UCO Bank in talks with ARCs to sell bad loans worth Rs 50 cr
Kolkata-headquartered UCO Bank is negotiating with leading asset reconstruction players, including Asset Reconstruction Company India (Arcil) and Arsec India to sell bad loans worth Rs 50 crore. The bank is also talking to Pegasus Asset Reconstruc...
By Atmadip Ray, TNN |
KOLKATA: Kolkata-headquartered UCO Bank is negotiating with leading asset reconstruction players, including Asset Reconstruction Company India (Arcil) and Arsec India to sell bad loans worth Rs 50 crore. The bank is also talking to Pegasus Asset Reconstruction Company towards this end.
This would be the first tranche of bad loan sales by UCO Bank this fis-cal. The bank intends to sell a total of Rs 200 crore worth of bad loans during 2007-08. According to chairman and managing director SK Goel, the bank has put 4-5 default accounts on sale in the first tranche. “Three ARCs have put in separate bids for acquiring these accounts.
We are now negotiating with ARCs to strike the best possible deals,” the CMD told ET. He expects this process to be over by mid-November this year.
This exercise would help the bank to clean its balance sheet, which is saddled with Rs 1,700 crore of bad loans. Net non-performing assets stood at Rs 1,065 crore. Ratiowise, its net NPA is now at 2.26% against 2.14% as on March 31, 2007. It plans to reduce net NPA to 1.66% by March 2008. UCO’s NPA is now on the higher side when compared to the banking industry average.
Of late, the bank has put a major thrust on reducing its non-performing assets (NPA). Besides selling bad loans to ARCs, it has also started negotiating with defaulting borrowers directly to recover bad loans.
It has recovered around Rs 213 crore during the first half to September 30, 2007. It is looking to recover another Rs 300 crore by March 30, 2008. The bank has engaged two general managers to identify and recover bad loans. One is for managing large bad loan accounts over Rs 1 crore, while the other has been asked to concentrate on small-sized loans.
Mr Goel said the bank has identified nearly 1.80 lakh bad loan accounts totalling Rs 1,672 crore. Some 1.44 lakh of these are small accounts with loan size below Rs 50,000. Total volume of small NPA accounts is Rs 560 crore. To improve the asset quality, the bank has also appointed Crisil to finalise a rule-based lending mechanism. This, as the bank management expects, would bring in more objectivity in bank’s lending decisions.
This would be the first tranche of bad loan sales by UCO Bank this fis-cal. The bank intends to sell a total of Rs 200 crore worth of bad loans during 2007-08. According to chairman and managing director SK Goel, the bank has put 4-5 default accounts on sale in the first tranche. “Three ARCs have put in separate bids for acquiring these accounts.
We are now negotiating with ARCs to strike the best possible deals,” the CMD told ET. He expects this process to be over by mid-November this year.
This exercise would help the bank to clean its balance sheet, which is saddled with Rs 1,700 crore of bad loans. Net non-performing assets stood at Rs 1,065 crore. Ratiowise, its net NPA is now at 2.26% against 2.14% as on March 31, 2007. It plans to reduce net NPA to 1.66% by March 2008. UCO’s NPA is now on the higher side when compared to the banking industry average.
Of late, the bank has put a major thrust on reducing its non-performing assets (NPA). Besides selling bad loans to ARCs, it has also started negotiating with defaulting borrowers directly to recover bad loans.
It has recovered around Rs 213 crore during the first half to September 30, 2007. It is looking to recover another Rs 300 crore by March 30, 2008. The bank has engaged two general managers to identify and recover bad loans. One is for managing large bad loan accounts over Rs 1 crore, while the other has been asked to concentrate on small-sized loans.
ADVERTISEMENT
Mr Goel said the bank has identified nearly 1.80 lakh bad loan accounts totalling Rs 1,672 crore. Some 1.44 lakh of these are small accounts with loan size below Rs 50,000. Total volume of small NPA accounts is Rs 560 crore. To improve the asset quality, the bank has also appointed Crisil to finalise a rule-based lending mechanism. This, as the bank management expects, would bring in more objectivity in bank’s lending decisions.
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
