In a bid to ensure corrective measures, the Reserve Bank of India (RBI) has directed United Bank of India (UBI) to raise capital, diversify credit portfolio and ensure cost control measures.
The public lender is going through severe stress with hovering bad loans.
RBI has also instructed the bank to retain whatever profit it garners without distributing it among its shareholders.
“The action points focus on profit retention, capital augmentation, provision coverage, diversification of credit portfolio, rationalisation of expansion and cost control,” said UBI.
The apex body directed the bank to follow the steps mentioned under its Prompt Corrective Action (PCA) initiative to curb the menace of Non-Performing Assets (NPAs), low leverage ratio and requirement to raise capital, based on the assessment of the bank’s position as on March 31.
UBI reported an NPA ratio at 10 per cent breaching the prescribed second level of risk of 9 per cent, the reason behind RBI’s correction plan implementation.
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