UCO Bank says RBI starts prompt corrective action over bad loans

UCO Bank says RBI has initiated ‘prompt corrective action’ for its high bad loans and negative return on assets


UCO bank came under the curbs of the RBI after the regulator revised the so-called prompt corrective action framework last month. Pradeep Gaur/Mint
UCO bank came under the curbs of the RBI after the regulator revised the so-called prompt corrective action framework last month. Pradeep Gaur/Mint

Mumbai: State-run UCO Bank said on Friday that the Reserve Bank of India (RBI) has initiated “prompt corrective action” for over its high bad loans and negative return on assets, although its loss narrowed in the fiscal fourth quarter.

It is the second public sector lender, after IDBI Bank Ltd, to come under the curbs of RBI after the regulator tightened thresholds around bad loans last month. Under RBI rules, prompt corrective action is triggered if a bank’s net non-performing asset (NPA) ratio crosses 6%.

UCO Bank, in a filing to the stock exchanges, said the action “will not have any material impact” on its performance, but did not give details of the corrective action.

The bank had a net NPA ratio of 8.94% at the end of March. It reported negative returns on assets consecutively for the past two years. Return on assets stood at -0.75% at the end of March 2017 and -1.25% at the end of March 2016.

The lender reported a smaller net loss of Rs588.19 crore for the March quarter compared to a net loss of Rs1,715.15 crore a year ago, as provisions fell.

Provisions for the fourth quarter fell to Rs701.02 crore from Rs1,326.05 crore in the December quarter.

Oriental Bank

Oriental Bank of Commerce, meanwhile, reported a loss of Rs1,218.01 crore for the quarter ended 31 March as provisions more than doubled. The bank posted a profit of Rs21.62 crore in the year-ago period.

Provisions in the quarter increased to Rs2,841.29 crore from Rs1,327.08 crore in the December quarter and Rs1,026.11 crore a year earlier.

Gross NPAs made up 13.73% of all loans in the March quarter compared to 13.8% in the December quarter and 9.57% a year ago. Net NPAs were lower at 8.96% from 9.68% in the previous quarter.

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