UCO Bank, UBI and Allahabad Bank stare at rising NPAs

Even as the RBI ruled out any special provisioning norms for debt recast in the wake of increasing NPAs in the banking industry, three Kolkata-based banks have reported a significant rise in bad assets during the third quarter of the current fiscal.

The banking regulator will soon meet 10 large banks to take stock of their non-performing assets. While UCO Bank, the largest among the Kolkata-based banks, has been burdened with huge non-performing assets for several consecutive quarters, other two public sector lenders, Allahabad Bank and United Bank of India, have seen a significant increase in NPAs during the period under review.

UCO Bank?s gross NPAs increased to 3.49% during the quarter ended December 31, 2011, against 2.57% during the similar period the previous fiscal. Fresh slippage of the bank during the quarter was R537 crore, which included R291 crore arising out of Kingfisher Airlines account. Almost 72% of UCO Bank?s advances are marked for corporate clients. ?We started the cleaning-up of our balance sheet from the last year. There are legacy issues, which we are facing,? admitted Arun Kaul, chairman and managing director, UCO Bank.

For the other two lenders, Allahabad Bank and UBI, NPAs in priority sector have been a cause of concern. According to Allahabad Bank CMD JP Dua, a major cause for its NPAs is small loans and agriculture. ?Even in this quarter, whatever NPA is there, around 60% NPA has come from agriculture and MSME. So, priority sector contributes in a major way towards our NPA,? he said.

Allahabad Bank?s gross NPAs during the quarter increased to 1.86% from 1.77% during the same quarter last fiscal. Its net NPAs also increased to 0.79% from 0.59% in the third quarter of 2010-11.

Almost 71% of UBI?s NPAs during the quarter have come from small-ticket transactions in sectors like agriculture, SME and retail trade.

?On the NPA front, we have seen two problems? last year our system did not properly capture the small-ticket advances? We have upgraded our system? now, all NPAs have been generated from the system. So, we have taken into account some small-ticket advances, which had not earlier been considered as NPA,? chairman and managing director, UBI, Bhaskar Sen, said. On the asset quality front, the gross NPAs of UBI stood at 3.28% in the third quarter of the current fiscal against 2.93% in the same period a year ago. The bank?s net NPAs grew to 2.77% during the quarter under review from 1.9% same period last fiscal.