Union Finance Ministry ordered the forensic audit of UCO bank
The Union Finance Ministry ordered limited forensic audit of Kolkata-based UCO Bank.
The Union Finance Ministry ordered limited forensic audit of Kolkata-based UCO Bank. The motive behind this audit is to find out irregularities in some non-performing accounts during sanction of loans. Some complaints were filed with regards to some accounts that have turned non-performing.
Forensic audit of Dena Bank and Oriental Bank of Commerce (OBC) is also being conducted as some officials were suspected of misappropriating the funds worth 436 crore rupees from the fixed deposit accounts of their customers.
Reason Behind the audit of UCO Bank
At the end of June 2014, the gross non-performing assets (NPAs) of the state-run UCO bank stood at 6346.32 crore rupees. The net NPA of the bank stood at 3344.02 crore rupees. During the fourth quarter of 2013-14, the bank sold NPAs worth 1545 crore rupees. This was approximately five times the value of bad loans that were sold by the bank in May, June and July 2014.
Around 11 percent of total loans for PSU banks come under the stressed category. However, the asset quality of UCO Bank is a concern. The bank has low capital adequacy , in Tier I it was at 8.49 per cent, just above the Government’s comfort level of 8 per cent.
UCO Bank is the fourth PSB (public sector bank) that is named for Forensic audit after the arrest of Syndicate Bank Chairman and Managing Director S K Jain who was accused in cash-for-loan scam. SK Jain was arrested for receiving bribe of 50 Lakh rupees for enhancing credit limits of Bhushan Steel and Prakash Industries.
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