Chidambaram Clears Plan To Turn Around Uco Bank

Finance minister P Chidambaram has accepted in toto the memorandum of understanding signed by the management and the trade unions of Uco Bank for implementing a three-year plan drawn up jointly to revive the bank.

Chidambaram has also assured the ailing Calcutta-based public sector bank that all required support, including capital contribution, will be provided by the finance ministry.

The bank, in turn, has responded by iterating its commitment to turning the bank around. A Uco Bank press release says: Action on the plan has already started and now it will gain further momentum.

Chairman Sharda Singh and executive director M M Vaish, along with representatives of the banks trade unions, met the finance minister in New Delhi yesterday.

 

The bank has been making huge losses for nearly a decade. It has projected a loss of Rs 160 crore for 1996-97.

Concerned about the condition of the bank, the finance minister, on his last visit to Calcutta in March, had asked it to devise a revival strategy. In response, the banks management and unions drew up a three-year business plan which has now been accepted by Chidambaram.

The revival plan aims at accelerated growth in business, substantial increase in non-interest income, complete check on expenses and aggressive recovery of non-performing assets.

The targets set in the turnaround plan include a 20 per cent growth in deposits in each of the three years of the operation of the plan, a growth of non-interest income by 40 per cent in the first year and by 20 per cent in the next two years, and a credit-deposit ratio of 45 per cent throughout the plan period. The plan aims at achieving these through concerted efforts to improve customer service.

A chief problem was that even in the final year of operation of the plan, the bank would not be able to reach a capital adequacy ratio of 8 per cent. The finance minister has solved this problem by assuring the bank that, if necessary, adequate capital contribution will be made by the government.