MUMBAI : The government is considering infusing additional capital into state-owned United Bank of India, Financial Services Secretary Rajiv Takru said, according to television channels quoting Bloomberg news. The state-owned bank reported a net loss of 12.38 bln rupees for Oct-Dec as against a profit of 422.0 mln rupees a year ago, as a sharp rise in bad loans increased the provisioning requirements.
As on Dec 31, gross non-performing assets ratio stood at 10.82% against 4.42% a year ago and 7.52% at the end of the previous quarter. The report quoted Takru as saying that there is no systemic risk to the Indian banking system from United Bank of India.
The government has already infused 7 bln rupees in United Bank as a part of its annual infusion in state-owned banks. United Bank of India is reportedly undergoing a forensic audit by the Reserve Bank of India. The regulator has placed a restriction on the bank on advancing a loan of more than 100 mln rupees to a single borrower and barred it from restructuring loans on the back of concerns over bad loans.
On Tuesday, Fitch Ratings said losses faced by United Bank of India could see its capital ratios fall below the minimum regulatory requirement and could test the authorities’ approach to banks’ capital raising instruments under the new Basel III norms.
United Bank’s capital adequacy ratio as per Basel II norms stood at 9.93% and 9.01% as per Basel III norms. Shares of United Bank ended down 1.89% at 25.95 rupees on the NSE. -Cogencis