UBI looks at Rs 3,000 cr recovery, expects to turn profit this fiscal

Kolkata:  State-run United Bank of India (UBI), which received about Rs 676 crore from two stressed accounts through the resolution in the NCLT, is expecting to recover Rs 3,000 crore in this route, its Managing Director and CEO Pawan Bajaj said here on Friday.

However, the lender which is under Prompt Corrective Action (PCA) framework of the Reserve Bank of India (RBI), is expecting to turn around into profit by this fiscal’s fourth quarter.

“The bank has submitted its business plan to the Ministry, which if approved, envisages turning around into profit by the fourth quarter of this fiscal,” Bajaj told shareholders at the 9th Annual General Meeting.

The bank referred 30-odd accounts to National Company Law Tribunal (NCLT) with an aggregating exposure of Rs 5,951 crore. The resolution took place in two accounts. In one account, the bank received Rs 488 crore against an outstanding balance of Rs 629 crore and in the other, it roughly received Rs 188 crore, he said.

“The rest of the cases are still in the NCLT and these cases are at last stage of settlement. We are expecting Rs 3,000 crore to be recovered from these cases in time to come,” he said.

Bajaj also said the turnaround plan talked about maintaining risk-weighted assets at an optimum level vis a vis capital requirement, reducing corporate exposures and focusing on retail, agriculture and MSME portfolio, limiting corporate advances to rated accounts in order to lend more stability to its overall advances portfolio, doubling the recovery efforts, augmenting non-interest income and controlling costs at all levels.

With more resolutions taking place by the end of this fiscal, this would bring down gross and net non-performing assets, thus improving the bottom line of the bank, he said.

In its latest annual report, the bank said despite constant follow up with the recalcitrant borrowers, monitoring of stressed assets and tough measures in hard account, the bank was not able to contain further growth in non-performing assets (NPAs) level which reached a level of Rs 16,552 crore, a 24.1 per cent of gross advances.

On reasons for higher NPAs, Bajaj said: “We are under PCA framework of RBI and the bank is not allowed to increase its book size of assets, which is one of the reasons and others are credit reasons.

“We are operating mostly in the eastern states where industrial growth is not happening and the requirement of credit in this part of India is less.”

He said the NPA level of all 20 public sector banks was around at 15 per cent.

According to Bajaj, UBI experienced deterioration in its asset quality in the March quarter of the last fiscal largely due to the revised framework of resolution of stressed assets introduced by the RBI, accounting for about 65 per cent of the fourth quarter slippages.

In 2017-18 (FY18), its retail portfolio grew by 17 per cent in which the housing loan portfolio increased by 21.62 per cent and car loan portfolio increased by 29.28 per cent.

The Kolkata-headquartered bank incurred a net loss for FY 18 to the tune of Rs 1,454.45 crore.

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