UBI may stage a turn-around in Q4 on the back of robust recovery--Business Standard
UBI reported a net loss of reported Rs 1238 crore of loss for the October- December
By Sri Manojit Saha
After reporting loss for two successive quarters, Kolkata-based state-run lender United Bank of India (UBI) is likely to turn around in the current quarter on the back of robust recovery which has led to reduction in non-performing assets.
UBI reported a net loss of reported Rs 1238 crore of loss for the October- December as compared to Rs 42.2 crore of profit during the same period of the previous year on the back of 500% increase in provisioning to Rs 1783 crore. Fresh slippages in that period was over Rs 3000 crore.
In the second quarter, the bank had posted loss of Rs 489 crore, and following a request for the bank's chairperson and managing director, RBI ordered an forensic audit by an independent agency. Things took drastic turn a few days after its third quarter result, as its chairperson and managing director Archana Bhargava resigned citing personal reasons.
Since then the bank has was closely monitored by both the finance ministry and the Reserve Bank of India (RBI). The lender was asked to furnish daily reports on its asset quality. According to sources, the gross NPA reduction in the bank will exceed the Rs 2,000 crore a target which was set by the bank it self- which has helped it to bring down the absolute number of gross NPA as on 31 March as compared to the end December figures, despite fresh slippages. However, the bank has also incurred fresh slippages were contained to a significant exchange.
Writing-off accounts have also helped the bank to contain NPA, sources indicated. In the third quarter, the bank wrote-off only Rs 9.74 crore. As on end December, the gross NPA of the bank was Rs 8545 crore which was 10.82% of its gross advances and net NPA was Rs 5630 crore or 7.44% of net advances. The NPA ratio for the fourth quarter will also look better since the bank is shrinking its balance sheet. RBI has imposed a curb on its lending activity as the lender is not allowed to disburse a single loan of more than Rs 10 crore.
Writing-off accounts have also helped the bank to contain NPA, sources indicated. In the third quarter, the bank wrote-off only Rs 9.74 crore. As on end December, the gross NPA of the bank was Rs 8545 crore which was 10.82% of its gross advances and net NPA was Rs 5630 crore or 7.44% of net advances. The NPA ratio for the fourth quarter will also look better since the bank is shrinking its balance sheet. RBI has imposed a curb on its lending activity as the lender is not allowed to disburse a single loan of more than Rs 10 crore.
During the post policy interaction with media on Tuesday, RBI deputy governor KC Chakrabarty pointed out to governance issues in public sector banks and said steps are being contemplated to address those issues. "The bank's chairperson wrote a letter to RBI and finance minister that in bank accounts are not classified as NPA, and requested for forensic audit. So we started forensic audit and the conclusions are found to be valid that banks accounts are not classified as NPA, because of technology or other reasons," Chakrabarty said adding that it is not only NPA that resulted in loss but also lower provisioning towards other provisions like pension.
"UBI loss is not just due to NPA, Rs 625 crore for pension was not provided for. The issue is that is not provided in many other banks also. These issues point towards issue of corporate governance. We have written to the government of India to take set of steps for this and this is not for UBI but for banking system as a whole," Chakrabarty said.
"UBI loss is not just due to NPA, Rs 625 crore for pension was not provided for. The issue is that is not provided in many other banks also. These issues point towards issue of corporate governance. We have written to the government of India to take set of steps for this and this is not for UBI but for banking system as a whole," Chakrabarty said.
No comments:
Post a Comment