Turnaround Management

Saraswat Bank v/s South

Indian Co-operative
Bank

What is Turnaround
Management?
Turnaround Managementis a process of
formulating and implementing a strategic plan and
a set of actions for corporate renewal and
restructuring, typically during times of severe
corporate financial distress.
Often outside interim managers, turnaround
consultants or strategy consultants devise a
turnaround plan and execute it, assuming that the
firm still offers the potential to return to
financialsolvency, profitability and strategic
viability.
Typical tools being used during TM areRoot Cause
Analysis,SWOT AnalysisandPEST Analysis.

Features of Turnaround Management

Turnaround involves restructuring the sick
company.
It is applicable to a loss-making unit.
It needs consultation of internal and external
experts.
It is a long and time-consuming process.
It involves in-depth planning with evidential
testing.
It is acapitalintensive strategy.
It helps to utilize all available resources
optimally.
It leaves a permanent effect on the structure of

Need Of Turaround Management

1.
2.
3.
4.
5.

Market Lag
Lack Of Operating Controls
Over Diversification
Explosive Growth
Operating Without A Business Plan

Introduction

Saraswat Co-operative Bank, the biggest

cooperative bank in the country, has taken over
Mumbai-based The South Indian Co-operative
Bank, offering huge relief to about 66,000
depositors.

South Indian Co-operative Bank customers with

deposits up to Rs one lakh each can now get back
their money if they want. However, those having
deposits above rupees one lakh will have to forgo a
part of their amount.
South Indian Cooperative bank had run into
problems two years ago and was unable to pay
back its depositors' dues. The bank had a network
of 12 branches and two extension counters.
Saraswat Bank would be soon converting the
extension counters into full-fledged branches.

Saraswat will now have 170 branches owing to the

merger against 156 earlier of which 88 would be in
Mumbai. Saraswat Bank has also absorbed 95
employees of South Indian Co-operative Bank
though the service conditions
While most of the branches of South Indian
Cooperative saw new deposit accounts opened, few
depositors opted to withdraw their deposits

Introduction to Saraswat bank

It is an urban co-operative banking institution based
inMaharashtra, India and operating as a cooperative bank since 1918
In 1988, the Bank was conferred with "Scheduled"
status byReserve Bank of India. The Bank is the first
co-operative bank to provide Merchant Banking
services. The Bank got a permanent license to deal
in foreign exchange in 1978. Presently the Bank is
having correspondent relationship in 45 countries
covering 9 currencies with over 125 banks. In 1992,
the Bank completed 75 years. Platinum Jubilee
Celebrations were inaugurated on 14 September
1992 and the Bank also crossed the business level of
Rs. 700 Crores. It has 267 branches nationwide.

In 2011, the Bank was granted permission for All

India Area of Operation byReserve Bank of India.
The Bank has an ambitious business expansion
plan in place to have a presence in all major cities
of the country, and to reach a business levels of Rs.
50,000 Crores by 2016 and Rs. 1,00,000 Crores by
2018 respectively.
The Bank has a network of 267 fully computerized
branches as on 31 March 2014 covering six states
viz.Maharashtra,Gujarat, Madhya
Pradesh,Karnataka,GoaandDelhi. The Bank
provides 24-hour service through ATMs at 205
locations.

Sickness Of A Company
South Indian Cooperative bank had run into
problems in August 2008
Closed after providing 85 years of service
Reserve Bank of India imposed moratorium on it.
Bank was unable to pay back its depositors' dues
The bank had a network of 12 branches and two
extension counters
Under Section 35A of the Banking Regulation Act,
the RBI allowed for withdrawal up to a sum not
exceeding Rs 1,000

 No worthwhile action was taken by either state

government or RBI
The looters were led by one Mr. Raghavan Sarathi,
office bearer of a leading political party, fully
backed by his deputy in office, the CEO of the
Bank and a scheming borrower
Some co-operative banks showed interest in
taking over the ailing SICBL, but backed away
seeing influential people in the scam
Meantime depositors, over 50 per cent of senior
citizens, were facing untold difficulties

 More than 100 anxiety deaths had occurred then

RBI even prepared to pump in a sizeable amount
to help the bank and its depositors
The culprits responsible for the downfall of the
bank were doing everything under their power,
political and bureaucratic influence to stall all
proposals for merger

Sicknessis defined as a company which fails to

generate surplus on a continuous basis and
depends on external funds for its survival.
Internal Factors
External Factors

Factors Responsible
Loss due to NPA
Non-payment of Loans
The total mismanagement and
misappropriation of the bank
Less documents
Non-integrity of BOD
Dishonesty
No futuristic perspective
Not dynamic
Apathy of the Regulator

Business Process Re-engineering

Business process reengineering (BPR) is the
analysis and redesign ofworkflowswithin and
between enterprises in order to optimize end-to-end
processes and automate non-value-added tasks.
It can also be defined as the elemental rethinking
and radical redesigning of the business processes in
order to achieve remarkable improvements in critical
measures of performance like cost, service, quality,
and speed.

Advantages of BPR

Performance improvement
Increase in profits
Enormous cost reduction
Speed up business processes
Improvement in employee
satisfaction
Improvement in quality
Profitability

Features of BPR
Business Process
Owning of
responsibilities
Customer Oriented
Benchmarking of BPR
Role of IT

Article
s

Advantages of BRP to Saraswat Bank

Saraswat Bank took over the branches of South
Indian bank
RBI had given 10 years time span to Saraswat
Bank to takeover South Indian Bank but they
successfully completed it within 6 years
Number of transactions and customers for
Saraswat Bank increased
Saraswat Bank repaid the depositors of South
Indian Bank during the sickness
Saraswat Bank also managed the deposits and
loans of South Indian Bank
The Current turnover of Saraswat Bank is Rs.50 Cr
Have set up a Document Archival Centre (DAC) at
Mahape

 Formation of Retail Asset and Small Business

Enterprises Centers (RASECs),
Setting up of SME focused branches,
Setting up of Clearing Processing Clusters (CPCs),
Setting up of Centralized Deposit Service Centre
(CDSC) for issue of personalized cheque books,
term deposit receipts and opening of accounts
from a centralized place, 15 Annual Report 2009
Setting up of back office for processing
export/import documents received by B category
forex centres.

Conclusion
Despite of the sickness faced by South Indian
Bank, Saraswat bank took the initiative to use
innovative techniques to support them and took
over South Indian Bank.