To All Office Bearers / State Federations /
All India Bankwise Organistions:
Dear Comrades,
Units are aware that United Bank of India has recorded net loss for the past two quarters mainly because of increasing bad loans and consequent higher provisions. But a panic situation is being created amongst the employees as though the Bank is sinking, will be merged with some other Bank, etc.
We have written a letter to the Finance Minister in this regard and the same is reproduced herein for the information of our units.
The comments of the Secretary, Dept. of Financial Services as appeared in the newspapers is also furnished herein.
With greetings,
Yours Comradely,
C.H. VENKATACHALAM
GENERAL SECRETARY
AIBEA/GS/2014/10 13th February, 2014
To
Shri P Chidambaram,
Hon Minister for Finance
Govt of India
New Delhi
Dear Sir,
Reg: United Bank of India
You are quite aware that for the last two Quarters, United Bank of India has been booking net loss even though the Bank has been earning operating profits as under:
Operating profit
Rs. In crores Net profit/loss
Rs. In crores
31-03-2013 2050 392
30-06-2013 600 4430-09-2013 373 - 489
31-12-2013 545 - 1238
United Bank of India is one of the important Banks under the public sector/nationalized banking system in our country and it has been playing an important role in the socio-economic development of our country, particularly in the eastern and north-east States with a total business of about 2 lac crores of rupees.
We are highly concerned about the deteriorating performance of this Bank in the recent months and it is naturally causing anxiety to us and the workforce in the Bank.
We find that this Bank is tending to be more and more corporate oriented when we find that more than 50% of its loans and advances have been extended to the large and mid-corporates while the priority sector loan is less than the statuary obligations and the retail sector loans of this Bank are hardly 14% of the total advances.
Hence, even though the Bank has the advantage of a substantial CASA Deposits at 36% of the total Deposits of the Bank, since the loans are being extended to large borrowal accounts and many of them are turning bad, the Bank is facing the problem.
Ofcourse, the Bank is also having bulk /high cost deposits amounting to about Rs. 24,000 crores which needs to be drastically brought down. There has been a spurt in bulk deposits by 80% over the recent months from Rs.13,000 crores to Rs. 24,000 crores adding to the cost of funds.
We feel that the main woes of the Bank are on account of the increasing bad loans and Bank’s inability to recover the same.
Gross NPA
Rs. In crores % Provision coverage
Sept. 2012 2415 3.9 69 %
Dec. 2012 2900 4.4 67 %
March 2013 2964 4.3 62 %
June 2013 4001 5.6 56 %
Sept. 2013 6285 7.5 48 %
Dec. 2013 8545 10.8 42 %
The Bank also has on its shelf, Rs. 5524 crores as Restructured Loans out of which Rs. 4815 crores are on account of the large corporate accounts.
If certain corrective steps are taken to recover the bad loans mainly of the large corporate accounts, in addition to other segment loans, the Bank will definitely improve in its profitability. If any top officials of the Bank are involved in mismanagement and bad decisions, stern action should be taken against them.
We also learn that restrictions are being imposed on the business operations of the Bank on account of fragile capital base. We feel that this may further weaken the earnings of the Bank and hence the Government should consider extending necessary capital to the Bank at this crucial juncture.
We from AIBEA and our affiliate United Bank of India Employees Association, will be too willing to take any steps to take the Bank out of this rut and put it on proper rails which the Bank and its staff are capable of. But we are not fully convinced or satisfied with the steps being taken by the top management of the Bank. On the other hand, only panic is being created amongst the workforce. Impressions are being given that the Bank needs to be merged with some other Bank. All these are having a negative and demoralising effect on the staff. Government should make necessary clarification that steps are being taken and there is no plan for merger of the Bank so that the staff and customers feel re-assured.
The Bank has a large network of more than 2000 Branches and is serving a clientele of more than 20 million customers as its account-holders. Hence all steps are needed to be taken to remove the present deficiencies and strengthen the Bank.
Thanking you,
Yours faithfully,
C.H.VENKATCHALAM
GENERAL SECRETARY
It is quite evident from news appearing in Newspaper pertaining to United Bank and ongoing forensic audit , that health of United Bank of India is now critical and RBI has thought it better to keep it in ICU (Intensive Care Unit) by stopping new loans.
It is though too late for RBI and Ministry of Finance to understand and realize the deep rooted mess prevalent in United Bank in particular and in all public sector banks in general. Still RBI is not ready to understand that health of almost all banks is almost similar to United bank .They do not want to attract the displeasure of corrupt ministers who appointed corrupt officials as ED and CMDs of the past.
Only difference is that case of UBI is exposed by unbiased and bold CMD of the bank whereas CMDs of other banks are still hesitant and timid to declare their real volume of bad assets .It is because majority of them know that it is only the top officials of these banks who sanctioned high value loans to serve their vested interest willfully sacrificing the interest of the bank as also that of bank staff.
RBI should at least now call the explanation of past EDs and CMDs of United Bank to know why they failed to stop rise in bad assets and why they continue to loot or allow the loot in the bank in the name of credit growth and to please the ministers and politicians.
Will RBI now at least fix accountability on top officials as also on ministers and RBI officials who were indirectly involved and indulged in reckless lending and careless monitoring of credit made by them.
Will RBI now ask retired ( or those who are posted in other bank now) EDs and CMDs why they concealed bad debts for years together?
It is to be noted here that NPA which are now coming on the floor are not newly created NPA but simply exposure of NPA hidden willfully for years and decades.
Even now it is open secret that majority of bankers are unethical evergreening process to keep bad debts in standard category. By their dirty tools CMD and Eds of every band used to project attractive balance sheet and win the hearts of Minister but spoil the future of all including bank staff, bank customers and investors in the bank.
Will RBI now ask retired ( or those who are posted in other bank now) EDs and CMDs why they concealed bad debts for years together?
It is to be noted here that NPA which are now coming on the floor are not newly created NPA but simply exposure of NPA hidden willfully for years and decades.
Even now it is open secret that majority of bankers are unethical evergreening process to keep bad debts in standard category. By their dirty tools CMD and Eds of every band used to project attractive balance sheet and win the hearts of Minister but spoil the future of all including bank staff, bank customers and investors in the bank.
It is very easy to penalize junior and middle level officers of the bank and deny bank staff their right of respectable wage hike but it is very hard to accept the truth and punish the real guilty top officials of the banks as also of the government.I condemn FM who hold bank staff responsible for rise in bad debts and for fall in profits of the banks and then deny bank staff a respectable wage hike saying that entire profit of banks cannot be given in wage hike. FM should introspect to find out who are real culprits for fall in profits of the banks.
Last but not the least
Last but not the least
Are politicians not responsible for polluting and damaging the credit discipline and repayment culture in banks by using Loan Melas and then by advocating write off and compromise to enhance their vote banks?
It is only politicians who are primarily responsible for the current poor health of banks. When protectors become destructers ,none can save banks from further damage.
Great writer late Munsi Presmchand said long ago
"jab rakshak hi bhakshak ban jaye to vinash nischit hai"
FinMin urged to bail out troubled United Bank-Hindu Business Line 18.02.2014
Mounting bad loans, heavy lending to corporations hurt bank, Union says
KOCHI, FEBRUARY 17:
Alleging that the public-sector United Bank of India is in bad shape due to its huge bad debt and heavy lending to big-ticket corporate borrowers, the All-India Bank Employees’ Association has urged the Union Finance Minister to take steps to put the bank back on the rails.
In a letter to the Finance Minster, AIBEA General Secretary CH Venkatachalam pointed out that the bank had made a net loss of ₹1,238 crore in the third quarter and ₹489 crore in the second quarter of the current fiscal, although the bank had made operating profits. He said the bank’s performance was deteriorating in terms of net profits, worrying its workforce and unions. “We find that this bank is tending to be more and more corporate-oriented,” the letter noted.
“We find that more than 50 per cent of its loans and advances have been extended to the large and mid-corporate (borrowers) while the priority sector lending is less than the statutory obligations. The retail sector loans of this bank are hardly 14 per cent of the total advances.”
Venkatachalam said that the main woes of the bank were ‘on account of the increasing bad loans and the bank’s inability to recover’ them. The bank’s NPAs have risen from ₹2,415 crore (3.9 per cent) in September 2012 to ₹8,545 crore in December 2013 (a rise of 10.8 per cent).
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