Chidambaram Pledges Uco Rs 300 Crore Capital Infusion

Union finance minister P Chidambaram has promised the ailing Calcutta-based Uco Bank that it will shortly receive a capital infusion of over Rs 300 crore. The minister has also promised to look into the banks public sector and other government accounts, which form a large chunk of its non-performing assets. Chidam-baram is believed to have conveyed this to the banks management and unions at a meeting in New Delhi last Friday.

The public sector bank has sought over Rs 300 crore as additional recapitalisation funds from the finance ministry. Uco Bank executive director M M Vaish said the bank expects to receive the finance ministrys official notification about the transfer in a month.

 

When the current additional capital infusion of over Rs 300 crore comes through, Uco Bank will have received recapitalisation to the tune of over Rs 350 crore. This is over Rs 100 crore in excess of the Rs 250 crore that the bank had envisaged when it first drafted the revival plan.

However, recent developments, including the recent RBI initiative making it mandatory for public sector banks to make provisions for additional NPAs classified in the apex banks annual inspection report, have forced the bank to hike its requirements. Bank sources said these developments could easily push the banks net loss for 1996-97 well over the Rs 160 crore envisaged in the revival plan.

The bank will also have to make additional provisions for payment of pensions to employees who retired before the current pension settlement agreement came into force.

Uco is in the process of implementing a three-year revival strategy. During his last visit to Calcutta in March 1997, the finance minister had asked the ailing bank to draw up a revival plan.