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UBI reported a net loss of Rs 1,238 crore for the quarter ended December as compared to Rs 42.2 crore of profit during the corresponding period of the previous year — on the back of 500 per cent increase in provisioning to Rs 1,783 crore. Fresh slippages in that period were over Rs 3,000 crore.
In the second quarter, the bank had posted a loss of Rs 489 crore. Following a request from the bank’s chairperson and managing director, the Reserve Bank of India (RBI) ordered a forensic audit by an independent agency.
Things took a dramatic turn a few days after its third quarter result: The bank’s chairperson and managing director, Archana Bhargava, resigned, citing personal reasons. After that, the bank has been closely monitored by the finance ministry and central bank. The lender was asked to furnish daily reports on its asset quality.
According to sources, the gross NPA reduction in the bank will exceed Rs 2,000 crore, a target (set by the bank), which has helped it bring down the absolute number of gross NPAs as on March 31, as compared to December-end figures, despite fresh slippages.
Writing off accounts had also helped the bank contain NPAs, sources said. In the third quarter, the bank wrote off only Rs 9.7 crore.
As on end-December, gross NPA of the bank was Rs 8,545 crore, which was 10.82 per cent of its gross advances, and net NPA was Rs 5,630 crore or 7.44 per cent of the net advances.
The NPA ratio for the fourth quarter will also look better since the bank is shrinking its balance sheet. RBI has imposed curbs on its lending activity, as the lender is not allowed to disburse loans above Rs 10 crore.
During the post-policy interaction with the media on Tuesday, RBI Deputy Governor K C Chakrabarty pointed to governance issues in public sector banks and said steps were being contemplated to address those issues.
