Tag: uco bank

UCO Bank sees ‘improved investor appetite’

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UCO Bank, which recently came out of the purview of the Reserve Bank’s Prompt Corrective Action, is expecting an “improved investor appetite”, which is likely to help its proposed capital raising plan.

The bank had recently received the board approval to raise close to ₹3,000 crore capital in 2021-22. The fundraise can take place through various modes, such as follow-on public offer, qualified institutional placement and preferential issue, subject to necessary approvals, it had said in a regulatory notification to stock exchanges.

According to Atul Kumar Goel, MD and CEO, UCO Bank, it would go for capital raising plans at an “opportune time”. “Earlier when we were in PCA there was less appetite from investors but now it is better. We have the board approval to raise around ₹3,000 crore and we will go for it when the market is right. We may look at QIP or preferential issue for raising funds,” Goel told BusinessLine.

As on June 30, 2021, the bank’s capital adequacy ratio stood at 14.24 per cent and CET-I ratio at 11.32 per cent.

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

The bank has been witnessing an improvement in profitability as well as asset quality.

Its net NPA reduced to 3.85 per cent (4.95 per cent) as on June 30.

Credit growth

The bank is expecting 8-10 per cent growth in advances during the current fiscal primarily on the back of a good demand from retail, MSME and agriculture sectors. During Q1FY22, the bank witnessed five per cent growth in advances at ₹1,20,849 crore as against ₹1,15,236 crore same period last year.

It has achieved 75 per cent of a targetted ₹2,500 crore loans by end September.

“We have seen a better response and demand for credit for housing loan and gold loan as compared to last year. There is also a demand from NBFC and infrastructure sectors. We are expecting 8-10 per cent growth in credit this year,” he said.

Loan restructure

UCO Bank, Goel said, has restructured loans to the tune of ₹2,500 crore upto June this year under RBI’s resolution framework 2.0.

Under the framework, banks and non-banking financial companies (NBFCs) can restructure loans of up to ₹50 crore.

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UCO Bank out of PCA, will RBI blink in case of IOB, Central Bank?, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) has removed UCO Bank from its Prompt Corrective Action Framework (PCAF) but the fate of Central Bank and Indian Overseas Bank hangs in balance.

The central bank lifted the PCA on Uco Bank following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital.

However, RBI had reservations over the capital adequacy levels of the banks under PCA.

Interestingly, Indian Overseas Bank and Central Bank were reported to be among the four banks shortlisted by the government for privatisation.

The RBI objection

In FY21, the government infused Rs 20,000 crore in ve banks through the instruments. Central Bank of India was the biggest beneficiary with Rs 4,800 crore, followed by Indian Overseas (Rs 4,100 crore), UCO Bank (Rs 2,600 crore).

However, the RBI had raised questions over the government’s bank capital infusion programme through non-interest-bearing bonds, according to a report.

The RBI reasoned that capital infusion through bonds cannot be taken at face value and, therefore, these banks may still be short of regulatory capital, they said. In such a situation, they will continue under the PCA framework. Under the PCA regime, business restraints are imposed on struggling banks until they regain health.

The government went ahead despite RBI’s initial reservations and now the regulator had expressed serious concerns. The entire fund infusion through such bonds will then not count toward regulatory capital.

RBI is not inclined to pull these lenders out of the PCA framework based on such capital infusion and may further direct lenders to recalculate their capital adequacy ratio based on the actual value of the bonds.

The PCA status

Indian Overseas Bank, Central Bank have reported net non-performing assets (NPAs) below levels that trigger PCA. However, on the proforma net NPA front, Central Bank falls short as its NNPA is 6.58% against the 6% required to be out of PCA.

Even after PCA exit, these banks may still be under RBI watch. In the case of IDBI Bank, which has committed to comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis, RBI has said the lender would be under continuous monitoring. “It has been decided that IDBI Bank be taken out of PCA framework, subject to certain conditions and continuous monitoring,” RBI had said.

Privatisation bid

Four banks on the privatisation shortlist included Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India.

Two public sector banks and one general insurance company are expected to be disinvested this year in addition to the divestment of IDBI Bank, Finance Minister Nirmala Sitharaman had announced during the Union Budget presentation.

Bringing the banks out of PCA could boost their valuations in the event of privatisation.



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Bank will expand exposures on lower-rated, unsecured segment with proper due-diligence: AK Goel, MD & CEO, Uco Bank

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AK Goel, managing director & chief executive officer, Uco Bank

As the Reserve Bank of India (RBI) has decided to take Uco Bank out of the prompt corrective action (PCA) restrictions, the bank will now take exposure in non-fund business to boost its non-interest income and expand exposures on lower rated, unsecured segment with proper due-diligence, says its MD & CEO AK Goel. In an interview with Mithun Dasgupta, Goel informs the lender will look for expanding its branch network in the areas where it has low presence but growth potential is more. Excerpts:

As the Reserve Bank of India (RBI) has lifted Prompt Corrective Action (PCA) restrictions on Uco Bank, will it help the bank grow its business faster?
Yes, Uco Bank can now go on non-fund business which attracts low capital and help in improving the bank’s non-interest income. It can now lend to borrowers which are highly rated but unsecured by keeping in mind the trade-off between risk and return.

Will the Bank now be able to disburse higher ticket size loans?
PCA had not put restrictions on lending to big ticket size loan, except some restriction on low rated customers, unsecured loans, exposure in non-fund based business. During the PCA restriction bank was cautious on lending to big ticket size except highly-rated and lending to this segment was restricted to AAA/AA , central/state government guaranteed loans, PSUs, customer with very high market reputations, etc.

What are the strategies to be taken going ahead for higher growth?
Even after removable of PCA restriction, the bank will be cautious in lending to risky sectors/customers. It will expand exposures on lower rated, unsecured segment with proper due-diligence and also factoring the trade-off between risk and return. The bank will take exposure in non-fund business to boost its non-interest income. It will continue to put more thrust on lending to retail, MSME, agriculture and better quality corporate customers to meet its higher growth requirements.

Will now Uco Bank plan to expand its branch network?
Yes, one of the restrictions under PCA was not to expand its branch network. Upon removable of restriction, the bank will look for expanding its branch network in the areas where it has low presence but growth potential is more.

At the end of the first quarter this fiscal, gross NPA ratio stood at 9.37%, while net NPA ratio was at 3.85%. Does the bank have any target on bringing down the NPAs further by this fiscal end?
The bank has strengthened its credit monitoring and recovery mechanism to arrest further slippages to NPA category and improve recovery from non-performing accounts.

These all efforts resulted that its net NPA ratio remained below 4% in June, 2021. We expect that the bank gross NPA ratio should come down below 8% and net NPA ratio at around 3% by this fiscal end.

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UCO Bank jumps 16% after exit from PCA framework, BFSI News, ET BFSI

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New Delhi: Shares of UCO Bank rallied as much as 16 per cent during early trade on Thursday after the state-owned lender was put out of PCA watchlist.

The Reserve Bank of India (RBI) yesterday removed UCO Bank from its Prompt Corrective Action Framework (PCA) following improvement in various parameters and a written commitment that the lender will comply with the minimum capital norms.

Following the update, shares of UCO Bank zoomed 16 per cent to Rs 14.85, before trading at Rs 14.13 at 10 am. BSE Sensex was trading 105.71 points, or 0.18 per cent, lower at 58,144.55 at the same time. The scrip settled at Rs 12.81 on Wednesday.

“On a review of the performance of the UCO Bank, the Board for Financial Supervision on the basis of the published financial results for 2020-21 found that the bank was not in breach of the PCA parameter,” the RBI said in a statement.

The Kolkata-based lender has also provided a written commitment that it would comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis.

It has been under PCA since May 2017. 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.

Santosh Meena, Head of Research, Swastika Investmart, said it is a very positive trigger for the bank as they can grow their business now.

UCO Bank has widely underperformed the broader market, gaining merely 10 per cent in the last one year compared to a 52 per cent rise in the benchmark index BSE Sensex.

“But there are a lot of concerns around smaller PSU banks,” cautioned Meena while advising investors to avoid this stock and focus on SBI from the PSU banking space which has huge potential to outperform.

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) 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. Its net NPAs were down at 3.85 per cent from 4.95 per cent.



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Bank Board Bureau recommends Atul Kumar Goel for PNB MD post, BFSI News, ET BFSI

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Banks Board Bureau (BBB) on Wednesday recommended Atul Kumar Goel for the post of Managing Director of Punjab National Bank.

Currently, Goel heads UCO Bank, which was removed from Prompt Corrective Action (PCA) restrictions. He will succeed SS Mallikarjuna Rao, who was recently given an extension till January 2022.

BBB interviewed 11 candidates for the post of MD and CEO of PNB – the country’s second-largest public sector lender. BBB is headed by former secretary of the Department of Personnel and Training BP Sharma.

“Keeping in view their performance at the interface, their overall experience and the extant parameters, the Bureau recommends Atul Kumar Goel for the position of MD and CEO of PNB,” BBB said in a statement.

The incoming managing director and chief executive will hold office for a term of three years from the date of entering office.

The name of the selected candidate would go for final approval to the Appointments Committee of Cabinet (ACC), headed by the Prime Minister.

The secretary of the Department of Financial Services, secretary of Department of Public Enterprises and the RBI deputy governor in charge of banking are part of BBB.

In 2016, the government approved the constitution of BBB as a body of eminent professionals and officials to make recommendations for the appointment of whole-time directors as well as non-executive chairpersons of PSBs and state-owned financial institutions.



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RBI removes UCO Bank from Prompt Corrective Action framework

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The Kolkata-based bank came out of the PCA restrictions after more than four years. The RBI had initiated prompt corrective action in May 2017 in view of high non-performing assets and negative return on assets.

The Reserve Bank of India on Wednesday removed UCO Bank from its Prompt Corrective Action Framework (PCAF) subject to certain conditions and continuous monitoring.

The Kolkata-based bank came out of the PCA restrictions after more than four years. The RBI had initiated prompt corrective action in May 2017 in view of high non-performing assets and negative return on assets.

In a release on Wednesday, the RBI said, “The performance of UCO Bank, currently under the Prompt Corrective Action Framework (PCAF) of the

RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended March 31, 2021, the bank is not in the breach of the PCA parameters.”

The RBI said the lender has provided a written commitment that it would comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis, and has apprised the regulator of the structural and systemic improvements that it has put in place. These steps will help the bank continue to meet its commitments.

“Taking all the above into consideration, it has been decided that UCO Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring,” the central bank said in the release.

UCO Bank had urged the RBI to consider taking it out of the PCA framework after posting full-year profit for the last fiscal. The bank had reported a net profit in 2020-21 after continuous losses in the previous five financial years. Net profit during the year ended March 2021 was Rs 167.03 crore.

The asset quality improved significantly during the last fiscal. Gross NPA fell to Rs 11,351.97 crore from Rs 19,281.95 crore as on March 31,

2020. Its gross NPA ratio dropped to 9.59% at the end of FY21 from 16.77% at the end of FY20, while net NPA ratio reduced to 3.94% from 5.45%.

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RBI takes UCO Bank out of PCA framework

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The Reserve Bank of India (RBI) has decided to take UCO Bank out of the prompt corrective action (PCA) restrictions.

This is subject to certain conditions and continuous monitoring.

With this, only two public sector banks – Central Bank of India and Indian Overseas Bank – remain under RBI’s PCA framework.

High NPA and negative ROA

The Kolkata-headquartered public sector bank was put under PCA framework in May 2017 on account of high net non-performing assets and a negative return on assets.

Also see: RBI tweaks guidelines for card-tokenisation services

The RBI, in a statement, said the performance of the UCO Bank currently under the PCA framework of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended March 31, 2021, the bank is not in breach of PCA parameters.

“The bank has provided a written commitment that it would comply with the norms of minimum regulatory capital, net NPA, and leverage ratio on an ongoing basis and has apprised the RBI of the structural and systemic improvements it has put in place which would help the bank in continuing to meet these commitments,” the central bank said.

Early intervention

PCA is a structured early intervention and resolution initiated by RBI for banks that become undercapitalised due to poor asset quality or vulnerable due to loss of profitability.

PCA entails restrictions on dividend distribution or remittance of profits, requirement on promoters to bring in more capital, restrictions on branch expansion, higher provisioning requirement, and restrictions on management compensation.

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RBI lifts Prompt Corrective Action restrictions on UCO Bank, BFSI News, ET BFSI

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FILE PHOTO: The Reserve Bank of India seal is pictured on a gate outside the RBI headquarters in Mumbai, India, February 2, 2016. REUTERS/Danish Siddiqui

The Reserve Bank of India today lifted Prompt Corrective Action (PCA) restrictions on UCO Bank, after the Board of Financial Supervision reviewed the financials of the bank, the central bank said in a statement.

The central bank said UCO Bank provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net Non Performing Assets and Leverage ratio on an ongoing basis.

UCO Bank will, however, be continuously monitored by the RBI.

Earlier in June, UCO Bank Managing Director Chief Executive Officer AK Goel said that he was hopeful that the central bank would lift PCA restrictions on the bank.

PCA is triggered when banks breach regulatory norms such as return on asset, minimum capital, among others.

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UCO Bank partners with Fisdom to offer wealth management solutions

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This partnership aims at augmenting the bank’s customer value proposition by making high-quality wealth management services accessible, affordable and truly digital.

Public Sector lender UCO Bank has partnered with Finwizard Technology, which runs Fisdom, to offer wealth management products and services, beginning with mutual funds, through the bank’s mBanking — Plus App — to its thirty million customers. This partnership aims at augmenting the bank’s customer value proposition by making high-quality wealth management services accessible, affordable and truly digital.

The collaboration between Fisdom and Uco Bank will focus on enabling large-scale facilitation and distribution of all mutual fund schemes through the bank’s network of over 3,000 branches and all digital platforms, the Kolkata-based lender said.

On the occasion, Atul Kumar Goel, MD & CEO, Uco Bank, said, “Our aim has always been to continuously create greater values for our customers. With these new tie-ups we would now be offering a much wider range of wealth products. We intend to deliver greater value through customer beneficial offerings both in terms of ease of convenience, and their features.”

Subramanya SV, co-founder and CEO, Fisdom, said, “We are delighted to partner with Uco Bank and enhance wealth management experience for its customers. The evolved acceptance of the wealth products has created a systemic change among the customers to adapt the service and products we have to offer.”

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Government extends tenure of UCO Bank’s MD & CEO for 2 years, BFSI News, ET BFSI

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State-owned UCO Bank on Saturday said the government has extended the term of its MD and CEO Atul Kumar Goel for two years.

The central government, through a notification dated August 26, extended the term of office of Atul Kumar Goel as UCO Bank’s managing director and chief executive officer (MD & CEO), for a period of two years or until further orders, whichever is earlier, the bank said in a regulatory filing.

Goel’s current term was to expire on November 1, 2021.

On Friday, Punjab National Bank and Bank of Maharashtra had also informed about extensions given to their MD & CEOs.

The government has also extended the terms of two executive directors each in Punjab National Bank and Union Bank of India, and one executive director of Central Bank of India.

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