Tag: S S Mallikarjuna Rao

Soma Sankara Prasad likely to be next UCO Bank MD, BFSI News, ET BFSI

Banking & Finance

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The government is considering appointing Soma Sankara Prasad, the deputy managing director of State Bank of India, as managing director of Kolkata-based UCO Bank. The Banks Board Bureau (BBB) has suggested the name of UCO Bank Managing Director Atul Kumar Goel for heading Punjab National Bank as MD. The managing director position of PNB will fall vacant after the superannuation of S S Mallikarjuna Rao in January.

According to sources, since Prasad was in the reserve list when the interview for appointment for managing director of Indian Bank took place earlier this year, he has been recommended to head UCO Bank subject to various clearances including vigilance.

The final view in this regard would be taken by the Appointments Committee of the Cabinet (ACC) headed by the Prime Minister, sources said.

The BBB, the headhunter for state-owned banks and financial institutions, in May had conducted interviews for the position of MD of Indian Bank. Post interview, Shanti Lal Jain was recommended for the post while Prasad was the candidate on the reserve list.

Last month, the Reserve Bank removed UCO Bank from its Prompt Corrective Action (PCA) Framework following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital norms.

The lender also apprised the RBI of the structural and systemic improvements that it has put in place, which would help the bank in continuing to meet the financial commitments. The public sector bank plunged under PCA in May 2017.

PCA is triggered when banks breach certain regulatory requirements such as return on asset, minimum capital and quantum of the non-performing asset.

The restrictions disable banks in several ways to lend freely and force them to operate under a restrictive environment that turns out to be a hurdle to growth.

UCO Bank had posted over a four-fold jump in its net profit to Rs 101.81 crore for the first quarter of the fiscal ended June 30, as bad loans fell significantly.

The lender trimmed its gross non-performing assets (NPAs or bad loans) significantly to 9.37 per cent of the gross advances as of June 30, 2021, as against 14.38 per cent at June-end 2020.

The net NPAs were down at 3.85 per cent (Rs 4,387.25 crore) from 4.95 per cent (Rs 5,138.18 crore). PTI DP ANZ MR



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PNB expects Rs 3,800 cr recovery from Bhushan Power resolution; sees good amount from DHFL too, BFSI News, ET BFSI

Banking & Finance

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State-owned Punjab National Bank (PNB) is expecting to recover a substantial Rs 3,800 crore from Bhushan Power and Steel under debt resolution in NCLT, which will help it achieve the target of Rs 8,000 crore cash recoveries during this fiscal, its managing director and CEO S S Mallikarjuna Rao said.

Besides, the city-based lender also hopes to make good recovery of its exposure in crisis-hit DHFL, which is undergoing a resolution process currently.

Sticking to the bank’s previous guidance on restricting the gross NPAs below 14 per cent and net NPAs lower than 5 per cent by the end of the current fiscal, Rao said there has been an improvement in collection efficiency as well in January after a dampened December.

Across the banking industry, the collections were much better in October and November, before dampening again in December because of lack of clarity on NPA recognition from the Supreme Court, he added.

In response to a public interest litigation during Covid times, the Supreme Court had passed an interim order in September, directing banks not to declare accounts as NPA, which otherwise would have turned dud, during March-August till further orders.

“So there was an impulse on identification on NPA. However, the collections have again improved in the month of January across the banking industry, including our bank. Considering, these factors, we are very confident that there won’t be any further increase (of bad loans). About pro-forma NPA, we have already marked them, we have identified and have done the complete provisioning, so there won’t be any impact in Q4 (FY21),” Rao said in a conference post bank’s December quarter results.

“On the contrary, I am expecting reduction of the proforma NPA what we have declared as on December 31, 2020.”

The bank has posted a net profit of Rs 506 crore on a standalone basis in the quarter ended December 2020 of this fiscal. It had posted a net loss of Rs 492.28 crore in the year-ago period.

The lender also cut down on its gross non-performing assets (NPAs) to 12.99 per cent by the end of the December quarter from 16.30 per cent in the year-ago period. While, net NPAs reduced to 4.03 per cent from 7.18 per cent.

Rao said the recovery from smaller accounts have been better, if not very good, as there was a dampening spirit in December.

“Recoveries are better in January, it will be definitely on the expected lines up to March. Last time, I had given guidance of recovery of about Rs 8,000 crore through reduction (by way of resolution) in NCLT cases. So we will await as there are big accounts… Bhushan Power is one account where we are anticipating cash recovery of Rs 3,800 crore. And DHFL is also there where bidding (for resolution of NPA) has been completed very recently. There also we expect a good amount of recovery,” Rao said.

So these two things (Bhushan Power & Steel Ltd and DHFL) together will be able to achieve the expected target what we were anticipating in terms of NCLT (National Company Law Tribunal), he added.

In June, the chief of the country’s second largest public sector lender had said that PNB expects to make recoveries worth Rs 8,000 crore in 2020-21.

On the NPA situation, Rao said as the bank has already identified those accounts which otherwise could fall into NPA category and its bad asset numbers would have been different and has made provision accordingly, there won’t be any change in its earlier stance of restricting gross and bad loan ratios below 14 per cent and 5 per cent, respectively.

“So, our guidance is what we have given last time also. We would like to retain the net NPA below 5 per cent by March and we would like to retain the gross NPA 14 per cent… January appears to be much better in terms of collections. So I am very confident that we will be able to control the NPA,” Rao said.



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