United Bank of India is in a bind. It has breached the risk threshold under the Prompt Corrective Action measures issued by the Reserve Bank of India due to a steady rise in stressed assets. In an interview to BusinessLine , Pawan Bajaj, Managing Director and Chief Executive Officer, United Bank of India, said the bank is now looking to grow its business, albeit cautiously. The bank has already submitted its turnaround strategy to the Finance Ministry. Excerpts:

Your gross non-performing assets account for nearly 15 per cent of your total advances as on March 31, 2017. How do you see your asset quality improving, going forward?

NPA is the main concern. Except for the 12 big accounts which have been identified by the RBI for recovery under the NCLT (National Company Law Tribunal), there has hardly been any activity happening on the recovery front in other accounts.

In fact, 30-40 per cent of the restructured standard accounts are also likely to become NPAs in the next few quarters. These come from the core sector — infrastructure, power and steel.

Our exposure is ₹2,600 crore in seven of the 12 accounts identified by the RBI. It accounts for 24 per cent of our total NPA.

It (recovery through NCLT) is a time-bound programme and we are hopeful of some resolution happening soon.

Our net NPA was 9.9 per cent as on March 31, 2017. We want to bring it down by 10 per cent by the end of this fiscal.

How do you see your business growing this fiscal?

Recent data suggest that credit growth has been lowest so far. A number of corporates are tapping the bond market.

We are envisaging a credit growth of 10 per cent this fiscal. We will focus on retail, MSME and agriculture. Retail accounts for 19 per cent of our total loan book at present. We would want to grow this by 15-18 per cent.

On the corporate front, we will look at sectors where there has been an improvement, like road and renewable energy. On the deposits front, we are expecting a growth of around 8 per cent.

We are not taking bulk deposits.

You had plans of raising capital. When and how much will you raise?

As of March 2017, we were comfortable at a CAR of 10.88 per cent.

We have taken board approval for a QIP and Tier-I bond issue of ₹1,000 crore. Depending on market conditions and credit growth we will be raising this (amount).

How do you see your fee-based income growing?

Our fee income has been growing on a quarter-on-quarter basis.

Our treasury profits have been good. We have a tie up with LIC and Bajaj Allianz for third-party products.

We are exploring tie-ups with more companies in both the life and general insurance space. This apart, we have applied to the RBI for entering the bullion business. There is good demand for bullion among jewellers.

This will also give a boost to our treasury income. We are awaiting RBI approval.

What are your expectations from the forthcoming monetary policy review?

Inflation — both consumer and wholesale — is at the lowest level and we expect similar figures for the current month. In that scenario there is a scope for a 25-basis point cut in policy rates.

The G-sec market has already discounted a 25-basis point cut, but if the RBI does cut rate, banks will reduce the MCLR by 15-20 bps. This will benefit retail borrowers.

comment COMMENT NOW