Union Bank sees a rise in bad loans in next quarters

KOLKATA: Union Bank of India expects a rise in non-performing assets (NPA) in the coming quarters. In fact, the Mumbai-based bank has already witnessed slippages on account of its restructured loans. “Till December, we witnessed a 5% slippage in the restructured loan portfolio of Rs 4,700-crore,” bank chairman and managing director MV Nair said, adding that the NPA level is expected to deteriorate in the next two quarters.

“Yet we hope to maintain our gross NPA level below 2% by the end of March 2010,” he said, after opening a branch at Jangipur in Murshidabad on Sunday. The CMD also mentioned that the bank would review its capital raising plan after the Union Budget. The bank may take the equity route for garnering capital.

“We will review our fund-raising plan only after the Budget. At the end of December 2009, we had a capital adequacy ratio of 13.76% and the tier-I capital ratio (equity capital plus reserves) was at 8.7%. We would like to maintain our tier-I capital at above 8%,” he said. He said the bank’s new mutual fund venture with Belgium’s KBC International is expected to commence operations from May.

On Sunday, besides opening a branch, Union Bank kicked off a village knowledge centre at Jangipur. The bank, along with Small Industries Development Bank of India (Sidbi), also opened a management & skill development institute to offer financial education, credit counselling and debt management. The bank adopted Kharibona village in Murshidabad as its 101st model village.