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

State-owned lender aims to returns to profits by lending to home-buyers and small businesses.

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.