Recap Likely For Indian Bank Alone

The Centre is likely to provide recapitalisation only to Indian Bank, while planning to keep Uco Bank and United Bank of India (UBI) out of any assistance package.

Finance ministry officials told Business Standard that the development comes in the wake of the performance of the three weak banks in the last financial year.

While all the three have recovered and posted operating profits, Indian Bank is the one which would require some assistance as it is still some distance from full recovery.

The Reserve Bank of India is looking at a fresh set of milestones for restructuring the three banks. In an earlier package, which had been cleared by the banking division, it was proposed that the government provide an assistance of around Rs 2,100 crore to Indian Bank and Rs 200 crore and Rs 100 crore to UBI and Uco Bank, respectively.

 

The package was, however, sent back for taking a relook. Indian Bank has sought Rs 2,100 crore as part of the package, while it has already received about Rs 800 crore earlier.

Officials said that the proposal will come back to the finance ministry for its consent shortly.

During the last financial year, Indian Bank reported an operating profit of Rs 62 crore compared with Rs 24 crore in the previous fiscal. Net losses were down substantially to Rs 274 crore at the end of March 2001, compared with Rs 427 crore a year ago.

Uco Bank, on the other hand, reported a net profit for the second year in a row. On account of a Rs 51 crore outgo on VRS, the bank's net profit was down 11 per cent to Rs 33 crore during 2000-01.

Similarly, UBI's net profit was also down 39 per cent to Rs 19 crore compared to Rs 31 crore at the end of 1999-2000.