs)
Opening balance as on 01.04.2014 17.61
Additions during the year 4.30
Less: Amortization/Depreciation 12.42
Closing balance as on 31.03.2015 9.49
Annual Report 2014-15 45
(Amount in `/Lacs)
Particular 31.03.2015 31.03.2014Bank Guarantees 93.99 117.25
Significant Accounting Policies, Disclosures and Notes on Accounts (Schedule annexed to and forming part of the Balance Sheet as on 31st March, 2015 and Profit & Loss Account for the year ended 31st March, 2015)
5. Impairment of Assets (Accounting Standard AS-28) In accordance with Accounting Standard 28 the bank has written off a sum of `1,214/- to its profit and loss account on account of Impairment
of assets.
7. Segment reporting (Accounting Standard AS-17): There is only one segment namely “Banking”.
6. Provisions, Contingent Liabilities & Contingent Assets (Accounting Standard AS-29)
(Bank Guarantees are 100% secured against tangible securities.)
8. Details of Other Investments: 8.1. Details of Non-SLR investments: (` In lacs)
S. No. Issuer AmountExtant of ‘below
investment grade securities’
Extant of ‘unrated securities’
Extant of ‘unlisted securities’
(1) (2) (3) (4) (5) (6)
1. PSUs (NHAI) 24.72 – – –
2. FIs – – – –
3. Public Sector Banks – – – –
4. Mutual Funds 3450.00 – – 3450.00
5. Others 500.02 N/A 0.02 500.02
6. Provision held towards Depreciation – – – –
8.2. Non-SLR Investments of the bank comprise the following items:
S. No. Name of Investment Amount (`)
1. IDBI Liquid Growth Fund 1,50,00,000
2. LIC Nomura MF Liquid Fund 6,00,00,000
3. LIC Nomura Savings Fund 1,00,00,000
4. UTI Liquid Cash Plan 7,00,00,000
5. Reliance Liquid Treasury plan 6,00,00,000
6. Reliance Liquidity Fund 6,00,00,000
7. Reliance Money Manager Fund 7,00,00,000
8. Shares of District Co-operative Bank Ltd., Saharanpur 1,000
9. Shares of Indore Premier Central Co-op. Bank Ltd., Indore 1,000
10. 8.30% Tax-free Bonds issued by NHAI. 24,72,000
11. Mannapuram NCD Bonds 2,00,00,000
12. Mannapuram NCD Bonds 3,00,00,000
TOTAL 39,74,74,000
8.3. All the investments under this head are within limits defined as per the extant instructions of RBI.
8.4. Investments under this head have been valued at the lower out of book value and market value.
8.5. Non performing non-SLR investments are Nil.
Shivalik Mercantile Co-operative Bank Limited46
9. Borrowings:
The Bank has taken overdraft limits from other banks, against the security of its Fixed Deposits in these banks, to meet short term liquidity
requirements during the year. The details of the limits sanctioned are as under:
Sr. No. Name of Bank from which limit has been availedLimit Amount
(` in Crores)
Amount of
FDRs pledged to
secure the limit
(` in Crores)1. IDBI Bank 13.49 17.682. ICICI Bank 3.15 5.14
10. Statutory Liability
10.1. The Bank had a statutory liability, towards Education Fund of `5,22,015/- which had to be paid to The National Co-operative Union of India
Ltd., New Delhi under The Multi-State Co-operative Societies Act, 2002 towards appropriation made for the same in the year. The payment
was made on 27th August, 2014.
10.2. DICGC Premium has been paid up-to-date & the next payment due date will fall in May, 2015.
10.3. No penalty has been imposed by RBI till date.
11. The Balance-sheet as on 31st March, 2015 was audited on 11th April, 2015. Subsequently, as a prudent practice the Board of Directors decided to
increase the Provision for Bad & Doubtful Debts relating to FY 2014-15 by `50 lacs. This increase was affected by debit to Profit & Loss account for
FY 2014-15 and approved by the Board in its meeting dated 9th September, 2015. As such, the audited Balance-sheet and Profit & Loss Account
have been revised to give effect of this change.
12. Previous year figures have been regrouped and recasted wherever considered necessary to make them comparable with those of current year.
As per our report of even date attached For Shivalik Mercantile Co-operative Bank Ltd.
For M R S & Co. Suveer Kumar Gupta
Chartered Accountants Managing Director & CEO
(Firm Regn. No. 016610N)
(CA Ram Kumar Dhiman) Sarvesh Singhal Dr. Sanjeev Mittal
Partner Director Director
(M. No. 096852)
Sudhakar Agarwal Shiv Puran Gulati
Saharanpur: 10th September, 2015. Director Vice Chairman
Significant Accounting Policies, Disclosures and Notes on Accounts (Schedule annexed to and forming part of the Balance Sheet as on 31st March, 2015 and Profit & Loss Account for the year ended 31st March, 2015)
Annual Report 2014-15 47
Budget for FY 2016-17Income Amount Expenditure Amount
Interest on loans 95.00 Interest on Deposits and borrowings 85.00
Interest on Investments 30.00 Operating Expenses 24.00
Miscellaneous Income 7.00 Depreciation & Repairs 3.00
Miscellaneous Expenses 4.00
Tax & Provisions 6.00
Net profit 10.00
132.00 Total 132.00
(Figures in lacs)
Annual Operation Plan/Target for F.Y. 2016-17 and Long-term Perspective PlanDescription Proposed Targets for the year 2016-17
Branches 28
Deposits 1000 crores
Loans & Advances 700 crores
Share capital 50 crores
membership 20,000
New Schemes Area of operation to adjoining states and getting scheduled status.
l Branch expansion
Starting out with a single branch in 1998,
Shivalik Mercantile Cooperative Bank
has 21 branches in two states. The Bank
opened five branches at Saharanpur,
Muzaffarnagar, Khatauli and Ghaziabad.
Two facts demonstrate the pressing need
for rapid expansion – India is home to
the largest unbanked population and
the presence of just one bank branch on
average per 14,000 people.
We plan on scaling operations to nearby
states – Uttarakhand, Himachal Pradesh,
Haryana, Punjab, Rajasthan, Delhi and
Chandigarh.
l Centralised Payment System
Shivalik Bank has acquired the necessary
approval from RBI to participate in
Centralised Payment System directly,
enabling RTGS (Real Time Gross
Settlement) and NEFT (National
Electronics Fund Transfer).
The infrastructure required to put this
in place is under way and by December,
2015, the Bank expects to provide RTGS/
NEFT services to customers as direct
members.
l Scheduled Bank status
A Scheduled Bank status will facilitate
access to sizeable CASA (current account
and savings account) funds, allow the
bank to forge ties with government
institutions, make institutional business
accessible and enable the bank to
approach agencies that provide refinance
to scheduled banks.
At the end of the last financial year, we
targeted a deposit base of `750 crore,
imperative to our goal of obtaining
Scheduled Bank status. The challenge
was clear – after 16 years of existence, the
bank had a deposit base of `398.55 crore;
it had to achieve an 88% increase within
12 months.
The Bank finished the year under review
with deposits of `775 crore and hopes to
create a deposit base of `900 crore by the
end of 2015-16.
l Conversion to Commercial Bank
The total number of villages in India is
over 6 lac but the number of scheduled
commercial banks and that of regional
rural banks stands at just 33,495.
The Bank aims to help plug this gap by
addressing emerging opportunities.
At Shivalik Bank, emerging as a Scheduled
Commercial Bank would be a decisive
step in the Bank’s vision to emerge as a
respectable financial institution with a
sizeable corpus of ̀ 5,000 crore in deposits
and advances by 2020.
We expect to emerge as a leading
commercial bank in North India across
the foreseeable future.
Shivalik Mercantile Co-operative Bank Limited48
Opening Balance Amount (in `) Closing Balance Remarks
Accumulated Profit of
previous years
1,01,62,039.93
Less: Adjustments during
the year
(22,98,749.00)
Profit for the year 2014-15 4,94,85,072.86
Total Profit 5,73,48,363.79
Proposed Appropriation:
Statutory Reserve 5,41,38,308.00 1,23,71,268.00 6,65,09,576.00 25% of current year's Profit (Mandatory as per Multi-
State Co-operative Societies Act, 2002)
Education Fund – 4,94,851.00 4,94,851.00 1% of current year's Profit (Mandatory as per Multi-
State Co-operative Societies Act, 2002)
Contingency Reserve 1,18,84,245.00 49,48,507.00 1,68,32,752.00 10% of current year's Profit (Mandatory as per Multi-
State Co-operative Societies Act, 2002)
Investment Fluctuation
Reserve
63,43,728.00 1,00,00,000.00 1,63,43,728.00 In accordance with RBI guidelines
Share Transfer Fund 50,00,000.00 (50,00,000.00) – Proposed to do away with STF & utilize the Share
Capital Account for share refunds in future
Interim Dividend @ 4% 1,66,70,512.00 1,66,70,512.00 Already paid on 31.03.2015
Proposed Dividend @ 4% 1,66,70,512.00 1,66,70,512.00 Last year's dividend amount was `2,80,17,096 @ 12%
Total Appropriation 5,61,55,650.00
Accumulated Profit C/F to
next year
11,92,713.79
Appropriation of Profit 2014-15
Annual Report 2014-15 49
Our Profile & Achievements
Shivalik Mercantile Co-operative Bank Ltd. was
registered as a Co-operative Society under
Uttar Pradesh Co-operative Societies Act,
1965 in 1997. It was granted the license to
conduct banking business as a Primary Urban
Co-operative Bank in the district Saharanpur
by Reserve Bank of India in September,
1997. The Bank started operations on 5th
September, 1998 and has registered constant
growth since then. Presently the bank is rated
amongst the best Urban Co-operative Banks
in the state.
Subsequent to achieving a deposit base of
more than `100 crores on 31st March, 2010,
the bank was recognized as a Tier-II bank and
was allowed to extend its area of operation to
entire state of Uttar Pradesh.
The bank has constantly been endeavouring
to expand and had taken over an Urban Co-
operative Bank by the name of Bhoj Nagrik
Sahakari Bank Maryadit at Dhar, Madhya
Pradesh. As a result of this merger, which was
effective on 1st November, 2010, the bank
was de-registered from the state Government
(UP Co-operative Societies Act, 1965) and was
re-registered under the Central Government
(Multi-state Co-operative Societies Act, 2002)
under the overall control of the Central
Registrar of Co-operative Societies, Ministry
of Agriculture & Co-operation, New Delhi.
Shivalik Bank thus became the first Multi-state
Urban Co-operative Bank of the state of UP.
Continuing the saga of inter-state expansion,
Shivalik Bank again took over a weak co-
operative bank, Malwa Commercial Co-
operative Bank Ltd. in Indore, MP. The merger
was made effective on 1st September, 2012.
Thus Shivalik Bank got a second branch in the
state of Madhya Pradesh.
The Bank is fully computerized under CBS
environment and has 21 branches at present,
out of which 12 branches are located within
District Saharanpur, 1 at Meerut, 2 each at
District Muzaffarnagar, Ghaziabad and Noida,
and 1 each at Indore & Dhar in Madhya
Pradesh.
The Bank is managed by a Board, which is
well diversified, reputed and experienced.
The Board comprises persons from all walks of
society viz. Industrialists, Agriculturists, Traders,
Professionals, Chartered Accountants, Retired
Senior Bank Personnel etc. The phenomenal
growth & excellent reputation of the bank is
much accredited to the personal reputation
and fame enjoyed by its Chairman & the
Board of Directors, apart from the professional
management style of the Bank.
The bank has its head-quarters at Saharanpur,
which is located at the junction of UP,
Uttrakhand, Haryana & Himachal Pradesh. The
population of Saharanpur is approximately 9
lakhs as per census 2011. The main activities
include trading, agriculture, handicrafts &
small industries. Saharanpur is famous for its
wood carving work and wooden articles are
exported all over the world from here. Some
very reputed industries like I.T.C. and Star
Paper Mills Ltd. are also located here.
A few of our major achievements are as
follows.
MANAGEMENT:
The Bank has maintained highest norms of
account keeping and has been very prompt
in finalizing its annual accounts and getting it
audited. The bank feels pride that the Balance-
Sheet of the bank is ready on 1st of April every
year after finalizing annual accounts.
The IT awareness is very high in our bank. This
is also due to the fact that the Chairman and
the CEO of the Bank are engineers with work
experience with M/s Hindustan Aeronautics
Limited and M/s Tata Consultancy Services
respectively.
The bank tends to manage its business in a
very professional and transparent manner. We
are regularly publishing our results/policies/
interest rates/charges etc. on our website
apart from displaying them in our branches.
All the senior personnel of the bank are
IT conversant and make extensive use of
technological communication modes such as
email and video conferencing, which enables
fast and cheap communication. The bank
is gradually moving towards the ‘paperless
office’ concept.
TECHNOLOGY INITIATIVES & INNOVATION:
We have professionalized our management by
having full computerization, and by employing
well-qualified staff. We have successfully
implemented ‘Core Banking System’, thereby
providing any branch banking to all our
customers. The bank has sourced state of the
art CBS software named ‘Profile’ from a leading
multi-national software company namely FIS.
FIS proudly features in the Fortune 500 list &
is one of the top five Financial Technology
providers, world-wide. The CBS software,
Profile, is capable of handling all future growth
in bank’s business. Apart from scalability, the
software is also capable of being upgraded
to confirm to latest technology from time to
time. This software helps the bank in efficient
control of all its branches and business. Further
the installation of CBS and use of technology
has also enabled the bank to provide Internet
Banking to its customers. Very soon, Mobile
Banking is also going to be launched.
The Bank is successfully connected to the
country-wide ATM network, ‘Rupay’ managed
by NPCI. As a result, the customer of Shivalik
Shivalik Mercantile Co-operative Bank Limited50
Bank can use their ATM cards not only at our
own ATMs but also at the ATMs of all other
banks. All branches and some BC offices of
the bank are equipped with ATMs and cash
deposit machines.
The bank is also participating in the RTGS/
NEFT transactions as a sub-member of IDBI
Bank Ltd. Very soon this participation shall be
done directly.
The bank constantly looks forward to
innovations in banking. Apart from
participation in RTGS/NEFT network, the
bank has arrangements with leading private
commercial banks for issue of ‘at-par cheques’
to facilitate remittances for its customers
and for speedy collection of outstation
instruments of its customers.
Other technological initiatives of the bank
includes SMS alerts, ATMs, Cash & Cheque
Deposit Machines, Debit Cards, POS
machines, E-commerce, Internet banking,
Mobile banking, Forex services, generation of
automatic AML alerts, Aadhar based payment
systems etc. The bank is providing above
services to its customers and some more are
in process subject to approval by RBI from
time to time.
An I.T. department has also been set up at the
Bank and we are providing computer training
to our staff officers also to keep them abreast
of all relevant innovations and advancements
in technology.
OPERATIONS:
Within a short span of about 17 years, the total
business of the bank has grown to `1,545.02
crores with the deposits at `775.59 crores, the
advances at `557.09 crores and investments
at `212.34 crores.
The Owned Funds of the bank have grown
from `15.50 lacs as on 5th September, 1998,
the bank’s opening day, to a net worth of
more than `57.13 crores as on 31st March,
2015. This shows the trust our shareholders
and the public have in the bank.
The Bank has been in profit from the very first
year of its working and has shown constant
growth. The bank has continuously been
paying a dividend of 12% to its members.
The share of Government or large institutions
in the deposit base of the Bank is not
substantial. The Bank relies on the trust and
confidence that individual investors have
placed in it. As a result the customer base
of the Bank has well exceeded 1,50,000 in
number.
The bank is very cautious & prudent in lending.
The gross NPA of the bank as on 31.03.2015 is
0.48% with a CD Ratio of 71.87%.
REGULATORY COMPLIANCE:
The Bank has been strictly following the
guidelines issued by RBI in all of its operations
and the working of the bank was appreciated
by the officials of RBI during the course of RBI
inspections.
The Bank neither makes any investments
in the shares/debentures nor does it give
any advances against the security of shares/
debentures i.e. the exposure of the bank
towards share/debentures market is Nil.
The Capital to Risk Assets Ratio of the bank,
has constantly remained more than 12% and
presently is 13.75% as on 31.03.2015.
The bank has successfully met the targets for
maintenance of SLR through investments in
Government and Approved Securities as per
RBI norms.
The Bank is regularly maintaining the required
ratio of 40% of total financing to Priority Sector.
FINANCIAL INCLUSION:
The bank is pioneering in the Co-operative
Sector towards efforts made for Financial
Inclusion. We have taken a great initiative by
starting micro-finance to self-help groups.
To run this efficiently we have entered into
partnership with an NGO, which provides
livelihood development trainings to members
of SHG apart from training them in better
money management. Almost all members of
these groups are women belonging to BPL
category with many groups inhabited by
women belonging to minority community.
Till the end of June, 2015, the bank has
linked approx. 7000 SHGs comprising app.
85,000 individual families to its microfinance
program. The total amount sanctioned by
the bank to these SHGs is `40 crores as on 30
June, 2015. These figures are increasing at a
rapid rate.
The bank has initiated a program to appoint
BCs in rural areas to provide banking services
to rural masses. In view of this, Bank has
opened its BC offices at remote places where
full size branch was not needed at present.
In Saharanpur, we have BC offices in Nakur,
Chhutmalpur and Chilkana. 3 BC offices
have been opened in Meerut at Hastinapur,
Mawana and Maliyana village. There are three
BC offices in Noida also at Nithari, Sadarpur
and Barola villages. Lastly, there is one BC
office in Patnipura, Indore.
Annual Report 2014-15 51
Customer Service Initiatives
The Bank has earned an excellent reputation
for providing good customer service
and utilization of latest technological
enhancements. The bank is providing
some very innovative and customer friendly
services to its clients. Some of these are
home banking, tele-banking, prompt issue of
remittance instruments, same day payment
of local clearing instruments, promptness
in outstation collection, extended working
hours etc.
A List of Customer Service initiatives taken by
the bank is as follows:
l Extended working hours: Our branches
are open for customer dealing and locker
operations from 10 am to 4 pm. Also, all
the staff at a branch does not take lunch/
tea breaks together, so that the customer
service does not stop even during lunch
hours.
l Entertaining of late customers: If a
customer walks in after 4 pm (close
of business hours), we entertain him
by marking his transactions for the
next business day. Such transactions
are recorded in the registers/systems
duly provided to the branches and are
executed after day open on next business
day.
l May I Help You & other specialized
counters: All our branches are equipped
with a ‘May I Help You/Inquiry’ counter,
a ‘Senior Citizen’ counter and a ‘Digital
Banking’ counter, which help the new
customers to get their work done without
any delay or confusion. The staff sitting at
these counters are well trained to handle
inquiries, suggestions and help in filling
up forms etc.
l Cheque Deposit Machines: All our
branches have installed cheque deposit
machines where a customer can deposit
a cheque intended for clearing/transfer
24 hours a day. This machine securely
accepts the cheque & provides a proper
receipt along with photocopy of the
cheque to the customer. All cheques
received during the night are taken up
for clearing/transfer the next day. This
way the customers can save one day in
clearing transactions.
l Passbook Printer: All our branches are
equipped with passbook printers, so that
customers get neat and legible passbooks
updated instantly.
l Currency counting & currency sorting
machines: All our branches are equipped
with adequate number of currency-
counting machines so that the work
of the customer is attended to within
the shortest time possible. Branches
which deal in high volumes of cash are
also equipped with currency sorting
machines.
l SMS Alerts facility: We provide free SMS
alerts to our customers for all transactions
made in their accounts. The information
provided in the alerts includes transaction
type, amount, date, closing balance and
transaction information.
l Camera for customer’s photo: All our
branches have been provided with a
portable camera so that customers
need not submit their passport size
photographs. The branch officials directly
click their photographs and get it printed.
l Photocopy machine: The branches are
equipped with photocopy machines so
that customers do not have to go out to
get copies of their documents done.
l Availability of Stamp papers: For
use in loan documentation, the bank
directly purchases stamp papers from
the Government Treasury and gets the
cost reimbursed from the customer. This
way the customers neither have to run
around in search of stamp papers nor do
they have to pay commissions to private
vendors to purchase stamp papers.
l Personalized service: The bank keeps a
track of its good customers and provides
personalized services to suit individual
needs. We try to delight the customer
by bonding with him strongly. The bank
wishes its good customers on their
birthdays, anniversaries and special
occasions.
l Home/Telephone banking: We entertain
our customers over telephone and take
their telephonic requests. Based on
their telephonic requests their account
statements/ drafts/ cheques/ other
documents are delivered/ picked up
from their homes/ offices. We also accept
service requests over e-mail. We also
arrange to get the accounts opened/
documentations done at customers’
homes in case customer is unable to
come to the bank.
l Branch infrastructure: It may also be
noted that we have provided excellent
Shivalik Mercantile Co-operative Bank Limited52
branch infrastructure to enhance
customer satisfaction. Our branches are
equipped with air conditioning, clean
toilets, proper waiting lounges, availability
of drinking water etc.
l Technology: We have installed suitable
CBS software to enhance customer
satisfaction. The software provides any
counter operation, any branch banking
etc. We are also connected with the
‘Rupay’ network for ATMs and to NFS for
RTGS/NEFT as a sub-member through a
leading bank.
l Customer oriented banking procedures:
We have strong customer oriented
banking procedures that ensure that
the customer feels pleasure in dealing
with us. For example whenever a new
customer approaches the bank we get
his KYC formalities done once and later
whenever he/she approaches the bank
again, we refer to his earlier ID and do not
ask for documents again & again.
l Security: We take utmost care to instil
faith and trust in our customers by
keeping all our premises safe & secure.
We take the services of expert security
agencies to provide strong and capable
security guards, all our premises are CCTV
enabled and are closely monitored.
l ATMs: The branches are equipped with
ATMs to facilitate cash withdrawals for
customers at all times. Further, the bank
is connected to the countywide ATM
network to help its customers withdraw
money anywhere in the country.
l Technology: The bank is highly conscious
of technological advancements and
endeavours to provide the latest & best
technology to its customers. Some of the
latest features are SMS alerts, ATMs, Cash
& Cheque Deposit Machines, Debit Cards,
POS machines, E-commerce, Internet
banking, Mobile banking, Forex services,
generation of automatic AML alerts,
Aadhar based payment systems, ECS &
NACH etc.
The Bank has achieved a high level of
satisfaction for all its stakeholders viz. the
Shareholders, the Customers, the Staff and
the Regulating Authorities.
A PRODUCTinfo@trisyscom.com
Our mission is to serve the lowest strata of society with the best products at the best prices and the best technology-driven services, while at the same time being a model employer for the national industry and emerging as a global role model in the small banking sector.
Shivalik Mercantile Co-operative Bank Limited18th Annual Report 2014-15
Shivalik Mercantile Co-operative Bank LimitedRegd. Office: 13/1207, Ansari Road, Saharanpur - 247001, Uttar Pradesh
Head Office: Hakikat Nagar, Saharanpur - 247001, Uttar Pradesh
Telefax: (0132) 2726125, 2726147, 9927135550
E-mail: info@shivalikbank.com
Visit us at: www.shivalikbank.com
Like us at: www.facebook.com/shivalikbank
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