UCO Bank posts pre-tax loss of Rs 892 crore in September quarter

High provisioning continued to weigh upon Kolkata-based UCO Bank, although losses reduced over the last one year. The bank posted a loss before tax of Rs 892 crore for the second quarter of the present financial year, against a loss before tax of Rs 1136 crore in the same period of the last financial year. In the first quarter of this fiscal, the bank had posted a loss before tax of about Rs 601 crore.

The provisioning for bad loans and contingencies increased to Rs 2,099.02 crore for the quarter under review from Rs 1,642.54 crore a year ago

On a quarter-on-quarter basis, as well as on a sequential basis, the asset quality of the bank improved. In the second quarter, the bank’s gross non-performing asset as a percentage of total loans stood at 21.87 per cent, while in the same period last financial year, it was 25.37 per cent. In the first quarter of this fiscal, the percentage of gross NPA was 24.85 per cent. The net NPA came down from 11.97 per cent in Q2 of FY19 to about 7.32 per cent in Q2 of FY20.

The bank's total income during the September 2019 quarter increased to Rs 4,533.51 crore, compared with Rs 3,749.18 crore a year ago.

During the July-September 2019 period, the central government infused Rs 2,130 crore by way of preferential allotment of equity share in the bank.

The bank’s non-performing loan provisioning coverage ratio is 81.19 per cent as on September 30, 2019.

Also, the bank said it is currently in the process of evaluating the option under new tax rules as amended by the government and continues to recognise the taxes on income for the quarter and the half year ended September as per earlier provisions of the Income Tax Act, 1961, the bank said.

UCO Bank reduces bad debts, aims to be out of RBI's lending curbs by 2020

State-owned lender UCO Bank hopes to reduce its net non-performing assets (NPA) or bad debts to under six per cent in the current fiscal, enabling it to get out of the central bank's curbs on lending.

“The bank’s net NPA in December 2018 was 12.48 per cent which has reduced to 9.73 per cent in March 2019. And, we have set a target of bringing it to six per cent by March 2020 and we will definitely come out of PCA by then (March 2020),” said AK Goel, managing director and chief executive officer of the bank, in Bhubaneswar.

Goel was talking about prompt corrective action or PCA, the term used for curbs the Reserve Bank of India put on 11 state-owned banks after their capital ratios fell below minimum requirements and bad loans surged.

Goel said the bank will show profits in the last quarter of the current fiscal.

“We have set a hefty target of at least Rs 2,000 crore of recovery per quarter from the NPA accounts and by this we are aiming for recovering Rs 8,000 crore during 2019-20."

The Rs 8,000-crore recovery target is in addition to the accounts referred to the National Company Law Tribunal (NCLT). In the current quarter, the bank hopes to recover Rs 1000 to 1500 crore from cases under the Insolvency and Bankruptcy Code (IBC).

The bank is giving thrust to retail advances particularly the home loans, MSMEs (micro, small & medium enterprises) and agriculture loans and zero RIDF (Rural Infrastructure Development Fund) for 2019-20.

Terming the PSB 59 model of government as wonderful model for providing loans to MSMEs in 59 minutes, the top bank official said “We have given the instructions to our field functionaries to make use of it.”

PSB Loans in 59 minutes is an online marketplace that enables in-principle approval for MSME loans up to Rs five crore in 59 minutes from public sector banks. The bank has set a growth target of 15 per cent and 17 per cent in advances and deposits for this financial year compared to 2018-19. UCO Bank’s deposits was Rs 198,000 crore and advanced Rs 119,000 crore in Fy19.

The lender has referred 183 NPA accounts with a total exposure of around Rs 25,096 crore to NCLT. Of which 109 cases with an exposure of Rs 15,865 crore were admitted in the tribunal while 72 accounts for a total exposure of Rs 8,226 crore were not admitted. The remaining two accounts were sold.

Out of the total value of Rs 25,096 crore, the outstanding is Rs 22,175 crore.

UCO Bank declares Yashovardhan Birla willful defaulter for Birla Surya loan

State-owned UCO Bank has declared Yashovardhan Birla a willful defaulter for failing to pay a Rs 67.65-crore loan taken by Birla Surya Ltd., a company in which the businessman is a director.

Kolkata-based UCO had given Birla Surya a credit limit of ₹100 crore. The company's present balance outstanding is ₹67.65 crore plus unapplied interest from the date it turned into a non-performing asset (NPA) on June 3, 2013.

“Due to non-repayment of dues to the bank, the account was declared NPA on 3 June, 2013. The borrower has not repaid the dues owed to the bank despite several notices. The borrower company and its directors, promoters, guarantors were declared as willful defaulters by the bank and their name reported to the credit information companies for public information," UCO Bank said in a notice.

A person is declared a willful defaulter if he/she defaults in repaying obligations despite having the capacity to repay. Not utilising a loan for the purpose for which it was availed of but was instead diverted for other purposes leads to being tagged as a willful defaulter either.

UCO Bank recently intensified efforts to bring down NPAs to come out of prompt corrective action (PCA), which imposes strict conditions on lending, by Q4 of this financial year.

A K Goel, managing director and chief executive of UCO Bank, had once said that the bank was using every possible, target-driven recovery method to bring down NPA.

“Our net NPA current is 9.72 per cent. To bring this to six per cent, we have given targets to all zones to recover Rs 2,000 crore each quarter at any cost,” Goel had told Business Standard.

Further, top 100 NPA account would be monitored by the MD & CEO and EDs personally, Goel had said.

UCO Bank’s gross NPA, as percentage of total lending, stood at 25 per cent, while net NPA stood at 9.72 per cent in the last quarter for the bank. It had reported a net loss of Rs 4,321.09 crore for the financial year 2018-19.

Interestingly, UCO Bank, formerly United Commercial Bank, was founded in 1943 by Ghanshyam Das Birla. Rameshwar Das, the great grandfather of Yashovardhan Birla, was Ghanshyam Das Birla's brother.