Public sector lender United Bank of India is aiming to grow its retail credit portfolio by 30% for this fiscal as it remains cautions on lending to corporate sector. The bank is eyeing a 10-12% business growth in this financial year.
“We want to grow by about 30% this year in retail segment. We grew by about 20% in this segment last year,” United Bank executive director Sanjay Arya told reporters after the bank’s annual general meeting.
“We want to grow our retail loan portfolio as we are still cautious on corporate lending,” Arya said.
At present corporate loan constitutes around 35-40% of the bank’s total loan portfolio. The lender aims to increase retail segment’s share in its lending portfolio. In the retail segment, the bank will focus on housing, education and vehicle loans.
Total business of the bank stood at Rs. 187813 crore as on March 31, 2016, registering a modest growth of 5.58%. P Srinivas, managing director and CEO, said the lender was aiming at 10-12% business growth this fiscal.
Speaking at United Bank’s 7th annual general meeting, Srinivas said the bank’s management was taking every possible step to contain the non-performing assets (NPAs) and ensure that no gap existed in its measures to recover bad loans.
“In the initial stages wherever there is difficulty, we are proceeding to issue the Sarfaesi Act, we are auctioning the properties and recovering whatever the available properties. So, the in the recovery efforts there is no gap. Similarly the follow-up of the accounts which are on the bottomline, we have a very strong and proven follow-up almost in a weekly basis,” he told shareholders.
During the March quarter last fiscal, the bank’s NPAs in absolute term surged by over 44.5% year-on-year to Rs. 9471.01 crore from Rs. 6552.91 crore in same period a year ago. Gross NPA as a percentage of total loans rose to 13.26%.
On the branch network, the CEO said the bank had gone slow on opening new branches and was reorganizing the branch network by merging branches to reduce costs. “We have some restrictions from the Reserve Bank of India on branch opening. We are going to RBI for getting appropriate approval. We have to stabilize the large number of branches opened in the previous years. Wherever branches are very nearly located, we are merging and re-organising them,” he informed.
United Bank is planning to raise up to Rs 1,000 crore in one or more tranches through a public issue or qualified institutional placement (QIP) or rights issue, for which it sought shareholders’ approval at the annual general meeting.
“Banks are taking all possible steps to bring down the government’s shareholding to 75%. As and when the market favours, the management and board will take appropriate steps and we will bring it down before the due date,” Srinivas added. The government’s holding in United Bank stood at 82% as on March 31, 2016.
Regulations require the government to reduce its stake in listed banks to 75% or less by August, 2017.