Rising NPAs: RBI initiates forensic audit at United Bank

Source: CNBC-TV18


The bank reported a net loss of Rs 489.5 crore in the quarter ended September as 

gross non-performing assets surged to 7.5 percent from 5.6 percent in the preceding

quarter.

The Reserve Bank of India has initiated a forensic audit of United Bank of India 's books, concerned by the steep deterioration in asset quality.

The state-owned bank reported a net loss of Rs 489.5 crore in the quarter ended Septemberas gross non-performing assets surged to 7.5 percent from 5.6 percent in the preceding quarter.

Also read: Worst is over, hope to break even by Q4: United Bank

Sources told CNBC-TV18 that this audit is different from the routine annual inspection. The regulator has sent a team of inspectors to the bank’s Kolkata headquarters to conduct the audit and has also appointed audit firm Deloitte to carry out an independent forensic enquiry. The RBI audit is likely to be completed in a month, sources said.

The term forensic means ‘suitable for use in a court of law’, and a forensic audit is done to check for fraud or embezzlement.

The development comes barely a couple of weeks after RBI governor Raghuram Rajan and other senior RBI officials called for a tough stance against rising bad loans.

United Bank of India’s financial performance has been worsening since December last year.

According to sources, Deloitte and RBI will examine if there are any hidden NPAs in the bank and if proper systems are in place to identify them. They will also see if there is any manual intervention by the employees in the process of NPA recognition. The RB team will also examine large value loan accounts of the bank.