Bank unions call for government bailout of United Bank of India-Live Mint-17.02.14
The Kolkata-based bank is facing a crisis due to a sharp surge in its bad loans and a weak capital base
Mumbai: United Forum of Bank Unions (UFBU), an umbrella body of bank workers’ unions, on Monday called for immediate action from the government to rescue the crisis-ridden United Bank of India.
The Kolkata-based bank is facing a crisis due to a sharp surge in its bad loans and a weak capital base.
“If some capital is required, the government should provide that,” said C.H. Venkatachalam, convenor of UFBU.
Gross non-performing assets (NPA) of the bank rose to near 11% in the December quarter, while its capital adequacy ratio, a key measure of the capital position of a bank, is at the bare minimum level of 9%.
The bank has on its shelf Rs.5,524 crore as restructured loans, out of whichRs.4,815 crore are loans to large corporate accounts, Venkatachalam said.
“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,” Venkatachalam said.
“If any top officials of the bank are involved in mismanagement and bad decisions, stern action should be taken against them,” Venkatachalam said.
Following the rise in NPAs, the Reserve Bank of India is conducting an audit of the bank’s books to find out the reasons for the rise in NPAs.
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