Kolkata, June 29 (IANS) State-run UCO Bank, which posted a net loss in the last fiscal on account of high provisions to cover bad loans, is expected to return to profitability by the next fiscal, a top bank official said on Wednesday.
“We expect to return to profitability by 2017-18,” bank MD and CEO R.K. Takkar said.
He said the lender is focussing on “pro-active management of asset health” through close monitoring of loan accounts and will go all out to recover bad loans to reduce its non-performing assets (NPAs).
The bank is also planning to sell 20 loan accounts with loans of around Rs 2,000 crore to asset reconstruction companies (ARCs) in the next few quarters to clean up its balance sheet.
As on March 31, the bank’s gross NPA ratio was 15.43 per cent while the gross NPAs in absolute term stood at Rs 20,908 crore.
The lender reported an operating profit of Rs 3,603.39 crore during the last fiscal, but incurred a net loss of Rs 2,799.25 crore due to provisions and contingencies of Rs 6,403 crore.
Speaking at UCO Bank’s annual general meeting, Takkar said bank employees were hitting the streets and protesting at the residences and workplaces of defaulters to recover bad loans.
“SDR (strategic debt restructuring) is not working, but we are open to sustainable restructuring. As the scheme (Scheme for Sustainable Structuring of Stressed Assets) has come out recently, things are being worked out. By the next quarter, I think things should start moving,” he told reporters after the meeting.
The bank, however, was experiencing ‘good recovery’ of bad assets in sectors like Micro, Small and Medium Enterprises, agriculture and small retail, he said.
He said loan recovery from larger accounts would be a key as mid- and large-scale industries comprise over 50 percent of its loan portfolio.
“The main thing is the resolution of big corporate accounts and their sustainable restructuring… if something can be worked out in bigger accounts, then it could help us cut down the NPAs,” he said.
The state-run lender was giving thrust on mobilising low-cost CASA deposits in much greater numbers and acquiring more quality assets in retail and MSME segments. Its corpus of fund from interest-free deposits on account of rupee-trade mechanism scheme with Iran has been shrinking.
“For the time being, the sanctions on Iran are lifted. So the rupee fund is not functional. No credits, only the debits are taking place… may be in the next six months to one year the account may become nil,” Takkar said.
UCO bank plans to raise funds of around Rs 3,000 crore through issuing tier I and II bonds in this financial year. It expects to get about Rs 2,000 crore from the government’s fund infusion programme.