UCO Bank to raise Rs 3,000 cr from LIC this year, turn around by next fiscal

RBI had initiated the PCA on it in view of high non-performing assets and negative return on assets

State-owned UCO Bank plans to raise Rs 3,000 crore this financial year and was expecting to be in the black by 2018-2019.

Executive Director of UCO Bank Charan Singh said part of this Rs 3,000 crore would be raised from the Life Insurance Corporation of India (LIC), adding that other fund raising options like follow-on issue or QIP would be explored.

In the last fiscal, LIC had pumped in a little over Rs 270 crore in the bank by way of preferential allotment of equity shares.

The shareholders on Wednesday approved the bank board's resolution to raise the funds by selling 75 crore equity shares.

"We will not go for rights issue as it will further raise the Government's stake in the bank. We may look to raise fresh capital by approaching LIC where we have some head-room. This apart, we are exploring other possible options," he told reporters on the sidelines of the AGM here today.

The bank was also working on a turnaround plan with the help of SBI Caps, Singh said, adding that it was likely to be finalised in the next two to three days.

According to him, the plan envisaged branch rationalisation, the merger of unprofitable branches or merging many branches in the same location and also bringing down the number of zonal offices.

Regarding credit growth, the bank was eyeing a modest six to seven per cent rise in the current fiscal, while the immediate focus would be to bring down non-performing assets.

"We should be profitable in FY19," he said.

Reserve Bank of India (RBI) had initiated the prompt corrective action (PCA) on it in view of high non-performing assets and negative return on assets.