Union Bank of India restructures loans worth Rs 15,927 crore under two recast schemes, majority in retail

Union Bank of India, the fourth largest public sector bank in the country, said on July 29 that it has so far restructured loans worth Rs 15,927 crore under the two resolution frameworks announced by the Reserve Bank of India.

A large chunk of the restructured accounts were from the retail segment, said Rajkiran Rai G, MD & CEO, Union Bank. Under resolution framework 1.0, the lender restructured accounts worth Rs 11,965 crore, of which Rs 3,702 crore were from the personal loans segment, Rs 2,427 crore was from the micro, small and medium enterprises (MSME) segment and Rs 5,836 crore were from large corporates.

Under resolution framework 2.0, the total recast amount was Rs 3,962 crore till June 30, 2021. The scheme is open for another three months. In the second round of recast, personal loans accounted for Rs 2,855 crore and Rs 954 crore came from MSMEs, while the rest was from agriculture. Large corporates were ineligible for recast under resolution framework 2.0, announced on May 5, 2021. The first resolution framework was issued on August 6, 2020, and applied to all categories of borrowers affected by Covid-related stress.

“We expect that retail and MSME put together, another Rs 2,000 crore of restructuring (may take place) in the second quarter,” Rai said.

Union Bank reported slippages worth Rs 7,049 crore in Q1FY22, of which 45 percent came from the MSME segment. Retail slippages were to the tune of Rs 1,078 crore, or 15 percent of total slippages. “The stress is mainly because of COVID-19 as EMI payments were affected," said Rai, adding, “most of the stress in retail is already covered in the June quarter and we do not see much in the September quarter.”

Rai said the bank is confident that with the aid of restructuring and facilities extended under the emergency credit line guarantee scheme (ECLGS), stress will decline. Union Bank expects recoveries and upgrades worth Rs 13,000 crore in FY22. In Q1, recoveries and upgrades were around Rs 4,300 crore.