 "Poor investment flows to hurt United Bank's credit growth")
Despite RBI lifting all lending restrictions imposed on United Bank of India (UBI) due to high NPA levels, the bank's credit growth will not rise significantly owing to poor investments on the ground, its Executive Director Sanjay Arya has said.
"There has been an improvement in sentiments as several measures have been taken by the Centre and various state governments. But that has not percolated to the ground as little investments are taking place," Arya told PTI. Recently, the banking regulator had lifted all lending restrictions which were imposed in December 2013 as the bank had posted a loss in that quarter owing to high NPA levels. On December 31, 2013, UBI's gross NPA was Rs 8,546 crore, which gradually came down to Rs 7,890 crore at the end of December 2014.
Arya said though restrictions had been lifted, RBI had said the bank would not be able to increase its credit-deposit (CD) ratio beyond 70 and capital adequacy ratio should not fall below 9.5 per cent. In the given current economic scenario, UBI would not be aggressive in lending activity to raise credit. "Our approach to corporates will be very cautious as we do not want to create further slippages. We will be very selective," he said. The focus would be primarily on the retail and the MSME sectors, besides improving recovery, he said.
The bank would also raise additional tier I capital to support its renewed lending activity, he added.
"There has been an improvement in sentiments as several measures have been taken by the Centre and various state governments. But that has not percolated to the ground as little investments are taking place," Arya told PTI. Recently, the banking regulator had lifted all lending restrictions which were imposed in December 2013 as the bank had posted a loss in that quarter owing to high NPA levels. On December 31, 2013, UBI's gross NPA was Rs 8,546 crore, which gradually came down to Rs 7,890 crore at the end of December 2014.
Arya said though restrictions had been lifted, RBI had said the bank would not be able to increase its credit-deposit (CD) ratio beyond 70 and capital adequacy ratio should not fall below 9.5 per cent. In the given current economic scenario, UBI would not be aggressive in lending activity to raise credit. "Our approach to corporates will be very cautious as we do not want to create further slippages. We will be very selective," he said. The focus would be primarily on the retail and the MSME sectors, besides improving recovery, he said.
The bank would also raise additional tier I capital to support its renewed lending activity, he added.