UNION BANK of India expects to recover Rs 350 crore in the form of bad debts by September end. As on July 31, its total bad debt was Rs 1,970 crore.
“We have already achieved a major portion of the recovery target by introducing a robust system of monitoring NPA Accounts,” Union Bank of India’s Chairman and Managing Director M V Nair said while speaking to Hindustan Times.
Simultaneously, the bank has targetted a 25 per cent growth in its small and medium enterprises (SMEs) portfolio. The bank has divided non-performing accounts (NPA) into three categories – Alert-I, Alert-II and Special Mention Accounts for monitoring and taking necessary action against the defaulters.
The bank has also appointed recovery agents and investigating agency for the purpose. “We are going for one-time settlements in small accounts of up to Rs 1 lakh in rural areas, which is quite a large number and the branch managers would settle them in a liberal manner by December end,” he said.
However, Nair wants to take stringent action in case of high-value NPA accounts, after a notice period of 60 days thereby bring down the net NPA below one per cent against the present 1.22 per cent, by March 2007.
Keeping with its SME agenda, the Union Bank of India wants to be a part in the economic growth process of Madhya Pradesh, where large investments are expected to flow in. “SME is a growth engine for us and we have signed an agreement with Small Industries Development Bank of India (SIDBI) to jointly appraise and lend to SMEs and 300 clusters have been identified,” he said.
In Madhya Pradesh, five clusters have been identified in Bhopal, Indore, Gwalior, Katni and Satna. The bank has also tied up with SMERA – a rating agency – so that clusters could be rated for quality lending.
As a thrust area, the bank has come up with 50 SME specialised branches and 120 officers would be provided with three-channel training on SME financing for faster decision making.
On the issue of consolidation and merger of banks, the Union Bank of India CMD said there would be no threat of job loss to existing employees.
“As per the RBI roadmap, there would be large entry of foreign banks in India by 2009. To compete with them, India needs to have a global-sized bank,” he added.
Justifying the merger, he said as Indians in recent times are prominently getting recognised in various fields abroad, especially in the economy, what is the harm of having a large-sized global bank.
Nair said any bank going in for IPO should be guided by strict regulations and 100 per cent compliance as the trust of a large number of people is involved in it.
Asked whether the bank has any plans to enter the large credit card market, Nair said, “Not immediately but we are looking at it. In future, we would also like to venture into insurance.”