UCO Bank to raise Rs 3,000 cr capital, hopes to be profitable in FY19

By Sarkaritel June 28, 2017 20:50

UCO Bank to raise Rs 3,000 cr capital, hopes to be profitable in FY19

Kolkata, June 28 (IANS) State run lender UCO Bank, which is planning to raise Rs 3,000 crore capital in the current fiscal, is hoping to turn profitable in the next financial year, an official said on Wednesday.

“This year it (return to profits) is not possible. We expect to become profitable in next year,” the lender’s Executive Director Charan Singh said on the sidelines of its annual general meeting.

As a part of its capital raising plan, the lender is looking at the Life Insurance Corporation of India (LIC).

“We are planning to raise Rs 3,000 crore capital this year. We will try from the government and also from LIC,” Singh said.

He, however, did not want to specify the amount of funds the bank is looking to raise from LIC.

LIC had infused around Rs 270 crore by way of preferential allotment of equity shares in the last fiscal. However, the insurance regulator, Insurance Regulatory and Development Authority of India, had asked LIC to prepare a roadmap to reduce its stake to 15 per cent in a few companies where the insurer has breached the ceiling.

Addressing the shareholders, Singh said the lender would also explore other fund raising options like follow-on issue or qualified institutional placements (QIP) depending on the market conditions.

On Wednesday, the bank took the shareholders’ approval to issue 750 million equity shares in the current financial year, though the issue price will be determined at a later date in accordance with regulatory norms.

In May, the Reserve Bank of India (RBI) directed the Kolkata headquartered bank to take Prompt Corrective Action (PCA) as its net non-performing asset (NPA) ratio increased to 8.94 per cent in 2016-17.

Under RBI regulations, PCA is triggered if a bank’s net NPA ratio crosses 6 per cent. The city-based lender posted a net loss of Rs 1,851 crore in 2016-17.

“We hope that our gross NPA level will come down this year. It is almost at the peak, and it will start coming down from this level. We expect it will be decreasing,” Singh said.

Stating that the PCA would not have much impact on the bank, he said it would not affect the lender’s credit growth. The bank is expecting a credit off-take growth of 6-7 per cent for this fiscal.

“There is no such restriction on credit expansion. However, we are not taking any exposure below a particular investment grade. Of course we cannot increase our unsecured exposure,” he said.

Singh said the bank’s turnaround plan would be prepared in the “next two-to-three days”.

By Sarkaritel June 28, 2017 20:50