Citizens Tribunal on Ayodhya

Viability of Rural Bank Branches THIS is to clarify some of the points raised by C L Dadhich (June 26). In my article (May 1) I had worked out the consolidation of the balance sheet and profit and loss statement of the branches grouped according to the size of population. Since my objective was to make meaningful comparison amongst the population groups, I have not made the data comparable with the published figures for the nationalised banks. As we are dealing with unpublished data and that too for a very recent period for an individual bank, there are some limitations on total transparency In my note I mentioned that "the sum of the gross profit made by the branches exceeded that of the bank as a whole because transfer payments to branches exceeded the income of the head office from deployment of funds in statutory preemptions''. This implies that 1 have not adjusted the branch data for HO loss. The HO loss arises from fund operations and also due to the expenses of the entire administrative offices including zonal and regional offices. To correct this limitation and make the data comparable with that of the published figures of nationalised banks, we may deduct HO loss from branch profits. It appears reasonable that 60 per cent of the loss may be ascribed to loans and 40 per cent to deposits. This has to be again apportioned to branches according to the share of each population group in the total advances and deposits of the bank. After the apportionment, the sum of the gross branch profits will be equal to that of the bank as a whole as published in the financial statements. The figure is comparable to the gross profits of nationalised banks as published in the RBI Report on Trend and Progress of Banking in India.