Uco Bank, which has been put under the prompt corrective action (PCA) by the Reserve Bank of India, on Wednesday said the turnaround plan is in the final stages of preparation. “We are almost in the final stages of preparation for the turnaround plan. Within 2-3 days, we may prepare it,” Uco Bank executive director Charan Singh told reporters after the 14th annual general meeting. The Kolkata-based bank has been working with SBI Caps to prepare the plan. “The plan will be on the areas in which we have to grow, and where we have to cut down (exposures)…” Singh informed.
The RBI initiated prompt corrective action (PCA) against Uco Bank last month because of huge bad loans and negative return on assets. The lender is in search of an appropriate business model for adopting proper strategies for quickly resolving non-performing assets issues and loan growth in low-risk areas.
On when the bank is expected to return to profitability, Singh said, “This (financial) year it is not possible. We expect to become profitable in next year.” Stating that the PCA would not have much impact on the bank, he said it would not hit the lender’s credit growth. The bank is expecting a credit offtake growth of 6-7% for this fiscal. “There is no such restriction on credit expansion. However, we are not taking any exposure below a particular investment grade. Of course we cannot increase our unsecured exposure,” he said.
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In order to improve capital adequacy, the bank is planning to raise around Rs 3,000 crore this financial year. It is looking to raise a part of this total amount from LIC, and will also explore other options such as a follow-on issue or QIP. LIC had infused Rs 270.60 crore in the bank last fiscal. The bank’s capital adequacy ratio under Basel-III stood at 10.93% at the end of FY17. Icra last week downgraded UCO Bank’s bond borrowing programmes worth Rs 1,300 crore due to weak financial performances.