Kolkata-based United Bank of India (UBI) is confident of bringing down its gross non-performing assets to below 10 per cent this fiscal (FY15).
As on June 30, 2014 (end of first quarter), its gross NPAs stood at ₹7,097 crore, that is, 10.49 per cent of gross advances, which is much higher than that of its peers.
According to Deepak Narang, Executive Director, UBI is looking to bring it down to 9 per cent this fiscal, provided the economy gathers steam.
“We want gross NPAs to be at 9 per cent. We are confident that business (advances) will pick up in the remaining period of the year. However, even in a worst-case scenario, we will end below 10 per cent level,” he told
An increased focus on recoveries, Narang pointed out, should help tackle rise in bad assets. Struggling with a spurt in bad assets since the third quarter of last fiscal (October- December 2013), the bank has for the last few months been on a recovery drive.
In the first quarter of this fiscal, cash recoveries of ₹340 crore were made, ₹626 crore worth of accounts upgraded, and ₹248 crore written off. UBI has set a cash recovery target of ₹1,150 crore during this fiscal. Last fiscal, it recovered ₹645 crore, and another ₹1,488 crore loans were upgraded (part recoveries).
Reduced creditThe full effect of recoveries is yet to show.
A slowdown in credit growth, despite an absolute reduction in NPAs, has resulted in the NPA percentage remaining high, Narang maintained.
In Q1 of this fiscal, gross NPAs came down by ₹1,124 crore. “Increase in credit growth and higher recoveries should help bring down NPAs,” he added.
According to Narang, with stalled projects in the infrastructure sector moving ahead, credit growth (advances) should pick up. However, exposure to the steel sector remains an area of concern.