Calcutta, April 9: The United Bank of India (UBI) plans to approach the Reserve Bank of India to allow it to lend more than Rs 10 crore — a cap imposed on it in November by the RBI.
According to top officials of the UBI, the bank is expected to make a turnaround after a rigorous recovery drive from January.
The improved numbers will help the bank to place its case before the regulator. The audited numbers of the bank for the fourth quarter are due to come.
Executive director Deepak Narang confirmed the bank’s plan to approach the Reserve Bank.
“We will first discuss the matter at the board meeting before approaching the RBI,” Narang told The Telegraph.
The UBI had reported a net loss for two successive quarters (July-September and October-December) in 2013-14 with the losses increasing to Rs 1,238 crore in the December quarter. This was on the back of a sharp rise in provisioning to cover for the fresh slippage of over Rs 3,000 crore during the quarter.
The rising non-performing assets (NPAs) and accumulated losses translated into the bank coming under regulatory scanner.
The RBI had conducted an audit to check for unreported NPAs and had subsequently mandated the bank not to advance loans of more than Rs 10 crore to a single lender.
The bank’s chairperson and managing director Archana Bhargava resigned in February. Since then, Narang and Sanjay Arya, the two executive directors of the bank, had been focussing on wiping off the losses in the final quarter, with close monitoring by the finance ministry and the RBI.
The bank had internally set a target of a recovering bad assets of Rs 2,000 crore during the quarter.
Arya, in an interaction with the UBI officers at the beginning of March, had said the bank had already been able to lower the NPAs by Rs 1,000 crore in January and February. Bank sources said it had been able to reach the target.
As on December 31, the UBI’s gross NPA stood at Rs 8,545 crore, amounting to 10.82 per cent of the gross advances. Net NPA was Rs 5,630 crore, or 7.44 per cent, of the net advances.
The government’s approval to the proposal of HDFC Bank for raising the overseas shareholding limit to 67.55 per cent may get delayed as the commerce ministry is scrutinising all foreign investments made in the bank.