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Thursday, March 26, 2015

RBI eases lending curbs on United Bank; shares up 5%

The Reserve Bank of India has removed the restriction imposed on United Bank of India for sanction of credit / participation in restructuring proposals. This is significant in view of fresh slippage by corporate borrowers, including some restructured loans.

P Srinivas, MD & CEO of the bank, met the RBI Governor earlier this month and requested the RBI to remove restrictions on its corporate borrowing. After the bank reported net losses in the second and third quarter last fiscal, the RBI had clamped several restrictions on the UBI.

Since then, UBI has reported fourth consecutive quarterly net profits till December 31, 2014. UBI’s net NPA stood at Rs. 5,240 crore at the end of the third quarter. Until the end of the third quarter this fiscal, it restructured debt worth Rs. 7,697 crore. During the third quarter cash recovery was Rs. 194 crore, bad loans worth Rs. 318 crore were upgraded and Rs. 340 crore were written off. UBI currently also faces branch expansion restrictions.

The RBI in June last year allowed UBI to consider loan proposals up to Rs. 200 crore taking exposure to triple A-rated PSUs and corporate borrowers. The RBI also had removed the ban on recruitment early this year.​

At 1.55 pm, United Bank shares were trading up 5.01 per cent or Rs. 1.35 at Rs. 28.30.

Source : Thehindubusinessline


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