United Bank of India reports fraud against Visa Power Ltd
Updated: Aug 22, 2019
UBI Managing Director Ashok Kumar Pradhan has said that the bank had Rs 90 crore exposure to Visa Power, which defaulted a total of Rs 3600 crore of bank loans.
State-owned United Bank of India has reported fraud against Visa Power for misappropriation of bank funds, while the lender has booked Rs 105 crore net profit for the quarter ending June.
UBI Managing Director Ashok Kumar Pradhan has said that the bank had Rs 90 crore exposure to Visa Power, which defaulted a total of Rs 1900 crore of bank loans. The Kolkata-based lender has also reported fraud of Rs 850 crore against Bhushan Power & Steel Ltd (BPSL), following others including Punjab National Bank.
Senior UBI executives said that it has provided fully against the exposure to BPSL while the Visa Power exposure is covered 60% by provision. UBI's net profit was backed by improvement in asset quality. This is the bank's second quarterly net profit in a row after making seven consecutive losses earlier. It had made Rs 389 crore loss in the year ago period. The bank's net non-performing assets ratio improved to 8.19% as on June, compared with 15.17% a year back.
UBI management has expressed confidence that its net NPA would be lower than 6% by September, a necessary parameter for lifting the lending restrictions and others under PCA framework.
"Irrespective of government infusion of capital, we should be out of PCA after the second quarter," Pradhan told ET. The Reserve Bank of India had curbed business expansion possibilities of 11 banks including UBI for high ratio of sticky loans and negative return on assets. UBI's gross NPA stood at 15.89% compared with 22.72% a year back while fresh accumulation of bad loans fell to Rs 407 crore compared with Rs 547 crore in the year ago period.
RBI, meanwhile, has allowed UBI to sell government securities bought before the business curb was imposed which boosted the bank's earnings.
Its operating profit grew 141% at Rs 683 crore in the June quarter over Rs 283 crore in the year ago period. Net interest margin improved to 2.83% from 2.36%.
(As published on 31st July 2019 by Economic Times)