Buzzing stock: UCO Bank to sell bad loans worth Rs 2,420 crore

UCO Bank has begun the process of selling bad loans worth Rs 2,420 crore from 27 non-performing asset (NPA) accounts. It will be selling the loans from its corporate loan segment and is not limited to any specific sector.

The bank has invited asset reconstruction companies (ARC) and other financial institutions to submit expression of interest by September 11. Bulk of these accounts have remained as NPAs since last two-and-half years. Through this process, the bank would be able to recover bad loans, reduce risky loans and strengthen capital base to improve its balance sheet.

In the list of 21 public sector banks, UCO Bank stands third with gross NPAs of 19.87 percent, followed by IDBI Bank and Indian Overseas Bank. Public sector banks have currently stressed loans worth Rs 10 trillion.

The sale of NPAs has been initiated to meet the deadlines imposed by Reserve Bank of India for resolving list of accounts named in its second list of defaulters. As per the central bank’s deadline, if the lenders do not finalize the resolution plans for at least 28 accounts in the list, then banks like UCO Bank will have to initiate proceedings under the Insolvency and Bankruptcy Code.

On August 11, 2017, the stock had dipped to 52-week low of Rs 28.50. However, some revival was seen subsequently and currently the stock is trading in the range of Rs 32-32.50.