Glitches in NPA classification, priority-sector lending pain behind United Bank of India's mess: Probe

Mar 17 2014, 01:25 IST
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SummaryUnited Bank of India's NPAs saw near 200% increase in terms to Rs 8,546 cr by Dec end from a year ago.

consortium/multi-bank accounts as NPAs, the sources said this has happened as the concerned clients had repaid the other banks in the consortium/multi-bank accounts, while keeping UBI high and dry. More discussion with other banks, the UBI Board and its statutory auditors could give a clearer picture as to whether these accounts can now be treated as 'standard' by UBI also, the sources said.

They said Archana Bhargava, during her tenure as the bank's chairperson and managing director, had asked auditors to be strict and unrelenting in treating accounts as NPAs. This, sources said, resulted in some of the accounts, which could have been restructured, also being classified as NPAs.

The probe also found that there were 'deficiencies' in Finacle 'core banking software' of Infosys which led to incorrect classification of accounts. However, the IT major had denied this allegation and stated that Finacle "has the proven ability and framework required to address asset classification and NPA reporting" as per the RBI norms.

The bank is trying its best to recover loans by holding video-conferences every alternate day with the zonal heads. It has reduced NPAs to the tune of Rs 1,200 crore in January and February, said finance ministry sources.

This included recovery of Rs 400 crore and upgrading accounts involving Rs 800 crore. The finance ministry is monitoring the recovery of bad loans on a daily basis.

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