United Bank of India has decided to stop fresh lending to infrastructure sectors such as iron and steel, airlines, real estate and textiles.
According to Archana Bhargava, Chairperson and Managing Director of UBI, non-performing assets in these sectors have been going up and the recovery has been poor.
She, however, clarified that the bank would continue to lend to public sector companies in these sectors having a lower risk profile.
According to a senior official of the bank, some of the existing long-term loan accounts in these sectors are being restructured. Of the total lending in 2012-13, the bank’s exposure to the power and iron and steel sectors stood at 13 per cent and 6.91 per cent, respectively.
Last fiscal, UBI’s net NPAs stood at Rs 1,970 crore.
While the bank has made a provisioning of Rs 846 crore for NPAs in the MSME (micro, small and medium enterprises) sector, the provisioning with regard to gems and jewellery, chemicals, hospital and solar energy sectors amounts to Rs 350 crore, Rs 150 crore, Rs 85 crore and Rs 65 crore, respectively, Bhargava added.
E-auction
Meanwhile, according to Bhargava, the bank is planning to start e-auctioning of mortgaged properties within a month to recover its bad loans. UBI will use public sector company MSTC’s auctioning platform for this.
ayan.pramanik@thehindu.co.in
(This article was published in the Business Line print edition dated June 22, 2013)
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