MUMBAI : Public sector lender Union Bank of India is expecting to recover and upgrade loans worth Rs3,000 crore in the March quarter, that could take its total recoveries to Rs8,000 crore in FY20, the bank’s chief executive Rajkiran Rai G. said on Monday.
“Actually our total recoveries and upgradations for the nine months has been Rs4,910 crore. We are expecting another Rs3,000 crore in this quarter both from the National Company Law Tribunal (NCLT) and non-NCLT accounts. So, we can close the year at about Rs8,000 crore,” Rai told reporters.
Of the Rs3,000 crore expected to come in the current quarter, Rai expects Rs1,000 crore from large accounts where resolutions have been already sanctioned and the rest from upgradations of bad loans into standard. He is banking on the fact that settlements by defaulting borrowers tend to peak in the fourth quarter of every financial year.
“One big steel account is very close to resolution and that should give us Rs700-800 crore of recoveries,” he said.
In the December quarter, the bank recovered bad loans of Rs2,583 crore, including Rs328 crore from written-off accounts. Banks write off loans from their books after fully providing from them when chances of recoveries seem bleak. However, recovery efforts are continued and whatever little that comes back is shown as other income.
“We were helped by some good recoveries which came from Essar Steel, Ruchi Soya Industries and Prayagraj Power Generation Company Limited. From these three accounts we recovered close to Rs2,000 crore,” said Rai.
According to him, in the Essar Steel loan the bank had provided 50%, it booked an interest income of Rs239 crore. On Ruchi Soya, it had 100% provisioning and the recoveries came in the form of recovery from written-off account.
Rai said that the bank has not factored in “harmonization provisions” in this quarter and even the quantification has not happened. This category of provisions was recently reported by Punjab National Bank who set aside Rs1,500 crore in Q3. These provisions apply to loans which were so far classified differently at different banks that are set to be merged. Union Bank of India will be merged with Corporation Bank and Andhra Bank.
“It is too premature to talk about that number [harmonization provision] and the RBI has not asked us about it as well,” explained Rai.
Meanwhile, the bank reported close to quadrupling of its December quarter net profit to Rs575 crore from the same period last year.
News Source:- livemint