United Bank of India is looking at capital infusion from the government soon, as it is unlikely that the bank can be able to raise funds through qualified institutional placements (QIPs) before the end of March due to prevailing unfavourable market condition.
Although the bank has received Sebi’s approval to raise Rs 250 crore capital through QIPs, managing director & CEO P. Srinivas is not hopeful of raising fund through this route in the current fiscal.
The lender is expecting that the government would inject a portion of Rs 600 crore, which it has sought for this fiscal, by March-end through preferential allotment of equity shares.
“Raising fund through QIP is not happening due to market conditions. We are now looking at government’s fund infusion,” Srinivas told FE. “The government can still inject some amount through preferential allotment before or after the Union Budget.”
The bank’s capital adequacy ratio as per Basel III was at 9.92% with tier-I at 7.12% as on December 31, 2015. The government holds 82% stake in it.
On asset quality, Srinivas said United Bank was putting a lot of effort in recovering bad loans in the fourth quarter.
During the third quarter, the lender’s gross non-performing assets (NPAs) as a percentage of total loans improved to 9.57% from 12.03% a year ago. However, sequentially, the asset quality deteriorated as gross NPA ratio stood at 8.90% at the end of second quarter.
“Asset quality review was incremental in terms of bad loans for the bank in the third quarter. We are putting a lot of effort on recovery. If we can recover a good amount of bad loans, we can certainly contain NPAs during the fourth quarter despite AQR,” the managing director said.
The RBI has advised the lenders to revise asset classification and provision in respect of certain advances over the third and fourth quarters of this fiscal.
United Bank is hopeful that the Calcutta HC would deliver its verdict on Vijay Mallya’s ‘wilful defaulter’ tag in a month, which will mark an end of a long courtroom battle.
“I expect that in a month’s time the judgment will come,” Srinivas told FE. UBI had appealed before a division bench of the HC last year, challenging its single bench order that had dismissed the bank’s decision to declare Mallya a ‘wilful defaulter’.
Cracking down on Kingfisher Airlines for non-payment of over Rs. 300 crore outstanding dues, the Kolkata-based bank had declared Mallya a wilful defaulter in September 2014.