Public sector lender United Bank of India is aiming to bring down its gross non-performing assets by over R500 crore in absolute terms in the current financial year.
The bank also expects to reduce its gross NPA as a percentage of total loans to 7.5% by this fiscal-end from over 9% at present.
While the bank’s NPA in absolute terms stood at R6,532.82 crore in the June quarter, the ratio of gross NPA during the same quarter was at 9.57%.
“Quarter-on-quarter on actual term our gross NPA is coming down. We will continue to do that. My goal is to bring it down to below R 6,000 by March, 2016,” United Bank of India managing director and chief executive officer P Srinivas told reporters on the sidelines of Ficci Banking conclave.
Srinivas said bank credit was expected to pick up from the second half of the current fiscal and that would help his bank reduce its gross NPA ratio. “I expect my credit will also reasonably pick up. By March next year we expect gross NPA ratio to come down to about 7.5%,” he said.
According to the data provided by the Reserve Bank of India (RBI), United Bank topped the list of public sector lenders with maximum bad loans including restructured assets as a percentage of total advances.
Earlier this month, finance minister Arun Jaitley had said bad loans of state-run lenders reached “unacceptable” levels, expressing hope that the situation would improve in the coming quarters. Srinivas said his bank’s margins were getting impacted as “sizeable amount” of its loans were either restructured or became NPA.
“Thus, to reduce our cost of funds, I have slashed deposit rates three times in the last four months. Once our cost of funds comes down the bank will lower lending rates, but it will take time,” he pointed out.
United Bank may raise a small amount of tier-I capital from the market this quarter. It has urged the government to infuse R500 crore by March, 2016 to support its tier-I capital adequacy.