The Finance Ministry is likely to appoint a new chief for United Bank of India (UBI) in the next 15 days, according to Rajiv Takru, Secretary, Department of Financial Services, Ministry of Finance.
“We expect to appoint (the new chief) by March. Give us about 15 days, we should come out with an announcement,” he said.
On Thursday, UBI Chairperson and Managing Director Archana Bhargava applied for voluntary retirement , which the Finance Ministry accepted on Friday.
Takru said, “This is a very personal decision. The bank as an institution is safe and will continue to work.
The Executive Directors said they are having a daily review of the NPA (non-performing assets).” Both the Executive Directors – Deepak Narang and Sanjay Arya – will jointly remain in charge of the bank, till the new CMD is appointed.
Bhargava was appointed as the chairperson in April 2013 and was given charge till February 2015.
No capital infusion Further, Takru also added that there was no question of any merger or capital infusion in the bank as of now.
“There is no question of a merger as it will only transfer the problem (to the acquiring bank). As of now, we want to focus on recoveries and removal of stress for the bank.
“Also, the capital infusion will be announced at the right time around June or July. At this time, there is no reason to do so,” he added.
The Government has already infused ₹700 crore in the current fiscal out of the total capital of ₹14,000 crore allotted in the Budget 2013-14.
The UBI scrip on Friday touched a 52-week low of ₹23.40 a share on the Bombay Stock Exchange after the CMD’s resignation. It closed at ₹24.35, down 0.41 per cent over the previous close.
Vishal Narnolia, Research Analyst with SMC Global Securities, said, “According to me, the management is not a big concern. The NPAs were rising even before her (Bhargava’s) tenure.
She too, probably, hadn’t monitored the process properly. Now, it will be crucial to see the way the bank’s NPA stress and recoveries are handled.” Narnolia also said a capital infusion by the Government could boost the stock.
However, the bank’s challenge will be to increase its capital adequacy ratio to meet Basel III requirements.
The bank’s CAR as on December 31, 2013, stood at 9.01 per cent with a Tier-I capital of 5.59 per cent.
The RBI regulations require banks to have a minimum CAR of 12 per cent with Tier-I capital of 9 per cent.