UCO Bank

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This is a collection of articles archived for the excellence of their content.

Bad loans

2017: business restrictions from RBI

Bad loans: Uco Bank faces biz restrictions from RBI, May 13, 2017: The Times of India

City-based public sector lender Uco Bank is facing business restrictions from Reserve Bank of India (RBI) following mounting losses, continuous erosion of net worth and huge NPAs. The bank on Friday has informed stock exchanges that the apex bank, through a letter on May 5, has initiated “prompt corrective action“ on some of its business activities over its high bad loans and negative return on assets.

Uco Bank, in a filing to the stock exchanges, said the action “will not have any material impact“ on its performance, but did not give deta( ils of the corrective action.Basically , the restrictions will be on lending and branch expansion plans as the statel run lender reported losses for two successive fiscals amid severe stress on asset quality , an official of the bank said.“There would be check on management compensation and directors' fees as well as the sector regulator has invoked prompt corrective action PCA) for the bank, aiming to bring it back on recovery path,“ he added.

It has become the second ender to face business restrictions after IDBI Bank following RBI's revision of its PCA framework last month.RBI has been on a mission to clean up the banking system which saw a surge in stressed assets. Uco Bank's gross nonperforming loans stood at Rs 22,541crore at the end of FY17, which was 17.1% of total advances. The NPA ratio of 8.94% was one of the poorest in the industry . It was 15.43% a year ago and 17.18% at the end of December last year.Under RBI rules, prompt corrective action is triggered if a bank's net NPL (Non-performing loan) ratio crosses 6%.

The public sector lender has managed to bring down losses to Rs 588 crore in the fourth quarter of 2016-17 from Rs 1,715 crore in the same period of last financial year.The loss for 2016-17 also came down to Rs 1,851 crore from Rs 2,799 crore in the year-ago period.

Profit on sale of Investment increased to Rs 1,241crore as on March, 2017 against Rs 707 crore a year ago. Analysts say more lenders could come under central bank curbs as the regulator strives to clean up bad loans of $150 billion in the sector.