IOB and United bank turn headless

Both the banks were both in midst of systematic plans to reduce stress on books and improve recoveries when they were impacted by RBI's Asset Quality Review

Don't want to miss the best from Business Standard?

With chief executives demitting office at the end of June,  two weak public sector lenders -- Indian Overseas Bank (IOB) and United Bank of India (UBI) -- are without a full-time person at the helm.

P Srinivas came from Bank of Baroda on December 31, 2014, to Kolkata-based UBI. On the same day, R Koteeswaran joined IOB; he was earlier an executive director (EDs) with Bank of India.

The Banks Board Bureau had conducted interviews for the job of managing director and chief executive officer at government-owned banks in May. The government is yet to make an announcement about appointments. Senior executives said a CEO's absence impacts the working in many ways.

Earlier, too, many public sector banks have been hit hard by the absence of a fulltime CEO for a long period. Punjab National Bank and Bank of Baroda, for instance.

UBI told the BSE exchange its EDS would administer the financial and administrative powers of a MD/CEO till a regular appointment.

IOB and UBI were both in the midst of systematic plans to reduce the stress on their books and improve recoveries when they were impacted by the Reserve Bank's Asset Quality Review (AQR) in 2015-16, jacking up the tally of non-performing loans.

IOB posted a net loss of Rs 2,898 crore for 2015-16, due to the AQR implementation, which warranted increased provisioning on identified non-performing assets (NPAs). Gross NPAs were 17.4 per cent of the total at Rs 30,049 crore, with net NPAs of 11.9 per cent (Rs 19,213 crore) at end-March.

UBI reported a net loss in 2015-16. Its gross NPAs were 13.3 per cent (Rs 9,471 crore) and net NPAs were nine per cent (Rs 6,111 crore) at end-March.