'Raising the entire amount in one go may not be prudent, given the market dynamics.'
UCO Bank has set a recovery target of Rs 2,700 crore - Rs 3,000 crore for the current financial year, Ashwani Kumar, managing director and chief executive officer, tells Harsh Kumar/Business Standard in an interview over phone.
What are UCO Bank's plans for stake dilution this financial year to meet the minimum public shareholding (MPS) norms?
Last financial year (FY25), we successfully raised around Rs 2,000 crore through a QIP, which was fully subscribed.
Following this, the government's shareholding reduced to around 90 per cent.
To meet the minimum public shareholding (MPS) requirement, we still need to dilute around 15 per cent more.
For this year, we have obtained Board approval and will seek shareholders' nod in the upcoming annual general meeting (AGM) -- scheduled for the end of this month -- to raise an additional Rs 2,700 crore.
We are also prepared to align our QIP plans based on market conditions, especially if the government decides to proceed with an offer for sale (OFS).
Our strategy is to raise capital in tranches, as raising the entire amount in one go may not be prudent, given the market dynamics.
What is the bank's strategy on the recovery front?
In Q4 of FY25, we recovered around Rs 1,666 crore, taking the total recovery for the full financial year to Rs 4,400 crore.
One significant settlement, worth around Rs 800 crore from the power sector, came through in March 2025.
Our initial recovery target for FY25 was Rs 3,500 crore, which we comfortably exceeded.
For FY26, we have set a recovery target of Rs 2,700-3,000 crore.
During FY25, recoveries were made across various sectors, including infrastructure and power, though I cannot disclose specific company names.
As a mid-sized bank, we remain cautious in our approach to large corporate lending.
Going forward, we will focus on extending smaller-ticket loans in the corporate segment.
Currently, our loan book comprises 63 per cent retail, agriculture and MSME (RAM) with 37 per cent being corporate loans.
What's the latest update on MTNL, given the bank's exposure of over Rs 268 crore?
There has been no fresh proposal from either MTNL or the government so far.
We had earlier received a proposal, but it was not considered viable and subsequently rejected.
Since MTNL is a government-owned entity, we are handling the matter through appropriate official channels.
How is UCO Bank progressing on the digital front, and how is it impacting business growth?
We're making strong strides in our digital transformation, and the results are clearly visible.
A year ago, our technical decline rate was over 1 per cent, which we've brought down to 0.26 per cent -- the second-best in the industry.
We've introduced features like one-tap fixed deposit booking, and as a result, around 16 per cent of our fixed deposits are now sourced through the mobile app.
Additionally, about 40 per cent of new account openings are happening via the app.
For FY26, we've set a target of Rs 20,000 crore through the digital mode.
We are also strengthening our cybersecurity infrastructure.
We've overhauled our digital ecosystem by adopting advanced tools and systems.
Integration with the Indian Cyber Crime Coordination Centre (I4C) has enabled us to build rule-based alerts that help in detecting suspicious customer behaviour and preventing frauds more effectively.
How is the bank addressing customer grievances?
We have prepared a structured plan to improve customer services, starting with soft skills training for our frontline staff.
We're also working on enhancing the ambience and overall experience at our branches.
Additionally, we're developing a feedback system that will allow customers to rate their interactions with bank employees.
This initiative is aimed at building a more responsive, service-oriented culture across the bank.
What will be your outlook for 2025-26?
Last year, we exceeded all our performance guidance across key metrics.
Business growth reached 14.12 per cent, up from 9.5 per cent the previous year, with consistent double-digit growth in each quarter since March 2024.
Deposit growth was 11.56 per cent, above the guided 8-10 per cent achieved after improving our credit-deposit ratio from 65-67 per cent to 75 per cent.
Advances grew 17.72 per cent against a 12-14 per cent target, with strong momentum in MSME lending, which ended the year with 18.55 per cent growth.
In FY26, we aim for 10-12 per cent deposit and 12-14 per cent credit growth. To support this, we plan to open 150 new branches, primarily in South and West India.
Feature Presentation: Aslam Hunani/Rediff.com
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