Draft infra norms good for industry: UCO Bank MD & CEO Ashwani Kumar

Our spending on IT infrastructure will be in the range of Rs 1,000 crore, including capital expenditure, Ashwani said

After the financial fraud in November 2023, the public-sector UCO Bank is revamping its information technology (IT) infrastructure with an investment to the tune of Rs 1,000 crore, Managing Director and Chief Executive Officer ASHWANI KUMAR of the state-owned lender tells Harsh Kumar over the phone. They also discuss the latest quarterly results and expansion plans of the bank. Edited excerpts:

What are your views on the draft infrastructure financing guidelines issued by the Reserve Bank of India?

If you ask me, it’s good for the industry. With these projects completed on time and since these are only draft guidelines, suggestions have been called from banks and other financial institutions. Probably revised guidelines will come, and then the real picture will emerge.

What is the status of recovery on the fraud that occurred in November 2023?

Of Rs 820 crore, we have recovered Rs 728 crore, with only Rs 92 crore pending. This means around 88 per cent has already been recovered. The Central Bureau of Investigation (CBI) is aggressively investigating the matter. The incident occurred due to a technical issue from the vendor’s side. We have now implemented stricter checks and balances, strengthened vendor management, and enhanced access controls. However, I cannot provide many details as the CBI investigation is ongoing.

How is the digital infrastructure working?

Our spending on IT infrastructure will be in the range of Rs 1,000 crore, including capital expenditure. We have already shortlisted knowledge partners for our digital infrastructure, and they are currently conducting gap assessments.

We will soon onboard a digital lending technology partner and focus on financial technology integration in the digital space. This year, our focus will be on digitisation. Additionally, we have hired an IT advisor and a chief technology officer, along with placing six deputy general managers in the IT sector.

How are you planning to expand your footprint?

This year, we plan to add 130 new branches across the country. We have minimal presence in Maharashtra and Gujarat, so we will increase our presence there. Additionally, we will expand our footprint in the southern part of the country.

Why did you see a fall in net profit in the fourth quarter of 2023-24?

The fall in standalone net profit to Rs 525.77 crore for the fourth quarter ending March 2024 — a decrease of 9.5 per cent compared to the corresponding period last year — is due to recent wage increases and overall increase in expenditure. We are continuously expanding and investing in infrastructure.

What are your guidelines on asset quality?

We have seen a sharp reduction in gross non-performing assets (NPAs) by 132 basis points (bps) to 3.46 per cent (a decrease of 39 bps from 3.85 per cent quarter-on-quarter) and net NPA reduction by 40 bps to 0.89 per cent (a decrease of 9 bps from 0.98 per cent quarter-on-quarter) as of March 31, 2024. We are holding around Rs 2,600 crore of standard asset provision, including mandates and forward-looking.

We aim to further reduce gross NPA to Rs 6,000 crore and net NPA below 0.7 per cent. Our target is to maintain slippages at 1.25 per cent next year, and to achieve this, we will focus on increasing