United Bank of India — which brought down its gross non-performing assets (NPAs) by over R2,000 crore in the January-March quarter last fiscal — will soon approach the RBI for the removal of a R10-crore single-borrower threshold for advancing fresh loans.

Pointing out its success in recovering bad loans, the troubled bank will also ask the RBI to lift the ban on restructuring of its accounts.

“I am sure we will be able to convince the RBI that our efforts in turning around the bank are bearing fruit. We want the RBI to remove the cap on lending and we will also seek its permission to allow restructuring of our accounts through the CDR (corporate debt restructuring) mechanism. We will first take our board into confidence and, then, seek the RBI’s nod to relax the norms,” UBI executive director D Narang told FE.

The issue of getting the RBI to ease norms will top the agenda during the the bank's board meeting slated for April 25, he said. The RBI had in December last year imposed these restrictions following a sudden surge in the bank’s bad loans.

Meanwhile, finance ministry officials told FE that the RBI will, next month or in early June, take a call on removing the curbs on lending and embargo on loan restructuring after going through the bank’s audited results for the last fiscal. The bank is holding its audit committee meeting on April 11, when a clearer picture of its NPAs will emerge after it takes into account the write-offs and fresh slippages.

The Kolkata-based public sector bank's gross NPAs had jumped nearly 200% in absolute terms to R8,546 crore by December-end from a year ago. As percentage of advances, the gross NPAs rose from 4.42% to 10.82% during the period.

It brought down gross NPAs by R1,200 crore in January and February 2014, including recovery of R400 crore and upgradation of accounts involving R800 crore. By March-end, the gross NPAs were brought down by a little over R2,000 crore, including recovery of around R500 crore and upgradation of accounts involving around R1,500 crore.

The RBI had given the bank a target of reducing gross NPAs by R500 crore every month, which has been surpassed, Narang said.

Complying with the RBI directions, the bank cut down on its expenses, halted its branch/ATM expansion plans and focused its efforts entirely on reducing bad loans.

“We will see a turnaround in March quarter itself…it will be a profit making quarter,” said Narang. The bank had reported a net loss of more than R1,200 crore in the December quarter.

However, the bank will take a call on its expansion plans only after bringing its NPA down to “manageable levels”, Narang said. (Financial Express)