Finance ministry directs United Bank of India to recover Rs 1 crore bad loans daily
(The finance ministry has…)
NEW DELHI: The finance ministry has directed loss-ridden United Bank of India to recover bad loans worth at least Rs 1 crore every day from each of its 36 circles until the end of this month.
A senior official in the ministry told ET that the aim is to bring down the state-run lender's non-performing assets (NPAs) to the level of Rs 7,000 crore or less in the current fiscal ending in March.
A senior official in the ministry told ET that the aim is to bring down the state-run lender's non-performing assets (NPAs) to the level of Rs 7,000 crore or less in the current fiscal ending in March.
The Kolkata-based bank has been under the finance ministry's scanner
since last month when it reported a nearly three-fold increase in NPAs
to Rs 8,546 crore for the quarter to December, resulting in an
unprecedented quarterly loss of Rs 1,238 crore. "The bank is aware of
these directions and we are monitoring the progress," the official
quoted earlier said, adding that progress reports from all 36 circles of
the bank are being reviewed daily. On Wednesday, finance minister P Chidambaram had said that the bank has reduced its NPAs by Rs 1,200 crore.
The lender recovered Rs 400 crore in cash and upgraded 800 crore worth of accounts. "The bank is focussing on recovery of both retail and corporate loans. We are hopeful to achieve the target," a senior United Bank executive said, requesting anonymity. Archana Bhargava, the bank's chairman and managing director, had stepped down last month amid allegations of under reporting of NPAs by the bank. Though the finance ministry has ordered an administrative inquiry into why the NPAs were under reported, a forensic audit by the Reserve Bank of India (RBI) has found that some of the accounts at the bank were restructured without a viability study while some accounts that were not eligible for special dispensation were not downgraded. Chidambaram is due to discuss the issue with RBI governor Raghuram Rajan on Friday. "United Bank is a special case. We will deal with that. It's not an alarming case...UBI issue will be discussed separately when the governor comes here on (March) 7th and we know the path forward," Chidambaram said on Wednesday after his meeting with heads of state-run banks and financial institutions.
Finance ministry officials as well as United Bank executives ruled out that the lender's board will be superseded. Chidambaram has already ruled out any move on consolidation, adding that any such initiative should come from the bank. "There can be some more capital infusion from the government," said the ministry official quoted earlier. The government, which owns 88% of United Bank, has provided it Rs 700 crore as capital in the current fiscal.
NAME - SHYAM KISHOR SINGH
PGDM - 2nd sem
The lender recovered Rs 400 crore in cash and upgraded 800 crore worth of accounts. "The bank is focussing on recovery of both retail and corporate loans. We are hopeful to achieve the target," a senior United Bank executive said, requesting anonymity. Archana Bhargava, the bank's chairman and managing director, had stepped down last month amid allegations of under reporting of NPAs by the bank. Though the finance ministry has ordered an administrative inquiry into why the NPAs were under reported, a forensic audit by the Reserve Bank of India (RBI) has found that some of the accounts at the bank were restructured without a viability study while some accounts that were not eligible for special dispensation were not downgraded. Chidambaram is due to discuss the issue with RBI governor Raghuram Rajan on Friday. "United Bank is a special case. We will deal with that. It's not an alarming case...UBI issue will be discussed separately when the governor comes here on (March) 7th and we know the path forward," Chidambaram said on Wednesday after his meeting with heads of state-run banks and financial institutions.
Finance ministry officials as well as United Bank executives ruled out that the lender's board will be superseded. Chidambaram has already ruled out any move on consolidation, adding that any such initiative should come from the bank. "There can be some more capital infusion from the government," said the ministry official quoted earlier. The government, which owns 88% of United Bank, has provided it Rs 700 crore as capital in the current fiscal.
NAME - SHYAM KISHOR SINGH
PGDM - 2nd sem
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