United Bank of India's Executive Director Deepak Narang says that they need to show RBI that all systems and procedures are in place and credit administration has been tightening.
I think we should also fall inline with what other banks have done, they have restructured AAA and AA rate accounts and kept it as standard.
Deepak Narang
ED
United Bank of India
Reports suggest that the RBI has rejected United Bank of India 's plea to ease curbs on lending.
United Bank of India's Executive Director Deepak Narang says that they need to show RBI that all systems and procedures are in place and credit administration has been tightening.
The bank hopes to approach the Reserve Bank soon to enhance the limit for AAA and AA rate accounts. Narang believes RBI is willing to relax those accounts up to Rs 25 crore for normal lending.
In an interview with CNBC-TV18's Ekta Batra and Anuj Singhal, he says they are focussing on recovery and not on credit expansion.
Below is the verbatim transcript of the interview:
Q: Can you give us more clarifications about the RBI rejection of the Bank's plea to ease curbs on lending?
A: We have some lending which are under RBI control and everything has been done as per sanctions on the board. All the procedures are in place. They are willing to relax for AAA and AA rates accounts or relax it up to 25 crore for normal lending and we are in touch with them, they are taking it in a very positive manner. We need to show them that all systems and procedures are in place and credit administration has been tightening. We will soon approach them to enhance the limit for AAA and AA. They are willing to do it; they are inclined to do it.
Q: Tell us in terms of your overall credit growth. How much would this impact?
A: We are not looking at credit growth at present. We are trying to restrict our exposure and trying to recover, so our focus is on recovery and not so much on credit expansion and we will expand wherever it is necessary and not in a big way.
Q: Related to the news on RBI in January, we do understand that the RBI had curbed United Bank of India. We do understand from restructuring of certain accounts. Is that also part of the curbs that you might have discussed, if you could clarify on that?
A: RBI did put some restriction but we have been taking case by case permission from them and they did grant us permission to restructure account under CDRs and those were taken up and restructuring was done and those accounts got upgraded in March quarter and for current quarter RBI has said that follow the RBI guidelines as are applicable to other banks and go to board and take their view on that about those projects. We go to Board of Directors/Management Committee of the Board (MCBOD) and through consensus; we take a call on our accounts, which need restructuring and those accounts that have been restructured by other banks. I think we should also fall inline with what other banks have done, they have restructured those accounts and kept it as standard. Our board should look at it and take a call on that.
Q: Since you are focusing on improving your book and that is your primary focus, I am going to ask you about your recoveries in this quarter. Can you give us a sense on how recoveries have panned out up till now in Q1 and compare it to Q4 for us in terms of asset quality in totality?
A: We have incurred about 300 crore odd by now of which mostly is cash recovery. We have not gone for upgradation, that we will take up once we take it to the board and we upgrade those accounts after restructuring. We expect to recover about 700-800 crore or upgrade those accounts about 700-800 crore this quarter.
United Bank stock price
On June 05, 2014, at 14:14 hrs United Bank of India was quoting at Rs 52.75, up Rs 2.75, or 5.50 percent. The 52-week high of the share was Rs 58.65 and the 52-week low was Rs 23.40.
The latest book value of the company is Rs 80.81 per share. At current value, the price-to-book value of the company was 0.65.
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