Source :Money Control :Thu, Dec 01, 2011 at 13:26 

Public sector lender Union Bank of India (UBI) is tightening its belt to check the rise of non-performing assets. According to S S Mundra, executive director of the bank, it has stopped lending to troubled sectors like power, aviation, and commercial real estate in the last 6-7 months. The bank has recently set up a pilot collection centre for recovery of loans in Bangalore. It has appointed two general mangers who are overseeing recovery process, categorised into parts: ticket sizes of below Rs 10 lakh and above Rs 10 lakh.

“We have around Rs 6,042 crore loan exposure to state electricity boards (SEBs).  Most of those SEBs are running in profits. So far, we do not have any concern. Till March, we do not have any repayment due with them. Going forward, however, if some of them need realignment of their loans, then we may look at it,” he told Moneycontrol.com in an audio interview.

The lender plans to expand its loan book at 16-17% year-on-year in FY12, revised from 22% Y-o-Y, a target set at the beginning of the year. During the second quarter, net non-performing asset (NPAs) ratio shot up from 1.32% to 2.04% sequentially. The lender had also registered slippages of Rs 1,821 crore.

The government of India, the bank's major stake holder (57.07%), is expected to infuse fresh capital to increase its holding to 58% by March, 2012, he said.

Rating agency - Fitch has recenlty affirmed UBI's long term ratings at 'Fitch AA+(ind)', with a stable outlook.