In an Interview with Mr. Atul Kumar Goel, Managing Director & CEO, UCO Bank

What part of UCO Banks journey is most close to your heart? Has the bank grown as per your expectations since you took charge?

UCO Bank was founded by visionary Shri G D Birla, a great industrialist and pride of India. We have around 10,000 touchpoints across the country and serve over 30 million customers. The Bank was reeling under continuous losses and was struggling for survival. It was undoubtedly a daunting task to bring the Bank into profitability and at the same time reclaim our glory by building on our strengths, enhancing our capacities, and engaging forcefully with the situation at hand. We had identified 6 key areas – Improve asset quality, use Capital efficiently, Lower cost of funds, Rationalize cost structure, Deepen digital reach and most importantly empower & upskill employees. In the last 2 years, our team worked aggressively following the mantra of “One Team, One Dream” and we charted a complete turnaround of Bank into profitability after continuous losses for 17 quarters. Today, we can proudly say that we indeed exceeded stakeholders’ expectations on various fronts and are comfortably placed on a growth trajectory with a holistic view of our path for the next 5 years.

How has the Bank integrated technology into its Banking System? What were the major challenges faced by the Bank in doing so?

Globally, Banks like all other customer-facing companies are vying for a spot on customers’ mobile devices. We strongly believe that technology is a differentiator for long-term success and it has removed barriers for entry enabling Fintech and Big Tech companies to offer financial solutions to customers where Banks once had a stronghold. Stopgap arrangements for technology and Low digital adoption were two major challenges we have addressed in 2 years. Cybersecurity is another focus area and we are constantly strengthening our systems. We have stopped viewing technology as an expense and started investing heavily to upgrade our Core Banking solutions, our capabilities to process financial transactions and at the same time also improve the user interface of mbanking, ebanking, and other digital offerings. We are also tying up with fintechs to improve our offerings to our large customer base. The Government of India played a key role in promoting digital transactions and Jandhan – Aadhaar – Mobile trinity has been a gamechanger in providing financial services. UCO Bank has always been at the forefront to adopt technologyand sensing the need for enhanced customer convenience, Door Step Banking was launched. UCO Bank was designated as anchor Bank on behalf of 12 Public Sector Banks in India to provide Banking services at the door step of customers of all PSBs through a common mobile app, web, and call-centre.

What does Schemes like PMAY (Pradhan Mantri Awas Yojana) and Atmanirbhar Bharat mean for a public lender like UCO Bank? How is the Bank helping make these initiatives a success?

Buying a house is a major purchase decision and probably most difficult both financially and emotionally. PMAY subsidy addresses the stress related to financial difficulty. The effective subsidy to the customer is in the range of Rs 2.30 – 2.67 lakhs for a 20-year term which is receivable upfront. UCO Bank has disbursed over Rs 60 cr subsidy to first time home buyers under PMAY scheme. Being a flagship scheme, we are working towards the Government of India’s goal of Affordable Housing for All for various income groups of borrowers. PMAY subsidy in addition to a Tax benefit and lower interest rates isa definite boost to this scheme, ultimately benefiting the borrower, nation, and economy.

Hon’ble Prime Minister of India gave a clarion call that self-reliance is the way forward to fulfill India’s 21st century dreams. A package of Rs 20 lakh crore was announced to lay a foundation for Atmanirbhar Bharat with a special focus on cottage industry, MSMEs, laborers, middle class, and manufacturing firms. As part of our efforts to revive the economy and ensure sufficient liquidity to our customers, UCO Bank extended Rs 1,750 crores as Emergency credit lines to over 1.5 lac MSME units who bore the brunt of the pandemic-induced lockdown and provided financial assistance to 25,000 street vendors. We also provided support to NBFCs and MFIs through Partial Credit Guarantee Scheme who in turn extended the benefit to their customers. As a Public Sector Bank, we proudly shoulder the responsibility of taking various initiatives to the last mile beneficiaries with a larger goal to make India self-reliant and a stronger economy.

What are the major investment sectors where the Bank sees maximum participation?

Infrastructure is one sector that can stabilize the economy and also fuel economic growth. Rs 111 trillion national infra projects for next 5 years with a focus on energy, roads, urban infrastructure, railways can boost economic growth. Production linked incentive, part of Atmanirbhar Bharat package, lays special focus on manufacturing, and we believe India’s manufacturing sector can leapfrog conventional phases of development to achieve self-reliance. Export growth is expected to rebound this year on the back of a recovery in economic activities and demand worldwide. We believe the worst is behind us and are very optimistic of India’s economic recovery. UCO Bank is looking forward to funding quality projects across these sectors apart from our focus area of Retail loans.

How is the Bank tackling issues of growing NPAs?

The good news is the economy is reviving. There are two aspects to tackling growing NPAs; onboarding quality customers through improved underwriting and stringent monitoring of loans.

Onboarding: The Share of corporate clients rated A and above has improved to 55% from 41% in 2018. We now use tools like SMS profiling & Data scrubbing for onboarding new customers. Schematic loans are now mainly processed at our Retail & MSME loans hubs digitally through Loan Origination system where the decision is simply a Yes or No leaving little room for judgement. We even reward new customers with high credit scores by lending at reduced interest rates.

Monitoring: Over 84 different Early Warning indicators in our system track loans based on various parameters and identify early stress and allow us to take corrective measures before the deterioration in asset quality. IT-based efficient collection system is also being implemented in Retail & MSME assets for risk gradation of accounts in to low, medium, and high-risk.A dedicated call centre is in place to remind borrowers in high risk category about their upcoming payment schedules.

In entirety, the quality of new customers acquired is significantly higher than what it was earlier due to our cautious approach and slippage in asset quality has also reduced.

What are the important Schemes and products that the Bank is ready to push this year?

The Bank is de-risking and de-bulking the advance portfolio and moving from low-yielding corporate loans to diversified and high-yielding Retail, MSME and Agricultural (RAM) advances resulting in an improvement in retails loans ratio to 63% of total loans. In line with the Government of India’s initiative to double farmer’s income, we are pursuing opportunities to extend investment credit under agriculture. The Bank is now looking to acquire low-cost deposit resources to improve our NIM. We are among very few Public sector Banks to start Video-KYC for account opening and using Whatsapp & a virtual chatbot UMA for providing non-financial services to customers. We are launching some tailor-made products specifically for business accounts and salaried personnel keeping customer convenience at the core.

What is the impact of Covid-19 pandemic on Indian banking system? How much time do you think we require to get back to pre-COVID-19 levels?

The Impact of COVID-19 on the economy seems to be waning slowly as recent data indicates an increase in power consumption by 6% (YoY) in December 2020, non-food Bank credit increased by 6.6% while deposits are up by 11.5% YoY. Broad-based Indicators do show an encouraging trend with demand visible across the country right from Metros to Rural areas. Commencement of the vaccination drive has also rekindled hopes and improved consumer sentiments and results are visible in demand for Home, Car and other consumer loans. RBI’s measures like moratorium and restructuring helped in easing the severity of the economic impact to borrowers. At the same time, the RBI slashed interest rates and provided liquidity to Banks. We do acknowledge the fact that there are some vulnerabilities in the system as the impact of measures like moratorium and restructuring extended to provide respite to borrowers is yet to be seen. We do anticipate an increase in Non-performing loans across Banks in the next financial year, but quick economic recovery can reduce the influence considerably. Going forward, we estimate over 2 years to reach pre-COVID levels in credit growth and also expect some stress in the next year and we are accordingly undertaking necessary measures to balance growth and risk.

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