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United Bank to focus ?all energies? on recovery of bad loans

State-run United Bank of India, which posted losses of over R1,200 crore for the December quarter…

State-run United Bank of India, which posted losses of over R1,200 crore for the December quarter, is focusing ?all energies? on recovering huge bad loans in the last quarter of the fiscal as the bank?s lending capacity has reduced sharply.

The Kolkata-headquartered bank?s ratio of gross non-performing assets (NPAs) to total advances during the third quarter of the current financial year jumped to 10.82%, with the amount of gross NPAs touching a whopping R8,545.50 crore.

The bank?s lending capacity has dwindled sharply as its capital-adequacy ratio at the end of the third quarter was at 9.01% under Basel-III norms, tad above the 9% stipulation by the RBI. Moreover, its tier-1 ratio was just 5.6% as of December, 2013, below the Common Equity Tier-1 (CET1) trigger of 6.125% for Basel-III additional tier-1 instruments and a 6.5% of RBI?s minimum requirement from March, 2014.

?Our lending capacity has already deteriorated. So, we have re-oriented our focus on recovery of bad loans for the next one-and-a-half months. Every branch has been asked to focus all energies only on recovery,? a senior official of the bank told FE, requesting anonymity.

?We have launched a massive drive to recover our bad assets. A substantial amount of bad loans can be recovered,? he said. The official, however, did not confirm reports that an internal directive, imposing a moratorium on lending, was issued earlier.

Conceding that it would be difficult to quantify the exact amount of bad assets that could be recovered during the last quarter, another bank official said it could be in the range of R2,000-3,000 crore.

The public sector lender last Friday reported a R1,238.08 crore loss for the December quarter of FY14 against R42.20 crore profit for the same period of FY13.

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First published on: 13-02-2014 at 03:40 IST
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