Union Bank expects to recover Rs 15,000 crore from bad loans this fiscal

Union Bank of India expects to recover Rs 15,000 crore from bad loan accounts during the current fiscal year, and a bulk of this would come from accounts undergoing insolvency resolution process.

It expects to make recoveries worth Rs 10,000 crore from accounts under the National Company Law Tribunal (NCLT) for resolution of bad loans in 2022-23, the bank said during an analysts conference call post June 2022-23 quarter earnings announcement last week.

Replying to a question on recovery guidance for full year 2022-23, Managing Director and Chief Executive Officer A Manimekhalai said: "The recovery will be around Rs 15,000 crore."

Besides, the public sector lender is also likely to shift a few accounts under the newly incorporated debt resolution company NARCL.

A total of 44 bad loans have already been approved by the NCLT with loan exposure of Rs 4,842 crore. Additional 55 dud accounts cleared by the Committee of Creditors (CoCs) are awaiting approval of the tribunal.

The 55 NPA accounts to be approved by NCLT have a total exposure of Rs 5,168 crore.

"So, almost around Rs 10,000 crore which we should expect in this financial year, definitely it should come...and (in) NARCL also, another three-four months, we are expecting some good number of accounts likely to be shifted," the bank said in a transcript of the analysts call.

National Asset Reconstruction Company Limited (NARCL) is an asset reconstruction company set up by various banks last year to aggregate and consolidate stressed assets for resolution.

During first quarter ended June of this fiscal, the bank received only Rs 122 crore from NCLT resolution.

Rest of recovery was through traditional modes such as sale of properties, one-time settlement and Debt Recovery Tribunal (DRT) resolutions.

It made recoveries worth Rs 1,481 crore during the quarter and accounts worth Rs 1,212 crore were upgraded.

While the bank expects slippages to the extent of Rs 13,000 crore in FY23.

In the first quarter of FY23, the lender wrote off bad loans of around Rs 4,000-4,500 crore against corporate sector loans; Rs 1,400 crore against MSME borrowings and Rs 200 crore against retail loans.

The fresh slippages during April-June quarter of this fiscal were worth Rs 3,714 crore.

Union Bank registered a 32 per cent growth in its net profit at Rs 1,558 crore in quarter ended June 2022.