United Bank of India (UBI) has chalked out a scheme whereby medium and small defaulters will be given another chance for settling their dues with the bank. The scheme will allow defaulters to waive their interest portion in case they are not able to pay back.
In cases where the borrowers have grown old and lost their capacity to earn, the scheme will also allow them to settle accounts at 50 per cent of the principal amount loaned.
"Although we have no targets, the scheme will allow us to collect a substantial portion of loans availed by these small- and medium-term players," UBI chairman and managing director Madhukar said.
The bank is trying to bring down its net non-performing assets (NPA) to five per cent this year against nine per cent in the previous year. However, UBI has only been able to recover around Rs 100 crore through the one-time settlement scheme.
Meanwhile, the bank is planning to roll out two new financial products by December as part of its long-term plan. The bank will also improve servicing of the existing products. It has launched six products till now.
The thrust is on retail customers where the percentage of default is low. All the products launched this year were targeted at retail customers.
Meanwhile, the heat of its voluntary retirement scheme will be felt this year as bulk of its employees, mainly highly paid officers, have been released, along with rest of its 1,600 VRS optees. Although the cost of the retirement scheme was amortised, the bank will have to bear certain portions of the cost which will show up on the balance sheet, Madhukar said.
He said the bank would not be closing down or merging branches. Only five branches would be shut this year for the process of closure for all these branches were initiated last year, he said.
The bank is also holding talks with a number of insurance companies to market their products once the corporate agency norm is passed at Parliament. The Life Insurance Corporation of Inida is one of them. "We are weighing the pros and cons of various companies," Madhukar said. "We will strike a deal once the agency norms are through," he added.
