Working with an aim to emerge as the most trusted, admired and sought-after world-class financial institution, UCO Bank has come a long way since its inception in 1943. The bank has planned to cash in on Smart Cities Mission as it deploys technological advancements in its operations. Atul Kumar Goel, MD & CEO, UCO Bank, shares his future plans and much more, in an exclusive interview with Elets News Network (ENN).
Tell us about the vision and mission of UCO Bank?
We aspire to be known as one of the best banks in India, and in this journey we have placed our esteemed customers from all strata of the society at the centre while providing a conducive environment for growth of employees and creating maximum shareholder value. Our core values of trust, transparency and professionalism have guided us to serve the needs and expectations of the nation holistically.
Vision: To emerge as the most trusted, admired and sought-after world class financial institutions and to be the most preferred destination for every customer and investor and a place of pride for its employees.
Mission: To be a top-class bank to achieve sustained growth of business and profitability, fulfil socio-economic obligations, and achieve excellence in customer service; through upgradation of skills of the staff and their effective participation making use of state-ofthe- art technology.
How has been the journey so far for UCO Bank?
Our Bank was founded with subscribed capital of Rs 2 crore and paid-up capital of Rs 1 crore by visionary, Shri Ghanshyam Das Birla, at Kolkata on 6th January 1943. Since inception, we have come a long way. Today we have 3,086 branches across country including presence in Hong Kong, Singapore and a representative office in Iran.
UCO Bank, with over 23,000 employees, provide dedicated service to the nation through active financial participation in all segments of the economy – Agriculture, Industry, Trade & Commerce, Service Sector, Infrastructure Sector, etc., and is keeping pace with the changing environment. We have stood at the forefront in building India and witnessed the nation’s growth story, and will continue to do so. UCO Bank successfully navigated difficult business environments weathering all sorts of extremes and has emerged stronger. Global business of the bank on March 31, 2019 was Rs 3.17 lakh crores. An instance of UCO Bank’s contribution to India’s growth story is our initiative to take responsibility of establishing a unique and sound ‘Rupee payment mechanism’ for trade with Iran. It has helped numerous exporters and importers to do business, and at the same time helped the Government of India to stabilise Forex trade.
Due to challenging operating environment, the bank, of late, has been facing problems on account of rising NPAs, increased provisions and falling profitability. UCOites (employees of UCO Bank) have made a sankalp to turn around the bank this year by making it profitable and reclaim the past glory by working as ‘One Team’ pursuing ‘One Dream’.
How do you visualise Pradhan Mantri Awas Yojana (PMAY) and Smart Cities Mission? Being a public lender, how is UCO Bank associated with its progress?
Urbanisation has hit India’s cities hard and the present infrastructure seems inadequate to support the citizens migrating from rural areas. Smart Cities’ mission aims to transform the urban landscape of the country and simultaneously ensure ease of living for the citizens. The mission, along with, ‘Housing for All’ initiative, would play a pivotal role in the development of urban areas, which by 2030 are expected to accommodate 40% of Indian population and contribute 75% of the total GDP. Housing being a fundamental need, ‘Housing for All’ by 2022 is a step in the right direction with Pradhan Mantri Awas Yojana (PMJDY). As many as 81 lakh houses sanctioned at a total investment of Rs. 4.83 lakh crore under PMAY – Urban is helping meet the objectives of providing a shelter to the urban poor.
The Smart Cities with their core infrastructure facilities would draw population thereby increasing the opportunities for MSMEs to start new ventures/enterprises. Further, with increase in population the demand for affordable housing would also increase.
“The Smart Cities with their core infrastructure facilities would draw population thereby increasing the opportunities for MSMEs to start new ventures/enterprises. We envisage that Smart Cities’ project will be a huge opportunity for us to finance the credit needs of MSMEs and home buyers.”
We envisage that Smart Cities’ projects will be a huge opportunity for us to finance the credit needs of MSMEs and home buyers, thereby being a part of these initiatives of the Government of India.
On the technology front too, UCO Bank is a Public Financial Management System (PFMS)-enabled banker for Solapur Smart City Development Corporation Limited, and we do understand various needs of Smart City Corporations.
Tell us about the recent technology deployments made by the bank. Would you like to share some of the tech-driven innovations and associated case studies.
We believe technology is a key enabler and leveraging it, we offer enhanced customer service while being efficient. Apart from offering CBS solutions, The bank has been offering customized solutions as per requirement of various State Governments and these in turn has helped the central Government to keep a track on reach of various welfare schemes, reconcile and plug leakages.
In Odisha, UCO Bank being the State Level Bankers Committee (SLBC) Convenor, has implemented technology solutions for online donations to Aahaar society, a flagship program of the state government to provide hot meals to the poor and needy, at a nominal cost, at places of public congregations.
After cyclone FANI devastated Odisha, which affected livelihood of millions, UCO Bank was the first one to activate Banking channel through offline payment utility. UCO Bank is ready to act as a Financial Platform Facilitator for various business requirements and can develop solutions at the earliest possible time for different business requirements.
UCO Bank has reduced Net Non- Performing Assets (NPAs) to 9.72% in March 2019. How are you planning to reduce it further in the current fiscal?
Banking industry has been in stress for over 3 years now due to burgeoning NPAs. In 2018-19, there has been an improvement in asset quality of Scheduled Commercial Banks (SCBs) as Gross NPA ratio declined to 9.3 % as on March 2019 from 11.5 % in March 2018.
UCO Bank’s Net NPA% decreased to 9.72 % in FY 2018-19 from 13.10 % in previous year. This was possible on account of aggressive recovery strategy of the bank in the previous year and also some quick resolutions through IBC route. Provision Coverage Ratio (PCR) of UCO Bank at 74.9 % is well above SCB’s average of 60.9 %; which is another positive factor for the Bank.
In FY 2019-20, the bank has envisaged to further reduce Net NPA% to less than 6%. We have set an ambitious recovery target of Rs 2,000 crore per quarter and also reach out to each and every defaulter and educate them about benefit of settling their dues with the Bank.
Government is putting a lot of focus on ‘PSB loans in 59 minutes’. What are your views pertaining to this model of loan disbursement?
In recent times, multiple Fintech firms have emerged and are providing effective solutions to applicants seeking MSME loans through an effortless process. ‘PSB loans in 59 minutes’ portal launched by Shri Narendra Modi, Hon’ble Prime Minister of India, is effectively an online marketplace with presence of various financial institutions and prospective borrowers. Usage of technology has made application process transparent and hassle-free. This portal verifies and analysis data pertaining to GST, ITR, Credit information Companies, Bank statements etc and also carries out basic appraisal while providing in-principle sanction to applicant. This portal is now being expanded to include Personal, Home and Auto loans in days to come. Financial institutions have gained from this model on account of lead generation, improved due diligence and reduced Turn Around Time in processing of loans.
The Regulator is eliminating the problem areas in PSBs through Prompt Corrective Action (PCA). What do you have to say about its effectiveness?
Prompt Corrective Action (or PCA) is intended to take proactive corrective measures in a timely manner, so as to restore the financial health of the banks that are at risk by limiting deterioration in their health and preserving their capital levels. While Asset Quality and Profitability continue to be the key areas for monitoring, Common Equity Tier-1 ratio has also been included to signify that it has the highest loss absorption capacity. The government infused Rs 1.6 lakh crores of capital during FY 2018-19. This helped five banks to come out of the Reserve Bank of India’s PCA framework. This framework has led Banks to find alternative sources of capital, viz., Employee Stock Purchase Scheme to shore up their capital base.
The performance of banks under PCA is slowly but steadily being restored. Credit growth of Public Sector Banks (PSBs) registered nearly double digit growth of 9.6% in March 2019. Capital Adequacy of Scheduled Commercial Banks (SCBs) improved after the re-capitalisation of PSBs. With the bulk of legacy Non-Performing Assets (NPAs) already recognised in the books, the NPA cycle seems to have turned around. Provision Coverage Ratio (PCR) of all SCBs rose sharply to 60.9 per cent in March 2019 from 48.3 per cent in March 2018, increasing the resilience of the banking sector. Imposition of PCA has led Banks to de-risk their asset side of Balance Sheets by moving away from riskier sector loans to less riskier ones, along with changing their portfolio mix from corporate to retail, enhancing non-interest income, focusing on low cost funds to improve net interest margins. Besides this, they are also stressing on expenditure control, optimizing branches, concerted efforts on Recovery and revamping Credit Monitoring through data analytics to capture early warning signals.