Our Bureau Union Bank of India expects an improvement in the quality of the loan book as it will monitor credit right from the start using analytical tools and initiate corrective measures on getting early warning signals.

It plans to do this by moving most of its credit underwriting in terms of volume of business to centralised processing hubs this fiscal, turning its branches into service and sales outlets.

Most of the non-customer-facing activities — such as credit appraisal and monitoring — are being moved to the back-office, the public sector bank said in its annual report.

As on March 31, it had 4,310 branches.

“Today, branch managers (anyway) can’t give loans above ₹50 lakh — the request goes to the back-office,” said Rajkiran Rai G, Managing Director and CEO.

With more than 90 per cent of the income coming from loans, the bank needs to concentrate on their sourcing, underwriting and monitoring so that they continue to earn, said Rai.

But the customer connect at the branch level is indispensable, too.

Branches matter

“If you remove the branch out of the loop, with the customer having to deal with a separate set-up, it will not work,” he added. So, now, loan applications will land at the branch and the manager will forward it to the back-office for processing. The sanction will go back to the branch and the manager will disburse it.

“Somewhere the focus on these things was taken away by routine banking practice... So, that is where we tried to address the issue — how we can look at these processes so that incrementally what we add to the (loan) book is of first class quality. But at the same time we are taking care to address the old legacy (bad loan) issues,” he added.

The bank’s NPA increased to ₹49,370 crore as at March-end 2018, against the previous year’s ₹33,712 crore.

Related Topics