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UCO Bank, which recently came out of the purview of the Reserve Bank’s Prompt Corrective Action, is expecting an “improved investor appetite”, which is likely to help its proposed capital raising plan.
The bank had recently received the board approval to raise close to ₹3,000 crore capital in 2021-22. The fundraise can take place through various modes, such as follow-on public offer, qualified institutional placement and preferential issue, subject to necessary approvals, it had said in a regulatory notification to stock exchanges.
According to Atul Kumar Goel, MD and CEO, UCO Bank, it would go for capital raising plans at an “opportune time”. “Earlier when we were in PCA there was less appetite from investors but now it is better. We have the board approval to raise around ₹3,000 crore and we will go for it when the market is right. We may look at QIP or preferential issue for raising funds,” Goel told BusinessLine .
As on June 30, 2021, the bank’s capital adequacy ratio stood at 14.24 per cent and CET-I ratio at 11.32 per cent.
PCA is triggered when banks breach certain regulatory requirements such as minimum capital, return on asset and quantum of non-performing asset.
The bank has been witnessing an improvement in profitability as well as asset quality.
Its net NPA reduced to 3.85 per cent (4.95 per cent) as on June 30.
Credit growth
The bank is expecting 8-10 per cent growth in advances during the current fiscal primarily on the back of a good demand from retail, MSME and agriculture sectors. During Q1FY22, the bank witnessed five per cent growth in advances at ₹1,20,849 crore as against ₹1,15,236 crore same period last year.
It has achieved 75 per cent of a targetted ₹2,500 crore loans by end September.
“We have seen a better response and demand for credit for housing loan and gold loan as compared to last year. There is also a demand from NBFC and infrastructure sectors. We are expecting 8-10 per cent growth in credit this year,” he said.
Loan restructure
UCO Bank, Goel said, has restructured loans to the tune of ₹2,500 crore upto June this year under RBI’s resolution framework 2.0.
Under the framework, banks and non-banking financial companies (NBFCs) can restructure loans of up to ₹50 crore.
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