Public sector lender United Bank of India, which is under Prompt Corrective Action (PCA) framework of Reserve Bank of India, is expecting to turn profitable by the end of the current financial year.
The city-based bank had registered a net loss of `1454.44 crore in the last fiscal. The RBI in December last year had prescribed certain ‘additional actions’ under the PCA framework against the bank over its high net non-performing asset (NPA), low leverage ratio and capital needs.
“Our bank has submitted its business plan to the finance ministry, which if approved, envisages turning around into profit by the fourth quarter of this fiscal,” United Bank’s managing director and CEO Pawan Bajaj told shareholders at the 9th annual general meeting here on Friday.
The turnaround plan submitted by the bank included maintaining RWA (risk-weighted asset) at an optimum level vis-a-vis capital requirement, reducing corporate exposure and focusing on retail, agriculture and MSME portfolio and limiting corporate advances to rated accounts.
The bank was expecting to recover close to Rs 3,000 crore this fiscal through resolution of stressed accounts under Insolvency and Bankruptcy (IBC), its MD said. It has referred 30-odd accounts, with an aggregating exposure of Rs 5,951 crore, to the National Company Law Tribunal (NCLT). “We have already recovered close to Rs 680 crore from resolution of two accounts under IBC. There are some more accounts, which are at the final stages of resolution. So we are hopeful of recovery from these accounts,” Bajaj added.
The state-run lender’s asset quality had worsened further in the March quarter last fiscal. Gross NPAs in absolute term rose to Rs 16,552 crore during the January-March period last fiscal from `10,952 crore in the same period previous fiscal. Gross NPA as a percentage of total loans rose to 24.10% in the fourth quarter of FY18 from 15.53% during the corresponding period of FY17.
