United Bank to sell Rs 100 cr bad loans

United Bank of India plans to sell non-performing assets (NPAs) worth Rs 100 crore to Asset Reconstruction Company of India by March, said United Bank of India's chairman and managing director PK Gupta.

The Kolkata-based bank sold Rs 700 million of NPAs to ARCIL in the third quarter of 2006-07.

"We have a net NPA target of 1.25 per cent by March and the gross NPA target is 3.75 per cent," Gupta said.

The bank's net NPA was 1.53 per cent and gross NPA was 4.10 per cent, as of September.

The NPAs were quite high until March 2005. "In March 2005, the gross NPAs were 6.13 per cent and net NPAs were 2.43 per cent," Gupta said.

Incidentally, the bank has tied up with Small Industries Development Bank of India to float an asset reconstruction company. Punjab National Bank, and Canara Bank will also pick up stakes in the company.

The United Bank is under no obligation to sell its NPAs to the proposed asset reconstruction company. "It depends on the price proposals we receive," Gupta said.

Sidbi will hold 15 per cent stake in the asset reconstruction company, which will be set up with an initial capital of Rs 100 crore. Merging a bank just for the sake of a bigger size need not be right, said Gupta.

"The mandate for a bank should be clear from the government. A bank offering service in places such as Meghalaya, Tripura, Sundarbans should not be compared with banks offering service in the south or west," said Gupta.