UCO Bank trying to reduce NPA provision, raise operating profit: CEO Atul Kumar Goel

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January 28, 2020 12:38 AM

As the bank received fresh capital of around Rs 2,142 crore from the government in the first week of January, capital adequacy ratio will improve further.

Around Rs 900 crore of money we received as the recovery through NCLT and other routes in the December quarter.

Uco Bank is confident that its profitability will increase quarter by quarter with the lender emphasising on sustainable operating profit, says MD & CEO Atul Kumar Goel. In an interview with Mithun Dasgupta, Goel informs the bank, currently under RBI’s Prompt Corrective Action framework, is exploring all the avenues to increase its non-interest income and bring down gross non-performing assets ratio to less than 20% by this fiscal end. Excerpts:

What is the outlook for Uco Bank’s profitability amid a challenging environment this fiscal?

This fiscal will be very good for the bank’s profitability. As on date, we are thinking how to increase our operating profit. The loss is only on account of one provision NPA. We are trying to reduce NPA provision and increase operating profit. In the June quarter, we had a very comfortable figure of Rs 1,201 crore operating profit, which was the highest in the last 15 quarters. And, in the September quarter also, we had clocked Rs 1,207 crore. We are trying to maintain this. It should be a sustainable operating profit going forward. In order to increase the operating profit, we are working on increasing CASA (current account and savings account), quality lending and increasing non-fund based non-interest (NFNI) income. We are hopeful that we would return to the black in the March quarter of the current fiscal. I am very confident that profitability of the bank will increase quarter by quarter. FY21 will be the golden year. Future of the bank is very bright.

What are the avenues being explored to increase NFNI income going ahead?

We are giving thrust to increase NFNI income. We are seeing that whatever non-fund limits we had sanctioned are not being utilised. So we are following up with the branches from June last year to make it utilise to ensure higher NFNI income. We are looking at other avenues also. Our bank’s income from bancassurance networks is very less. We have already floated a request for proposal for selecting two-three new insurance partners in general and life insurances. We have also signed an MoU with SBI Cards and Payment Services to launch co-branded credit cards.

Where do you see the NPA numbers at this fiscal end?

Our main endevour as on date is to reduce net NPA ratio below 6% by March 2020. And, all our employees are committed to bring net NPA ratio below 6%, which is the major criteria to come out of the PCA framework. I am very confident that NPAs will be reduced quarter by quarter. We are targeting less than 20% gross NPA ratio by March end.

Apart from NCLT, what are the steps being taken to bring down bad loans?

Recovery of bad loans is our focus area. For recovery, apart from NCLT and one-time settlement (OTS), we are exploring a non-discretionary and non-discriminatory (NDND) scheme. Our board has approved this scheme, in which NPA accounts having ledger balance up to Rs 1 crore are eligible for settlement. The haircut depends on age of NPA and value of the security. As on date, I am having six lakh eligible accounts, amounting Rs 5,500 crore. We are targeting this segment for recovery through OTS. We had recovered good money in the December quarter under this scheme. Further, we are going for the OTS route for small as well as big accounts as per the policy approved by the board.

What kind of recovery does the bank expect via NCLT in the coming quarters?

I am expecting around Rs 1,500 crore of recovery in the current fiscal through NCLT. Around Rs 900 crore of money we received as the recovery through NCLT and other routes in the December quarter. I am very hopeful in the current (March) quarter there will be another recovery of around Rs 500-600 crore because of the Bhushan Power and Steel account. I am confident that in the current quarter and in the next quarter (June quarter next fiscal) also, we will be in a position to recover good amounts in the NCLT cases.

Capital adequacy ratio was at 11.44% as on September 30, 2019. Do you have any plan to raise more money to boost capital?

As the bank received fresh capital of around Rs 2,142 crore from the government in the first week of January, capital adequacy ratio will improve further. In this fiscal, we have got a total of around `4,270 crore capital from the government. We have already got approval from the board for raising money through QIP also. We will take the decision to launch the QIP at an appropriate time when the market will support.

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