Jaitley orders forensic audit of UCO Bank
Shares of Kolkata-based lender UCO Bank on Wednesday fell 8% on the Bombay Stock Exchange and the National Stock Exchange, a day after the finance ministry ordered limited forensic audit into some of its non-performing accounts.business Updated: Aug 27, 2014 23:06 IST
Shares of Kolkata-based lender UCO Bank on Wednesday fell 8% on the Bombay Stock Exchange and the National Stock Exchange, a day after the finance ministry ordered limited forensic audit into some of its non-performing accounts.
Forensic audit refers to the examination and evaluation of a firm’s financial information for use as evidence in court.
The share price crash eroded as much as `3,186 crore from the company’s market value in a single day on Wednesday.
Confirming the probe, Arun Kaul, chairman and MD of UCO Bank, told HT: “This relates to three-four accounts, which are five-six years old. We will come out with a detailed statement. We are currently busy with the financial inclusion campaign that begins tomorrow (Thursday).”
This is the fourth public sector bank to face a forensic audit after the alleged cash-for-loan scam came to light following the arrest of Syndicate Bank chairman and MD SK Jain by the Central Bureau of Investigation earlier this month. Jain was arrested for allegedly taking a bribe of `50 lakh to enhance credit limits of Bhushan Steel and Prakash Industries.
The government has also ordered forensic audits against Dena Bank and Oriental Bank of Commerce (OBC) after some officials were suspected of misappropriating `436 crore from fixed deposit customers.
Finance ministry sources said the UCO Bank probe was ordered following an internal report. “It is a limited audit on a few accounts, for which we had initiated investigation, since they were found to have turned non-performing assets (NPAs),” they said.
The company’s net NPA — loans that do not yield returns — had dropped to 2.33% as on June 30, 2014 from 3.15% a year ago. Gross NPAs of the state-run lender stood at `6,346.32 crore at the end of June 2014. In percentage terms, it was 4.31% of the bank’s total advances. Net NPA stood at `3,344.02 crore.
The nature of bad loans of UCO Bank can be compared with Kolkata-headquartered lender United Bank of India, as in both the cases, smaller loan accounts contributed the majority of bad loans, sources said.