Union Bank of India (UBI) has decided to bring into sharp focus about 7 per cent of its branches, which hold a sizable chunk of advances and bad loans, to closely monitor the health of advances and keep tabs on recovery.
Of the public sector bank’s total network of 8,729 branches as at June-end 2022, about 550 branches account for close to 95 per cent of the advances.
Further, about 30 Stressed Asset Management Branches (SAMB) and Asset Recovery Branches (ARBs) together account for about 85 per cent of the bad loans.
As at June-end, UBI’s global advances stood at ₹7,28,635 crore. Domestic advances accounted for about 97 per cent of the global advances.
As at June-end 2022, gross non-performing assets (GNPAs) stood at ₹74,500 crore.
In an interaction with BusinessLine, A Manimekhalai, MD & CEO, observed that her Bank has adopted verticalisation strategy so that at any point of time if it focuses on 550 branches, 95 per cent of the advances are taken care of.
Further, if the Bank concentrates on SAMB and ARB branches, the recovery will be taken care of.
The early warning signal system the Bank has put in place picks up stress signals in accounts well in advance, helping it to take appropriate mitigation measures.
“So, instead of talking to 8,700 branches, our top executives talk to only 10 SAMB (handling NPAs of ₹25 crore and above and all the National Company Law Tribunal cases) and 18 ARBs (dealing with NPA cases from ₹20 lakh to ₹25 crore) branches,” the Union Bank chief said.
Hence, by talking to a maximum of about 30 branches (handling about 85 per cent of NPAs), the recovery momentum is sustained.
Verticalisation for better focus
Manimekhalai emphasised that UBI has started verticalisation of various operations.
“For example, in the case of asset quality, we had fewer ARBs. We are now increasing these branches to which NPAs of ₹20 lakh and above will be moved so that they get focussed attention.
“For retail, we had only 100 odd retail loan points (RLPs). We are increasing RLPs to about 250,” she said.
All the branches -- about 8,700 -- will be connected to the RLPs, which will be doing loan processing, sanction and documentation. Branches will be only doing loan sourcing and sending proposals to RLPs.
Manimekhalai mentioned that as of now, UBI has about 70 MSME focussed branches. The Bank has drawn up plans to increase the number of such branches to 150. It has already opened 126 MSME loan points.
The Bank plans to increase the number of mid-corporate branches/MCBs (which deal with loan proposals ranging from ₹50 crore to ₹250 crore) so that they can focus on these loans, she said. As at March-end 2022, UBI had 31 MCBs across the country.
UBI is also intends to open more large corporate branches (LCBs), which will focus on loan proposals of ₹250 crore and above. Currently, the Bank has eight industrial finance branches/LCBs.