Finance Minister P Chidambaram on Wednesday said he will discuss United Bank of India’s bad loan crisis with the Reserve Bank Governor later this week.
“United Bank is a special case. We will deal with that. It’s not an alarming case...UBI issue will be discussed separately when the governor comes here on (March) 7th and we know the path forward. It will be resolved on 7th,” he said.
The Finance Minister is scheduled to address the Reserve Bank of India board here on March 7. Besides the UBI issue, Chidambaram will discuss matters related to new bank licences.
Kolkata—based UBI posted a net loss of Rs 1,238 crore in the three months ended December, during which its gross non—performing assets (NPAs) surged to Rs 8,546 crore from Rs 2,964 crore at the end of March last year.
UBI has recovered Rs 400 crore in cash and has upgraded Rs 800 crore worth of accounts. NPAs have been reduced by Rs 1,200 crore, Chidambaram said after meeting with chief executives of PSU banks and financial institutions here.
The minister said a large part of the meeting was focused on bad loans and the steps needed to recover them.
Chidambaram indicated the government would soon appoint a chairman.
Archana Bhargava quit as UBI Chairperson and Managing Director in February, opting for voluntary retirement on health grounds. Bhargava had taken charge as CMD in April 2013 and her term was to have ended in February 2015.
“At the moment there is executive director and we will strengthen the management of United Bank,” Chidambaram said.
An administrative enquiry is under way to find out why UBI’s NPAs had been under—reported. Following the rise in bad loans, the Reserve Bank had ordered a forensic audit by a firm, which has submitted its report.
The government, which holds an 88 per cent stake in the bank, has provided Rs 700 crore as capital to UBI in this financial year.