UCO Bank, Allahabad Bank look to make recoveries this fiscal

Kolkata: Two troubled lenders, UCO Bank and Allahabad Bank, on Wednesday told shareholders at their annual general meetings that they are looking to recover ₹ 4,000 crore and ₹ 5,500 crore, respectively, from troubled assets in the current year.

The management of the Kolkata-based public sector banks sought two years to turn the corner, saying they expected the restrictions imposed on their operations by the Reserve Bank of India (RBI) under prompt corrective action to be lifted by March 2020.

UCO Bank is expected to start making profits again in two years, said managing director and chief executive officer R.K. Takkar. For now, the “main focus” is on recovery, he added.

Takkar said the current year’s recovery target is ₹ 4,000 crore. Most cases under the Insolvency and Bankruptcy Code (IBC) are at an advanced stage of resolution, he said. The bank has, however, had to take substantial haircuts on its loans to Bhushan Steel and Electrosteel Steels, he added.

The bank’s gross non-performing assets (NPA) were at ₹ 30,549.92 crore at the end of March, or 24.64% of gross assets.

The focus for Allahabad Bank, too, is on recovery, said its executive director N.K. Sahoo, who chaired Wednesday’s annual general meeting. The bank’s managing director and chief executive officer Usha Ananthasubramanian was in May divested of all responsibilities, pending investigation into frauds at Punjab National Bank where she previously worked.

Allahabad Bank, which has recently recovered ₹ 1,300 crore from insolvency resolution at Bhushan Steel and Electrosteel Steels, expects to recover ₹ 3,000 crore more in the current fiscal through dispute resolution under IBC.

It expects to receive around ₹ 2,000 crore more through other channels of recovery, including one-time settlement. That apart, the lender is also looking to rake in ₹ 400-500 crore from the sale of stressed assets to asset reconstruction companies, according to Sahoo.

Allahabad Bank’s gross NPAs were at ₹ 25,562.79 crore, or 15.96% of gross assets, at the end of March. Of this, around ₹ 12,000 crore is locked up in 94 stressed accounts, which have been referred to various benches of the National Company Law Tribunal for resolution under IBC.

Sahoo said the lender may have to take a haircut of up to 60% on loans given to three companies—Uttam Galva Steels Ltd, Alok Industries Ltd and Essar Steel Ltd. All three are undergoing insolvency resolution under IBC.

Allahabad Bank is looking to raise ₹ 9,000 crore in the current year.

It expects the Union government to infuse around ₹ 7,000 crore into its operations. The bank will raise the rest on its own from capital markets. It is also looking to liquidate non-core assets to raise an estimated ₹ 500 crore, according to Sahoo.