Uco Bank sells bad loans worth Rs 1500 crore to clean up books

State run Uco Bank said it has sold bad loans worth Rs 1,500 crore to an asset reconstruction company to clean up its balance sheet before the end of the fiscal.

This is nearly five-folds than what Uco had sold in the third quarter -- Rs 330 crore.

Banks are rushing to sell off bad loans to protect themselves against the higher loan loss provision rule that take effect in March 2015.

"High non performing assets is a concern area for banks," Uco chairman and managing director Arun Kaul said. "Banks are proxy to the economy. So, there is stress in banks' asset quality as the economy is facing slow growth," he said at an event in Kolkata, organised by MCC Chamber of Commerce & Industry.

Earlier, the Kolkata-headquartered lender announced that it was looking to sell Rs 1900 crore of bad loans during the fourth quarter.

"We expect the NPA ratios to improve in the fourth quarter," Kaul said.

Its gross NPA ratio was 5.20% as on December, compared with 5.53% a year back while net NPA ratio fell to 3.06% from 3.32%.

Kaul said he expects net interest margin to be a little less than 3% for the quarter.


Source: Economic Times