UCO Bank to sell NPAs worth Rs 2,000 crore

The net NPA was 8.99% at the end of the third quarter of 2016-17

UCO Bank is planning to sell bad loans worth around Rs 2,000 crore to asset reconstruction companies in the first half of the current financial year. The bank is also working on a one-time non-performing asset (NPA) resolution scheme, among other measures, to shed bad loans off its books.
 
The bank’s gross NPA as percentage of total advances at the end of quarter ended December 31, 2016 was as high as 17.18 per cent, compared to 10.98 per cent in the corresponding period of the previous year. The net NPA, however, was 8.99 per cent at the end of the third quarter of 2016-17, against 6.51 per cent a year ago.

 
The government has tied the recapitalisation of 10 public sector banks, including UCO Bank, with time-bound milestones for improving their financial state.
 

“We are working on specific plans for NPA management, which will take around a month to be finalised. In the first half of this financial year, we are looking to sell NPAs worth around Rs 2,000 crore. We are also working on a one-time settlement scheme,” R K Takkar, chairman, UCO Bank, told Business Standard.
 
To accomplish the turnaround, UCO Bank is also looking to replicate its old restructuring exercise, carried out in 1997.  UCO Bank had posted a net loss of about Rs 437 crore for the quarter ended December 31, 2016, against a net loss of about Rs 1,497 crore in the corresponding quarter of the previous financial year.

 
In 1997, the bank had faced a similar financial constraint. That time, it had undertaken a strategic revival plan in collaboration with employee unions.
 
“We are looking at a turnaround strategy like the one we implemented in 1997. We are conducting human resource exercises, which will take into confidence all the employees and senior management for a faster turnaround. Initially we had a meeting at the corporate level with employee unions, and then we had simultaneous meeting in around 44 centres, in town halls,” said Takkar.
 
In accordance with a government directive, another turnaround strategy for the bank is being formulated by SBI Caps.