RBI has no magic wand to help UBI

Written by fe Bureau | Mumbai | Updated: Mar 21 2014, 09:55am hrs
Kolkata-based United Bank, which saw gross NPA levels of 10.82% in the December quarter, must reduce expenses and work hard to improve its asset quality because the RBI has no magic wand to help it, RBI deputy governor KC Chakrabarty said Thursday.

On RBI initiatives to revive the bank, Chakrabarty said, It is the bank which has to work to improve their asset quality, reduce expenses and mobilise more business.

We are asking them to do good business and avoid bad business, he said, adding that if a bank hides its NPAs, it will not be able to recover them.

Last month, United Bank had decided to suspend its loan facilities for an indefinite period, owing to the high level of stressed assets and diminished capital adequacy. However, as there were reports of the government planning to infuse R1,000 crore into the bank, it resumed lending operations a few days later.

The RBI, in December 2013, had restrained United Bank from advancing credit of more than R10 crore to a single borrower and also restricted it from restructuring stressed assets, after conducting a forensic audit in November.

The bank reported a net loss of more than R1,200 crore in December quarter. The ratio of gross non-performing assets (NPAs) to gross advances during the third quarter of the current financial year jumped to 10.82% at R8,545.50 crore. Moreover, the capital adequacy ratio also fell to a little over 9%. As per Basel-III norms, banks must maintain a total capital ratio (tier-1 capital and tier-2 capital) of 9%.

The public sector lender had recently expressed confidence in upgrading and reducing at least R2,000 crore of non-performing assets through an intensive recovery drive to improve its working results in the March quarter of fiscal 2014.

No reply from EC on bank licences: RBI

fe Bureau

Mumbai, March 20: The RBI has not yet received a reply from the Election Commission (EC) to its letter seeking clarity on whether issuance of bank licences would come under the purview of the model code of conduct, RBI deputy governor KC Chakrabarty said on Thursday, on the sidelines of a conference.

I only know that RBI has written to the EC seeking its view and whether they have replied or not I have no idea. At least till yesterday I had no information about it, Chakrabarty said.

Bloomberg reported on Thursday that the EC will probably rule next week on a central bank request to issue new bank licenses, according to a government official who asked not to be identified because the decision is not yet final.

A section of the media on Thursday had reported that the RBI plans to issue licences before the general elections might be thwarted by the EC.

Meanwhile, finance minister P Chidambaram and governor Raghuram Rajan had earlier said the EC would not have

any problems with the licences as the process had started much before the poll season.

Gold imports by more banks will bring down prices: Chakrabarty

Mumbai, March 20: RBI deputy governor KC Chakrabarty has defended the decision to allow more banks to import gold, saying presence of more players will lead to lower costs and help the country's external balances. "If there is competition, gold will be imported at a lower cost. Whatever gold will be imported that will be cheaper, to that extent CAD will improve," he told reporters on the sidelines

of an event here. PTI