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UCO Bank expects to recover Rs 800 crore this financial year from loans that have turned bad (at least, technically). But against this, the fresh slippage of NPAs (non-performing assets) in the first nine months of the current year was Rs 1,560 crore.
NPA management is a big issue with the bank.
In a chat with journalists on Saturday, and in a subsequent address to the bank's employees, the Chairman and Managing Director of UCO Bank, Mr Arun Kaul, stressed on this point.
If the net slippage is (say) Rs 1,000 crore for the whole year, the bank would have to make a provision of Rs 700 crore. “Can we afford that?” Mr Kaul, who took over as the CMD of the bank in September 2010, asked of his employees.
In the chat with journalists, Mr Kaul said that the high bad debts are related to ‘legacy issue' and the bank is making efforts to improve its recovery. Gross NPAs were at Rs 2,299 crore (2.57 per cent) for quarter ending December 31, 2010. For the preceding quarter ending September 30, 2010, they were Rs 2,058 crore (2.3 per cent).
In his address to the employees, Mr Kaul said that the bank must be careful whom it lends to. He also rued that “efforts are lacking” in recovery of bad debts.
On another issue, Mr Kaul told journalists that the bank, armed with the fresh capital of Rs 940 crore recently received from the Government, would double its retail and SME franchise.
Towards this, the bank would set up 76 retail hubs across to country to encourage home and car loans.
The hubs are centralised processing centres to verify and qualify these loans for customers as branches do not have the required skills, he said.
Credit cards
UCO Bank will enter the credit card business only when its customer base reaches three crore (from 1.3 crore today).
Responding to a question by an employee as to when the bank would enter the credit card business, Mr Kaul said that the business was inherently risky and pointed out that none of the public sector banks was making a profit in this business.
However, no bank could afford not to have credit card, or it would be a glaring gap in its product portfolio.
Therefore, UCO Bank, when it enters the credit cards business, will issue the cards only to its customers, and never to its non-customers, Mr Kaul said.
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