United Bank of India (UBI) chairman and managing director Archana Bhargava resigned from her post on Friday even as the bank faces a probe by the Reserve Bank of India (RBI) and the government regarding the piling up of bad loans in the last two quarters.
Confirming her resignation and the government’s decision to accept it, financial services secretary Rajiv Takru told FE that Bhargava had put in her papers mentioning her health and added that the government will fill the post as soon as possible.
“She (Bhargava) has sought VRS (voluntary retirement scheme) citing health reasons. We will soon start the process for appointment of a regular CMD. In the interim period, we have asked the EDs (executive directors of the bank) to take charge,” he said.
The Kolkata-based bank in a BSE filing said, “…ministry of finance vide its letter dated February 21, 2014, has communicated its acceptance to the application for voluntary retirement of Archana Bhargava, chairperson and managing director of the Bank w.e.f February 20, 2014”.
Last week, the bank had decided to suspend its loan facilities for an indefinite period owing to high levels of stressed assets and diminished capital adequacy. However, as there were reports of the government planning to infuse R1,000 crore capital into the bank, it resumed lending operations a few days ago.
The UBI scrip on the BSE fell to 23.40 rupees, the lowest in intra-day trading since the stock’s debut four years ago, but recovered to end at Rs 24.35, up 0.41%. UBI has dropped 65% over the past year, compared with a 13% decline in the 12-stock S&P BSE Bankex.
The RBI in December 2013 had restrained United Bank from advancing credit of more than Rs 10 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 Rs 1,200 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% to Rs 8,545.50 crore. Moreover, the bank's capital