CEO of Union Bank of India: restructures loans worth Rs 13,000 crore, follows resolution framework by RBI

On August 6, 2020, the first resolution framework was issued and was applied to all the categories of borrowers affected by the COVID-related stress.

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On July 29, the Union Bank of India, which is the fourth-largest public sector bank in the country, had said that it had so far restructured the loans worth Rs 15,927 crore under the two resolution frameworks announced by the Reserve Bank of India.

Rajkiran Rai G, MD, and CEO of the Union Bank said that a large piece of the restructured accounts was from the retail segment. He added on saying that under the resolution framework 1.0, the lender had restructured accounts worth Rs 11,965 crores, out of which Rs 3,702 crore were from the personal loans segment, Rs 2,427 crore were from the micro, small and medium enterprises segment and Rs 5,836 crore were from the large corporates.

Till June 30, 2021, the total recast amount was Rs 3,962 crore under the resolution framework. The scheme would be open for three more months. In the second round of the recast, the personal loans accounted for Rs 2,855 crore, and from the MSME’s over Rs 954 crore came, the rest came from agriculture. Under the resolution framework, 2.0 announced on May 5, 2021, large corporates were not eligible for the recast.

Rajkiran Rai said that they have expected that retail and MSME would be put together, and restructuring worth Rs 2,000 crore might occur in the second quarter.

On August 6, 2020, the first resolution framework was issued and was applied to all the categories of borrowers affected by the COVID-related stress.

Slippages worth Rs 7,049 crore were reported by Union Bank in Q1FY22, out of which 45 per cent was from the MSME segment. 15 per cent of the total slippages were from Retail which was worth Rs 1,078 crores. Mr. Rai said that the stress was mainly due to COVID-19 as the EMI payments had been affected, and the stress in retail was already covered in the June quarter and there was not much in the September quarter.

The CEO had mentioned that the bank was confident that stress would get lower with the aid of restructuring and the facilities extended under the emergency credit line guarantee scheme (ECLGS). In FY22, the Union Bank has expected recoveries and upgrades worth Rs 13,000 crore. The recoveries and upgrades in Q1 were over Rs 4,300 crore.

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