State-run Uco Bank on Friday said Reserve Bank of India (RBI) has initiated prompt corrective action (PCA) for it in view of high non-performing assets and negative return on assets. “RBI, vide their letter dated May 5, has initiated prompt corrective action for Uco Bank in view of high NPA and negative RoA. These measures aim at improving performance of the bank and to strengthen internal controls of the bank,” Uco Bank said in a late evening BSE filing.
Notably, earlier this month IDBI Bank has said the central bank initiated PCA against it.
Kolkata-based Uco Bank’s asset quality worsened further in the March quarter last fiscal as its gross non-performing assets (NPAs) in absolute term rose close to 8% y-o-y to Rs. 22540.95 crore from Rs. 20907.73 crore for the corresponding quarter previous fiscal, according to a BSE filing on Friday. Its gross NPAs soared by 1.6% on a quarter-on-quarter basis from Rs. 22181.26 crore in the December quarter.
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The bank reported that its net loss narrowed by close to 65.71% year-on-year to Rs. 588.19 crore for the fourth quarter ended March 31, from Rs. 1715.15 crore for the same period a year ago, on the back of lower provisions to cover bad loans. In the third quarter ended December 31, 2016, the lender had posted a net loss of Rs. 437.09 crore.
The lender in its filing, however, said the imposition of PCA would not adversely impact performances of the bank. “The board of directors at its meeting held on this day (Friday) took note of the measures taken by RBI,” it added.
Under prompt corrective actions, controls imposed on a bank could be ranges from restrictions in branch expansions to curb on relatively risky lending.
During the fourth quarter Uco Bank’s total income saw 17.69% y-o-y dip at Rs. 3905.74 crore against Rs. 4745.48 crore in the year-ago period. Provisions and contingencies decreased by 70% y-o-y to Rs 701.02 crore from Rs 2344.88 crore in the corresponding period previous fiscal.
Gross NPA as a percentage of total loans rose to 17.12% in the March quarter last fiscal from 15.43% during the same period previous fiscal. In December quarter last fiscal gross NPA ratio was at 17.18%. Significantly, Uco Bank has one of the highest NPA ratios across the country’s banking industry.
On Friday, the bank’s scrip fell 0.24% to end the day at Rs. 41.55 on the BSE. The lender announced the results after market hours.