UCO Bank ‘redesigns’ strategies to align with ‘Aatmanirbhar Bharat’; to focus on agri, MSME lending

Notably, UCO Bank has been under RBI’s Prompt Corrective Action (PCA) since May 2017 on account of high net NPA and negative RoA.

Public sector lender UCO Bank has redesigned its strategies to align with the government’s ‘Aatmanirbhar Bharat’ initiative, with enhanced focus on lending to retail, agri and MSME sectors amid COVID-19 crisis, according to its annual report. In its 2019-20 annual report, the bank said it is expecting the various technological initiatives for customer convenience to yield “good results” in coming months.

Underlining the fact that the COVID-19 outbreak and the effect of lockdown from late March to June caused severe adverse impact on all sectors of the Indian economy, including banking, UCO Bank said “it has redesigned its strategies” to implement Aatmanirbhar Bharat package announced by the central government, to fall in line with the current situation.

The report said the thrust area of the bank is to improve lending to retail, agriculture and micro, small and medium enterprises (MSMEs). In these tough times, the bank will extend emergency credit lines, on merits, to the borrowers who were affected by the COVID 19 economic crisis, it added.

“Bank has taken up several technological initiatives like migrating to Finacle 10, improving software of mobile, internet and phone banking. These initiatives in customer convenience will give good results in coming months,” UCO Bank said in its annual report.

The Kolkata-headquartered lender said that it will focus on mobilisation of low cost resources to augment its bottom line with the help of PHYGITAL (physical and digital) network. “Bank is in the process of upgrading its loan processing with introduction of technology driven loan origination system which will be rolled over in couple of months. With introduction of this system, there will be almost end to end automation of loan appraisals and lapses in loan processing can be avoided to a great extent. With the speedy approvals, bank will boost its retail portfolio,” UCO Bank said.

Besides, the bank said that it will focus on strengthening its customer reach techniques by tie-up with a few fintech firms that are having expertise in evaluation of GST and IT returns, analysis of financial statements, bank statements, customer information including behavioural pattern of customers.

“Economy is likely to be muted till the end of first half. Bank will make its products and services more competitive and improve its internal processes for a robust growth soon after economic revival take place,” it added. UCO Bank Managing Director and Chief Executive Officer A K Goel in his message to shareholders said the way forward for FY 2020-21 is shift from “survival to growth mode”.  The bank will continue its focus on containing slippages and reaching the industry benchmarks on advances and CASA growth, Goel said. Further, he said UCO Bank is in the process of introduction of Loan Originating System (LOS) to upgrade its appraisal techniques through technology driven end to end automation of loan appraisal system.

“Using LOS facility, customers will also be able to apply for loans on bank’s website and can avail the facilities like option of branch selection while applying for loan, tracking of the status of loan application and information on pendency reasons through e-mail/SMS. These processes will enhance transparency with priority of compliance over business. These improvements in processes will minimise the response time and ensures better asset quality,” Goel said.

Talking about the current pandemic, he said the situation continues to be uncertain and bank is closely monitoring the same.  “Bank will continuously in touch with our borrowers and will provide financial support to the borrowers on merits,” Goel added.

During FY20, UCO Bank narrowed its net losses to Rs 2,437 crore as against Rs 4,321 crore in FY19. However, there was a net profit of Rs 16.78 crore in its book during the last quarter ended March of 2019-20. Interest income of the bank increased by 11 per cent to Rs 5,876.19 crore mainly because of increase in domestic investment portfolio, while the total income grew by 13.64 per cent to Rs 18,006 crore. The bank had registered 12 per cent year-on-year growth in its retail loan portfolio to Rs 25,223 crore as on March 31, 2020.

Notably, UCO Bank has been under RBI’s Prompt Corrective Action (PCA) since May 2017 on account of high net NPA and negative RoA. The lender said that it has improved the asset quality during 2019-20 on the back of an all round effort in management of non-performing assets (NPAs).

Its gross NPA reduced to 16.77 per cent as on March 31, 2020 from 25 per cent by year ago same period. While, net NPAs fell to 5.45 per cent from 9.72 per cent. “Bank is complying the PCA framework norms meticulously. Bank has prepared an action plan and also taken various steps to reduce NPA and improve its profitability. Bank is also reporting its progress made on PCA framework to RBI periodically,” said the annual report.

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