UCO Bank on recovery path; gross NPA up only by Rs 419 cr

Despite UCO Bank disappointing the street on Tuesday with its fourth quarter result, S Chandrasekharan, ED of the Bank is happy with the bank's performance.

“Our gross net non-performing assets (NPA) contract has come down from 5.52 percent to 5.42 percent. The slippage has almost been bottomed-out and we are on the recovery path now. Our gross NPA has gone up only by Rs 419 crore from December to March quarter,” he says in an interview to CNBC-TV18.

The bank's net profit fell 80.4 percent year-on-year to Rs 49.5 crore due to higher provisions. However, net interest income increased 28.3 percent to Rs 1,348 crore from Rs 1,050.6 crore Y-o-Y. Meanwhile, Chandrasekharan says Reid & Taylor is being pursued by the bank for recovering more than Rs 100 crore of loan after the textile firm defaulted.  “The present outstanding is around Rs 112 crore, 80 outstanding with the company (Reid & Taylor). We have been discussing with the company and it has been earlier promising for the last six months that it will be repaying the account, but no substantial payment has been made,” he adds. Below is the verbatim transcript of S Chandrasekharan’s interview on CNBC-TV18 Q: The advertisement that you have published this morning with regards to Reid & Taylor and S Kumars, you have almost put out a ‘beware notice’ on the promoter and also slapped a loan recall note on them. Where do things stand with regards to Reid & Taylor? Have you received any response yet from the management with respect to that loan recall notice? A: We have not yet received any response from them. We have been following up with them from last six months because the account has been made non performing asset (NPA) much earlier. We have put up a legal notice, so that companies can come forward and repay the amount in order to settle it. Q: What does the entire outstanding amount stand at and how did things get to this point? Were there no negotiations or discussions with the management in the past that did not elicit any response from them? A: The present outstanding is around Rs 112 crore, 80 outstanding with the company. We have been discussing with the company and it has been promising firstly for the last six months that they will be repaying the account but no substantial payment has been made. That account has slipped to NPA category. _PAGEBREAK_ Q: Are there any other accounts like this which have the possibility of slipping into NPAs soon? A: As on date, there are not many accounts. This year, our recovery has been much above. Our gross NPA cotton contract has come down from 5.52 percent to 5.42 percent and net NPA from 3.32 percent to 3.17 percent. The slippage has almost plateaued and we are on the recovery path now. We have made a substantial recovery during this year. Our gross NPA has gone up only by around Rs 419 crore from December to March quarter. Q A five percent gross NPA level is still very elevated. Can you give us any indication of what were the fresh slippages that the banks saw this quarter in terms of the exact amount? A: In this year, the slippage was around Rs 1,500 crore mainly due to some of those textile and other industries, the slippage, number of accounts were more than 100. The average account balance is around Rs 10-20 crore, so, small accounts have slipped. There was not much slippage in major accounts this year. We were able to upgrade and recover more than 1,000 accounts during this quarter, that’s why the gross NPAs have gone up only by Rs 419 crore and the ratios have come down. Q: Two other figures - (1) your net interest income (NII) target for the rest of the year because NII growth has been intact for UCO Bank and (2) whether through the course of the FY14 you will need to do any further provisioning or has a sufficient amount been done in the quarter you closed up? A: Almost all the provisions have been made. That’s why we can see one of the reductions in properties because of the majority of provisions we have made. All provisions have been made. I don’t think we will be able to make similar provisions in the coming quarter. Q: What will be the next step with regards to Reid & Taylor? What kinds of assets were attached to the bank as collateral when the loan was given? What is the next step that you can take after having slapped this lookout notice and the loan recall notice as well? A: Next step would be having recalled upon, we will go for the successive action. Q: How soon would you choose to do that? A: It has got its own legal timing. Normally, it takes quite a while. Afterwards negotiations may take place. It will take at least two-three months.