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Turnaround Management

Saraswat Bank v/s SouthIndian Co-operative

Bank 

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What is Turnaround

Management?Turnaround Management is a process offormulating and implementing a strategic plan anda set of actions for corporate renewal andrestructuring, typically during times of severe

corporate nancial distress.Often outside interim managers, turnaroundconsultants or strategy consultants devise aturnaround plan and execute it, assuming that the

rm still oers the potential to return tonancial solvency, prota!ility and strategicvia!ility.

 Typical tools !eing used during TM are "oot #ause

$nalysis, %WOT $nalysis and &'%T $nalysis.

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(eatures of Turnaround Managemen

•  Turnaround involves restructuring the sic)company.

• *t is applica!le to a loss+ma)ing unit.

• *t needs consultation of internal and externalexperts.

• *t is a long and time+consuming process.

• *t involves in+depth planning with evidential

testing.• *t is a capital intensive strategy.

• *t helps to utilie all availa!le resourcesoptimally.

• *t leaves a permanent eect on the structure of

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-eed Of Turaround Management

. Mar)et /ag0. /ac) Of Operating #ontrols1. Over 2iversication3. 'xplosive 4rowth5. Operating Without $ 6usiness &lan

 

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 %araswat #o+operative 6an), the !iggestcooperative !an) in the country, has ta)en overMum!ai+!ased The %outh *ndian #o+operative6an), oering huge relief to a!out 77,888depositors. 

*ntroduction

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%outh *ndian #o+operative 6an) customers withdeposits up to "s one la)h each can now get !ac)their money if they want. 9owever, those havingdeposits a!ove rupees one la)h will have to forgo a

part of their amount.

%outh *ndian #ooperative !an) had run intopro!lems two years ago and was una!le to pay

!ac) its depositors: dues. The !an) had a networ)of 0 !ranches and two extension counters.%araswat 6an) would !e soon converting theextension counters into full+;edged !ranches.

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 %araswat will now have 5employees of %outh *ndian #o+operative 6an)

though the service conditions

While most of the !ranches of %outh *ndian#ooperative saw new deposit accounts opened, few

depositors opted to withdraw their deposits

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*ntroduction to %araswat !an)

*t is an ur!an co+operative !an)ing institution !asedin Maharashtra, *ndia and operating as a co+operative !an) since >=*n >==, the 6an) was conferred with %cheduled

status !y "eserve 6an) of *ndia. The 6an) is the rstco+operative !an) to provide Merchant 6an)ingservices. The 6an) got a permanent license to dealin foreign exchange in > currencies with over 05 !an)s. *n >>0,the 6an) completed >0 and the 6an) also crossed the !usiness level of"s.

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*n 08, the 6an) was granted permission for $ll*ndia $rea of Operation !y "eserve 6an) of *ndia.

 The 6an) has an am!itious !usiness expansionplan in place to have a presence in all maAor citiesof the country, and to reach a !usiness levels of "s.

58,888 #rores !y 087 and "s. ,88,888 #rores !y08= respectively.

 The 6an) has a networ) of 07< fully computeried!ranches as on 1 March 083 covering six states

vi. Maharashtra, 4uAarat, Madhya&radesh, Barnata)a, 4oa and 2elhi. The 6an)provides 03+hour service through $TMs at 085locations.

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%ic)ness Of $ #ompany

• %outh *ndian #ooperative !an) had run intopro!lems in $ugust 088=

• #losed after providing =5 years of service• "eserve 6an) of *ndia imposed moratorium on it.• 6an) was una!le to pay !ac) its depositors: dues•  The !an) had a networ) of 0 !ranches and two

extension counters• Cnder %ection 15$ of the 6an)ing "egulation $ct,

the "6* allowed for withdrawal up to a sum notexceeding "s ,888

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• -o worthwhile action was ta)en !y either stategovernment or "6*

•  The looters were led !y one Mr. "aghavan %arathi,oDce !earer of a leading political party, fully

!ac)ed !y his deputy in oDce, the #'O of the6an) and a scheming !orrower

• %ome co+operative !an)s showed interest inta)ing over the ailing %*#6/, !ut !ac)ed away

seeing in;uential people in the scam• Meantime depositors, over 58 per cent of senior

citizens, were facing untold diDculties

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• More than 88 anxiety deaths had occurred then• RBI even prepared to pump in a siea!le amount

to help the !an) and its depositors

•  The culprits responsi!le for the downfall of the!an) were doing everything under their power,political and !ureaucratic in;uence to stall allproposals for merger

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Sickness is dened as Ea company which fails togenerate surplus on a continuous !asis anddepends on external funds for its survival.F

*nternal (actors'xternal (actors

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(actors "esponsi!leG

• /oss due to -&$• -on+payment of /oans•  The total mismanagement and

misappropriation of the !an)• /ess documents• -on+integrity of 6O2• 2ishonesty•

-o futuristic perspective• -ot dynamic• $pathy of the "egulator

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usiness Process Re-engineerin

Business process reengineering (BPR) is theanalysis and redesign of wor);ows within and!etween enterprises in order to optimie end+to+endprocesses and automate non+value+added tas)s.

*t can also !e dened as Ethe elemental rethin)ingand radical redesigning of the !usiness processes inorder to achieve remar)a!le improvements in critical

measures of performance li)e cost, service, Huality,and speedF.

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Advantages of BPR

• &erformance improvement• *ncrease in prots• 'normous cost reduction•

%peed up !usiness processes• *mprovement in employee

satisfaction• *mprovement in Huality• &rota!ility

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(eatures of 6&"

• 6usiness &rocess• Owning of

responsi!ilities

• #ustomer Oriented• 6enchmar)ing of 6&"• "ole of *T

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$rticle

s

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dvantages of 6"& to %araswat Ban

• %araswat 6an) too) over the !ranches of %outh*ndian !an)

• "6* had given 8 years time span to %araswat6an) to ta)eover %outh *ndian 6an) !ut they

successfully completed it within 7 years• -um!er of transactions and customers for

%araswat 6an) increased• %araswat 6an) repaid the depositors of %outh

*ndian 6an) during the sic)ness• %araswat 6an) also managed the deposits and

loans of %outh *ndian 6an)•  The #urrent turnover of %araswat 6an) is "s.58 #r• 9ave set up a 2ocument $rchival #entre I2$#J at

Mahape

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• (ormation of "etail $sset and %mall 6usiness

'nterprises #enters I"$%'#sJ,• %etting up of %M' focused !ranches,• %etting up of #learing &rocessing #lusters I#sJ,• %etting up of #entralied 2eposit %ervice #entre

I#2%#J for issue of personalied cheHue !oo)s,term deposit receipts and opening of accountsfrom a centralied place, 5 $nnual "eport 088>

• %etting up of !ac) oDce for processingexportKimport documents received !y 6 category

forex centres.

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#onclusion2espite of the sic)ness faced !y %outh *ndian6an), %araswat !an) too) the initiative to useinnovative techniHues to support them and too)over %outh *ndian 6an).