Union Bank anticipates recovery of Rs15,000 crore from bad loans this financial year

2 Aug 2022 , 07:56 AM

During the current fiscal year, Union Bank of India anticipates recovering Rs15,000 crore from bad loan accounts, the majority of which will come from accounts going through bankruptcy resolution.

The bank’s CEO stated during an analysts conference call following the release of the June 2022—23 quarter earnings last week that it anticipates making recovery worth Rs10,000 crore from accounts under the National Company Law Tribunal (NCLT) for the resolution of bad debts in 2022—23.

A Manimekhalai, managing director and chief executive officer, responded to a question about recovery projections for the entire fiscal year 2022—2023 by stating: “The recovery will be around Rs15,000 crore.”

Additionally, the public sector lender is probably going to transfer a few accounts to the recently formed debt resolution business NARCL.

The NCLT has already accepted 44 problematic loans totaling Rs4,842 crore in debt exposure. The tribunal’s clearance is pending on 55 further bogus accounts that the Committee of Creditors (CoCs) has cleared.

The overall exposure for the 55 NPA accounts that the NCLT must approve is Rs5,168 crore. In order to gather and consolidate stressed assets for resolution, many banks established the National Asset Reconstruction Company Limited (NARCL) last year.

This fiscal year’s first quarter concluded in June, and the bank only collected Rs122 crore from NCLT resolution. The remaining amounts were recovered through conventional techniques such as property sales, one-time settlements, and Debt Recovery Tribunal (DRT) rulings.

During the quarter, it made recoveries worth Rs1,481 crore and upgraded accounts worth Rs1,212 crore.

The lender paid down bad loans totalling approximately Rs4,000—4,500 crore against corporate sector loans, Rs1,400 crore against MSME borrowings, and Rs 200 crore against retail loans in the first quarter of FY23.

In the April to June fiscal quarter, there were new slippages totalling Rs3,714 crore.

In the quarter ending June 2022, Union Bank increased its net profit by 32% to Rs1,558 crore.