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Ashok Kumar Pradhan, Managing Director and CEO, United Bank of India, on Thursday, called for a “statutory ban” on loan waivers in the country. The series of agricultural loan waivers announced by the various State governments has impaired credit culture and has made recovery difficult.
“The entire credit culture has been vitiated due to these waivers….lot of our (bankers) time is getting lost in ensuring recovery. I feel there should be a statutory ban on loan waivers,” Pradhan said here after announcing the bank’s quarterly results.
United Bank of India has witnessed close to ₹300 crore worth non-performing assets (NPA) from the agri loan portfolio. A majority of the bank’s agri loan portfolio is in the eastern and north-eastern States including West Bengal, Assam and Odisha.
While on a year-on-year basis, the bank’s net NPA decreased to 8.56 per cent for the quarter ended December 31, 2019, as against 12.08 per cent same period last year, however, on a sequential basis, it has gone up from 7.88 per cent for the quarter ended September 30, 2019.
The bank reported close to ₹900 crore worth NPAs from two big ticket accounts including DHFL and Simplex Infrastructure.
Q3 net improves
Riding on the back of a higher net interest income, United Bank of India has posted a net profit of ₹114 crore for the quarter ended December 31, 2019, as against a net loss of ₹1,139 crore in the same period last year.
Net interest income grew by 115 per cent to ₹819 crore (₹380 crore). The bank’s net interest margin also improved to 2.98 per cent (2 per cent) during the quarter under review. While overall advances grew by close to 7 per cent, retail credit witnessed a 20 per cent growth during the quarter under review. “The overall credit growth was 7 per cent because of de-growth in corporate credit but our retail loan book did well,” Pradhan said.
The bank’s provision coverage ratio also improved to 74.19 per cent, as against 65.23 per cent.
Merger
The harmonisation exercise, which includes standardisation of products, process and features of the three merging entities – Punjab National Bank, United Bank of India and Oriental Bank of Commerce, is expected to be over by month-end. Post that, the valuation exercise would be complete and based on that the swap ratio would be determined, Pradhan said.
The anchor bank, Punjab National Bank, had appointed Ernst & Young (EY) as a consultant for the process. As many as 34 committees were formed with representatives from each of the merging banks, so as to formulate policies pertaining to human resources and IT among others.
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