United Bank Joins Dues Recovery Race

Armed with the Securitisation and Financial Reconstruction Ordinance, United Bank of India (UBI) has joined the race to recover dues.

The bank has initiated the process of issuing notices to companies under the ordinance with a two month period to payup its dues. It will also put into action all its AMC branches for the purpose.

"We have initially issued notices to 15 entities where bulk of the loan was provided by the bank. These are entities whose cases were not referred to either the debt recovery tribunal (DRT) or any other civil court," said UBI chairman and managing director (CMD) Madhukar.

UBI was also in the process of issuing another 15 such notices to begin with. "There are three categories of entities who has defaulted in paying back its dues to the bank. The first category involves accounts where the case was already referred to the DRT, the other category was from accounts where the case was referred to the asset reconstruction committee (ARC) and the third category are borderlines cases where payment have not come and but where securities are available," explained Madhukar.

"UBI has initiated the process of issuing notices to the third category of borrowers, where the security is expected to fetch good value from the market and the company is in a relatively better shape," he added.

The CMD justified the issue of notices even as ground rules for recovery were being framed by the government and were yet to be passed by Parliament, saying "UBI has started issuing notices because the ordinance was issued and the board thought it prudent not to wait until the details were cleared but rather take full benefit of an early start".

Notices with two-months payup time are being issued to companies or entities where UBI's exposure to in the total debt of the company was as large as 75 per cent.

"We hope that the government will clear the rules soon, but if there were no development from the government's side, UBI will exercise its option and sell off property or file cases with DRT or civil court. However, if the borrower agrees to pay up, the bank might allow borrowers to sell off property under a trustee," said Madhukar.

The ordinance allows banks to attach the property and assets of defaulters without any court approval. If it was unable to sell these assets to realise them, banks could restructure them.