UCO Bank hopes to get rid of its swelling non-performing assets (NPA) basket partly this year. The capital base of asset reconstruction companies (ARCs) is improving, which will help them take on the dud loans of the banking sector."With the change in norms for the ARCs, responses from them during asset sale were very poor in later part of FY15. But things are improving as in the March quarter we would dispose off Rs 114.98 crores of NPAs to them. So we believe we would get response to the sale of NPAs we have lined up," Arun Kaul, chairman and managing director, UCO Bank, said.The revival in the market for bad loans has encouraged UCO Bank to plan a major disposal of 140 bad accounts with outstanding balance of Rs 3,112 crores, as reported by dna recently.Following the change in the norms in August last year, ARCs were required to triple their investments in security receipts against the bad loans.This forced the ARCs to shy away from the bad loan market, a scenario which is now improving with many of them arranging for capital raising, executive director JK Garg told dna."We used to take 95% in form of security receipts and rest 5% in cash. The cash component requirement was raised to 15%. The ARCs have limited resources and weren't in a position to put down three times the money. So, in between, there was poor response from these companies. But now they have started raising resources and so we are getting better responses from them," he said.UCO Bank needs some urgent stripping of NPAs as the fourth quarter has been harsh with NPAs going up steeply.

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"During the quarter there was gross NPA addition of Rs 2074.28 crore, out of which 46.3% are restructured assets amount to Rs 961.33 crore that have turned bad with maximum slippages happening in power, distribution, iron and steel and other infrastructure sector," Kaul said post the earnings announcement of the bank.As a percentage of the asset, net NPA of the bank as on March end was 4.30%, against 2.38% in the same period last year.Even as NPAs spiralled, income dipped during the quarter from Rs 5,309.27 crore year ago to Rs 5,263.36 crore while net profit declined by 26.5% to Rs 209.28 crore in the fourth quarter."There was hardly any credit growth while we lost interest on the loans which turned bad," said Kaul. Its Iran deposits also suffered because of oil price slide."Gradually the Iran deposits are doing down. With oil price easing, deposits have come down from a peak level of Rs 23,000 crore to about Rs 17,000 crore now."UCO Bank is the only designated Indian bank to have accounts through which payments for oil imports from Iran and exports from India are settled which gives rise to some added liquidity for the bank, exclusively available to it.