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Indian central bank directs United Bank of India to take corrective actions

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Indian central bank directs United Bank of India to take corrective actions

India's central bank directed United Bank of India to take certain additional corrective actions aimed at improving profit, boosting capital and reducing costs in view of its high level of nonperforming assets, low leverage ratio and capital needs.

The Reserve Bank of India prescribed certain additional actions for the bank under the prompt corrective action framework, based on the assessment of the bank's position as of March 31. The actions focus on profit retention, capital augmentation, provision coverage, diversification of credit portfolio, rationalization of expansion and cost control, the bank said.

United Bank of India's net nonperforming asset ratio stood at 10.02% as of March 31, compared to 10.62% as of Dec. 31, 2016, and 9.04% as of March 31, 2016, according to its earnings release. It reported net profit of 735.6 million rupees for the quarter ended March 31, compared to 641 million rupees in the year-ago quarter.

The lender said the corrective action is not likely to have any material impact on its performance and operations.

It was the second time in four years that the central bank directed United Bank of India to take corrective measures, Moneycontrol.com reported. In 2013, the RBI imposed restrictions on the bank's lending practices after its chairperson flagged off accounting malpractices.

The announcement came after the RBI placed another Indian bank, Bank of India, under the prompt corrective action framework partly due to the lender's high net nonperforming assets.

As of Dec. 20, US$1 was equivalent to 63.99 Indian rupees.