Mumbai-based public sector lender Union Bank of India has put its non-performing assets, worth Rs 500 crore (principal value of assets), on the block to improve its financial health.
Bank officials confirmed the development saying the process is underway. However, they did not elaborate on the nature of assets on offer and the name of the Assets Reconstruction Companies (ARC) which are in the fray.
SIDBI-promoted India SME Asset Reconstruction Company and ARC set up by JM Financial are amongst those who have shown interest in buying the NPAs, said the head of an ARC promoted by public sector banks. “It (the sale) is part of a regular cleaning-up process. The actual sale would happen only if the bids meet the bank’s norms regarding recovery,” a senior bank official said. The Bank had sold two prudentially written-off accounts for Rs 26.79 crore in FY 10.
Following the global recession and its effect on the Indian economy, the bank had to restructure several accounts in 2008-09. Bank officials said, due to sluggish market conditions, the number of restructured accounts could not adhere to the restructuring terms and turned into non-performing assets. This had an impact on the asset quality of the bank.
Its gross NPAs rose to 2,671 crore at the end of March 2010 from Rs 1,923 crore a year ago. In percentage terms, the gross NPAs rose to 2.2 per cent from 1.96 per cent a year ago.
UBI has pursued recoveries from written-off accounts. Its recoveries from such accounts has shown a compounded annual growth rate of 21.01 per cent between 2006-07 and 2009-10.
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