State-owned lender United Bank of India is working towards coming out of Prompt Corrective Action (PCA) farmework by second quarter of the current fiscal, its chief Ashok Kumar Pradhan said Tuesday.
After posting losses for seven consecutive quarters, UBI reported a net profit of Rs 95.18 crore in the last quarter of 2018-19.
"The bank's entire efforts is towards recovery and to come out of the Prompt Corrective Action by the second quarter of the current fiscal," Pradhan, the bank's Managing Director amd CEO, told reporters.
The bank's Gross Non-Performing Asset (GNPA) and Net NPA stood at 16.48 per cent and 8.67 per cent, respectively, at the end of the last fiscal.
"Our target is to bring down GNPA levels to 8-9 per cent and NNPA to 3-4 per cent, which will help us in getting out of the PCA, which has also led to restrictions in expansion of branches," Pradhan said.
The PCA framework kicks in when banks breach any of the three key regulatory trigger points -- namely capital to risk weighted assets ratio, net non-performing assets (NPA) and return on assets (RoA).
The PCA framework imposes lending restrictions and prevents banks from expanding, among other curbs.
On capital infusion, Pradhan said, "We want to come out with a QIP amounting to Rs 700 crore to Rs 800 crore, as well as are looking to raise around Rs 150 crore from Employees Stock Purchase Scheme (ESPS)."
Currently the government owns 96.83 per cent in the bank.
Sounding caution, Pradhan said there were reasons for concerns about lending in the infrastructure sector. "Now NBFCs are likely to create some problem because of the cascading effect of IL&FS. We have to be very careful while lending to them."
About NCLT resolutions, Pradhan said the bank was ready to take a haircut of 30 to 35 per cent, which would raise its bottomline.
He said the bank is targetting a credit-deposit ratio of 60 per cent by the end of the current fiscal. Its present CD ration is at 54 per cent.
Pradhan said as the bank was operating mostly in the eastern and Northeastern regions, the CD ratio was low due to lack of industrialisation.
He said the bank's operating profit will be between Rs 2500 crore and Rs 2700 crore in the current financial year.
The bank reported an operating profit of Rs 540 crore in the quarter ending March 31, 2019.
The bank's business volume crossed Rs 2 lakh crore in the last fiscal. "For the current fiscal, our target is to achieve a business volume of Rs 2.20 lakh crore," Pradhan said.
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