Three years ago, Mr Madhukar recalled, the MS Verma committee labelled the bank as sick which needed Rs 1000 crore for improving capital adequacy, supporting VRS expenses and technological upgradation. The CII committee, which was headed by ICICI Bank chief KV Kamath, went a step further and opined that there was low probability of turnaround and recommended liquidation of UBI. The committees report, however, was withdrawn after protests by the bank staff.
UBI, Mr Madhukar who will be retiring shortly said, is the only bank that turned around without the advice of a consultant or government assistance. The bank, which posted a net loss of Rs 262 crore in 2000-01, posted Rs 305 crore net profit in the last fiscal and Rs 242 crore in the nine months ended December 2003, he said.
The erstwhile sick bank, he said, finds a place in the list of top 1000 banks prepared by London-based The Banker of Financial Times. UBI was ranked 54th in the list of top 500 Indian companies prepared by London-based Dun & Bradstreet Information Services. The KPMG has rated UBI as the fourth safest bank in the country.
The United Bank, he said, has no immediate plans for public offer but has ambitious growth plans for future. Last fiscal, the bank reduced its accumulated losses by Rs 500 crore and similar amount would be wiped off this fiscal. Next fiscal, the bank would be able to wipe off its accumulated losses completely, Mr Madhukar said.
Primarily good human resource policies and better cash management practices are responsible for the turnaround. The bank was able to deploy an additional Rs 1,200 crore just by following prudent inter-branch reconciliation practices. We did not focus on profit. We concentrated on factors that are responsible for profits. There is no mention of profit in the memoranda of understanding that I signed with regional managers, he said.
The UBI has also increased its capital adequacy ratio to 16.63 per cent at the end of December 2003 from 10.4 per cent in 2001. The bank also reduced its gross non-performing assets to Rs 946 crore (11.7 per cent of advances) by December 2003, from Rs 1,411 crore (21.5 per cent) in 2000-01. Net NPAs came down to Rs 385 crore (5.4 per cent) till December last year from Rs 602 crore (10.5 per cent) in 2000-01.
The drastic reduction in NPAs was despite the fact that the UBI has a predominant presence in the economically backward areas of eastern India, Mr Madhukar said. Viewing the high incidence of NPAs from priority sector, the bank has scaled down food-credit to Rs 989 crore till December 2003 from Rs 1,274 crore in March 2001.
The bank has been able to increase its loan advances to Rs 8,300 crore compared Rs 6,560 crore in March 2001. The banks deposits have grown from Rs 1,477 crore in 2000-01 to Rs 22,439 crore till December 2003.