United Bank Of India To Get Rs 330 Crore Relief On RBI’s Provisioning Norms Breather

United Bank of India is poised to get a relief of Rs 330 crore from the Reserve Bank of India temporarily relaxing provisioning norms on accounts admitted under the National Company Law Tribunal for the March quarter earnings.

The bank had impending provision of Rs 250 crore to be made on stressed accounts, that it is now exempted following the central bank's temporary respite. Additionally, the lender will be writing back Rs 80 crore in its books, bringing the total relief tally to Rs 330 crore, said managing director Pawan Kumar Bajaj in a conversation with BloombergQuint today.

The RBI, last night, allowed banks to provide only up to 40 percent of secured loans against accounts undergoing insolvency proceedings under the NCLT. The earlier norm required bankers to provide a 50 percent provisioning against secured loans in the NCLT cases.

The central bank also asked banks to raise the minimum provisioning back to 50 percent by June 30. Commenting on this, Bajaj said that lower provisions in March quarter will not lead to higher provisions in the June quarter. “Recoveries from resolution of cases under the first list of NCLT will take care of provisions in the first quarter of the financial year 2018-19,” he added.

In June last year, the banking regulator had asked lenders to provide for 50 percent of all secured loans against NCLT accounts, and 100 percent of unsecured exposures. The provisioning requirement on unsecured loans would remain at 100 percent.

Watch the full conversation here:

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