UCO Bank's provisions will come down in 3rd quarter: Chief

UCO Bank reported a net loss of Rs 384.83 crore for the quarter ended September 30, 2016, on account of higher provisions for bad loans.In conversation with CNBC-TV18, Ravi Krishan Takkar, MD & CEO of the bank, said net non-performing assets (NPA) have come down from 10.04 percent as on June to 8.83 percent. This is due to good recovery and the bank was able to upgrade few account during this quarter.He said there has been an increase in the provisions because of ageing NPAs and also because of the new guidlines from Reserve Bank of India (RBI) on provisions. Giving a positive outlook, he said provisions will go down in the third quarter and the bank will see a better position.Takkar said the Rs 7,75 crore infused by the government is already accounted for in the September quarter results. In the month of October the bank has allotted another Rs 270 crore to LIC and the bank has also raised 81 bonds of Rs 750 crore. He said this capital will be helpful in meeting with the bank's credit portfolio in the coming quarter. Commenting on demonetization, Takkar said the bank has taken all the necessary steps to ensure customer doesn't face any problems."We have ensured that all branches have adequate stock of currencies. We are using our currency chest and RBI is also supporting us," said Takkar.Below is the verbatim transcript of Ravi Krishan Takkar’s interview to Mangalam Maloo and Sumaira Abidi on CNBC-TV18.Mangalam: If you could tell us the movement in the gross non-performing assets (GNPAs) in your quarter, the slippages, upgrades, recovery as well as write-offs quarter-on-quarter (QoQ)? A: If you really see our result, our GNPAs have basically come down from 17.19 percent, while the net NPAs have come down from 10.04 percent as on June to 8.83 percent. So, there is improvement in the position of NPAs, even the absolute terms the NPAs are down Rs 22,597 crore to Rs 22,275 crore. This has happened because of good recovery efforts and we had few big accounts which we were able to upgrade during the quarter. So, that helped us in containing the NPAs. Sumaira: While there has been some improvement but at Rs 22,000 crore odd the asset quality still looks a little bit worrying. Is that the reason why we have also seen that sharp spike in your provisions this quarter? A: NPAs although in absolute terms, they are down as compared to June but there has been increase in our provisions. This is mainly on account of some ageing effects of NPAs which had turned say about a year back or so, plus there were some new Reserve Bank of India (RBI) guidelines regarding the provisions for these accounts which I have been reading had been suspended. So, we had to make some extra provisions on account of that. However, in the coming quarters, we would see a better position; basically they are expected to go down further in the current quarter.Mangalam: Could you give us some color on what trend the NPA is likely to take going forward and saying that can you also tell us what kind of slippage can we expect from your restructured book going forward? A: Restructured book now, most of the accounts which were stressed under the restructured portfolio, they have slipped into NPA. Now, our portfolio of restructured accounts is not much and the total account on our watch list would be around 2,500 odd. So, that has also gone down drastically, So, that should help us in keeping the NPAs under control. Sumaira: Loan book has declined almost 11 percent if we see on a year-on-year (YoY) basis. Is there stress that you are seeing in the balance sheet, what is the reason for this? A: If you see on a year-to-year basis, the reason for decline in the total assets is one, basically due to the conversion of the discom into the bonds. We had a portfolio of almost Rs 10,000 crore and that is one of the major reasons. Otherwise also, keeping view of the capital requirements, we have kept the business at the appropriate level so that we don’t breach the capital CRI norms. Mangalam: The government has infused Rs 775 crore in the bank which is expected to come in the next quarter results; how much will this strengthen your tier I capital by?A: This Rs 775 crore is already accounted for in the September 30 results. However, after that, in the month of October, we have allotted another Rs 270 crore to LIC and we have also raised 81 bonds of Rs 750 crore. So, this capital will help us in meeting our increase in the credit portfolio in this coming quarter. Sumaira: One final question on the demonetisation of the big notes by the government. How is UCO bank prepared, what is the kind of impact that you are seeing on your branches and are there any further steps that you are planning or introducing or are introducing currently to help customers? A: We have taken all the necessary steps. We have ensured that the customers so do not face any problems; especially in the initial first 10 days there is going to be pressure. We have made adequate arrangements and we have ensured all our branches have adequate stock of the currency. We are using our currency chest and also the Reserve Bank India is also supporting us and we are well prepared for it and we are keeping the branches open till the time -- maximum we are trying to help the public. So, even the late hours branches will be open. This Saturday, Sunday the branches are also being opened as you must be knowing that. On the other hand, we are ensuring that people do not panic and we have issued messages, instructions to our customers. As far as they are concerned, they can come in and deposit any amount of cash, there is no restriction on that. We are trying to remove that doubt in the mind of public, people do not panic; that is required.