Reserve Bank of India has initiated additional actions under Prompt Corrective Action framework for United Bank of India in view of high net non-performing assets, low leverage ratio and the need to raise capital.
The actions are based on the assessment of the bank’s position as on March 31, 2017.
The apex bank had issued these actions in a letter dated December 19, United Bank said in a regulatory filing to the BSE on Wednesday. The action points focus on profit retention, capital augmentation, provision coverage, diversification of credit portfolio, rationalisation of expansion and cost control. Some of these have already been initiated by the bank.
The bank had earlier breached the risk threshold under PCA measures due to a steady rise in stressed assets.
As on September 30, gross NPAs as a percentage of total loans increased to 18.8 per cent from 16.26 per cent in the same period last year, while net NPAs grew to 11.63 per cent (11.19 per cent).
Dragged down by higher provisioning and a dip in core income, the bank had posted a net loss of ₹345 crore for the quarter ended September 30, compared with a profit of ₹44 crore during the same period last year.
The bank said normal activities like acceptance of deposits, credit disbursement and treasury functions would remain unaffected and the regulatory action would not have any material impact on its performance.