No inherent deficiencies in Infosys software: United Bank official
The development comes two days after the lender blamed the software Finacle for faulty recognition
Bangalore: Two days after United Bank of India blamed Infosys Ltd’s banking software for faulty recognition of sticky loans, an executive director of the troubled lender has said that there are “no inherent deficiencies" in the software, according to a statement released by the software company.
The apparent volte-face comes after the state-run lender said on Wednesday in a regulatory filing that Infosys’s Finacle software could not correctly identify non-performing assets (NPAs) for some categories of borrowers.
“We would like to clarify that there are no inherent deficiencies in Finacle," United Bank’s executive director Deepak Narang said in the statement on Thursday. “The version of the NPA tool currently used at United Bank needed certain additional customizations to meet our specific needs, which are feasible and are being addressed now."
United Bank has seen a spurt in its NPAs last year—the lender’s bad loans shot up from ₹ 4,001 crore to ₹ 8,546 crore between July and December. This translates into 10.8% of gross NPA, measured against its total loan book, which is currently the highest among state-run lenders.
Since Mint first reported about the beleaguered lender’s sticky loans, United Bank has blamed the Finacle software for most of its troubles, especially when it came to identifying NPAs.
“Because of the deficiencies in the software, we have already identified that ₹ 400 crore was wrongly reported as NPA in the December quarter, but these are standard assets. And there could be some more that are found. That apart, ₹ 1,500 crore of restructured loans were wrongly classified as NPAs in the December quarter," United Bank’s executive director Sanjay Arya had said in an interview on Wednesday.
United Bank said it doesn’t want to comment further on Thursday’s development.
The two executive directors of United Bank didn’t respond to phone calls on Thursday.
Infosys has defended the functioning of Finacle, saying that it had provided all the necessary software upgrades to United Bank as and when the lender needed them.
“It is inaccurate to say that Finacle has inherent deficiencies in any form or manner. Finacle’s NPA module has been adopted by and is running successfully in leading banks across India. No bank has raised any issues regarding the performance of Finacle’s NPA module," Haragopal M., global head of Infosys Finacle, said in Thursday’s statement.
Launched in 1999, Finacle is used for accounting by about 90% of Indian banks.
It is also used by some foreign banks, and generates for Infosys about $300 million in annual revenue, according to industry estimates.
Manish Basu in Kolkata contributed to this report.
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