East And North-East, Banking On UBI

The odyssey of Comilla Banking Corporation (1914), which metamorphosed into United Bank of India (1950) with the amalgamation of three other Bengal-based banks, is an important saga in the history of Indian banking. United Bank of India (UBI) is the lifeline of banking in West Bengal and the North East. A lawyer, Narendra Chandra Dutt, started Comilla Banking Corporation Limited in 1914 to finance agriculturists and others. Three other banks were founded in the then Bengal on the same lines-- Bengal Central Bank (1918), Comilla Union Bank (1922) and Hoogly Bank (1932). These banks were not founded by any industrial house. They were working for the common man of Bengal and the North-East.

All these banks were facing difficult times due to various reasons. The Kolkata riots in 1946 followed by Noakhali riots seriously affected the economy of Bengal. The economy was further buffeted by Partition of Bengal. By 1950, the atmosphere was charged as banks faced runs. At the behest of the Reserve Bank of India (RBI), an amalgamation of four banks took place on December 18, 1950 and the United Bank of India Ltd was born. Having its roots in the Eastern region, the financing the economic activities of this area was most important for the bank. The most important event for the bank during the year was taking over the assets and liabilities of 14 major banks by the Union Government which had deposits of ₹50 crore and above as on the last Friday of June. UBI responded to the national aspiration well. The nationalisation resulted in a shift in its policy with regard to extension of credit to the priority sector.

As on March 31, 2019, UBI had 2,055 branches and three-fourth of them in the Eastern and the North-eastern region with 14,301-strong manpower. Since the bank’s branches are mainly in the Eastern and the North-eastern parts, 50 per cent of its advances are concentrated in these areas. UBI’s lending in these parts has been towards various strategically important sectors like agriculture, renewable energy, infrastructure, power projects, retail and real estate. United Bank of India plays an important role in Indo-Myanmar trade and Indo-Bangladesh trade and has representative offices in Yangon and Dhaka, respectively. As per Indo-Myanmar Border trade agreement, United Bank of India, Moreh Branch, and Myanmar Economic Bank, Tamu, were designated authorised banks to enable normal trade under the letter of credit system. For this, the Government of India gave the responsibility to United Bank of India to train officials of Myanmar Economic Bank (MEB).

The focus of UBI is on capital conservation, cost rationalisation, control and compliance and NPA management. UBI is focussing on expanding credit to agriculture, retail and MSME sectors. The bank is working towards providing more loans to self-help groups besides expanding personal loans like car and housing. The target is to reduce gross NPA-level by recovery through NCLT, OTS and asset sale. To boost recovery, a stressed management vertical has been formed.

All these efforts have yielded results: UBI’s stressed assets position improved in the fourth quarter with the gross NPA ratio dipping to 16.48 per cent at the end of March from 24.10 per cent a year back. Net NPA ratio improved to 8.67 per cent from 16.49 per cent. UBI has reported ₹95 crore net profit and has earned four times higher operating profit at ₹540 crore as compared with ₹133 crore last year.

The board has also approved raising equity capital not exceeding ₹1,500 crore in one or more tranches during this financial year by way of Qualified Institutional Placement, or a public or rights issue to fund business growth.