Union Bank of India managing director Rajkiran Rai G on May 14 said that Rs 3,000-3,500 crore worth of recoveries are likely from three bad loan resolution cases.
Rai was referring to Bhushan Power & Steel, Alok Industries and Essar Steel, cases which are in advance stages of the National Company Law Tribunal (NCLT) proceedings.
These cases were expected to be fully resolved in the January-March quarter, but are still awaiting final orders from the NCLT or other regulatory approvals, which have resulted in higher provisioning for lenders.
Union Bank of India, on May 14, reported a net loss of Rs 3370 crore, as compared to a loss of Rs 2,583 crore in the same quarter previous financial year owing to higher provisioning. Provisions against bad loans rose to Rs 5,783 crore in the January-March quarter, up from Rs 5,639 crore in the same period in the previous financial year.
The bank reported their gross non-performing assets (NPA) ratio at 14.98 percent at the end of March 2019, down from 15.73 percent a year ago. Its net NPA ratio also fell to 6.85 percent, down from 8.42 percent in the same period.
Slippages in the January-March quarter included Rs 900 crore from the IL&FS account. The bank’s total exposure to the troubled non-banking finance company is at Rs 1100 crore.
Rai expects the bank’s gross NPA ratio to fall below 12 percent and net NPA ratio around 5-6 percent in the current financial year.
The bank is also expecting Rs 300 crore from its sale of non-core assets this year. It includes the bank’s investments in the National Stock Exchange, the National Payments Corporation of India, the National Securities Depository , and the Clearing Corporation of India.
The state-owned lender will be targeting a credit growth of 9-11 percent, and deposit growth of 8 percent in the current financial year. This is much higher than the growth of 3.7 percent in advances and 2.7 percent in deposits recorded in 2018-19.
While Rai did not comment on whether the bank was approached by the government with a proposal to merge with other state-owned lenders, he said that the bank is open to the idea of consolidation.
April 1, 2019, marked the first mega merger between Bank of Baroda, Dena Bank and Vijaya Bank that was planned by the government as part of its efforts to consolidate state-owned lenders in India.