United Bank of India faces auditing, corporate governance probes
March, 04th 2014
The crisis-hit United Bank of India, which has run into losses amid suspiciously high bad loans, now faces fresh probes for possible lapses related to auditing and corporate governance norms.
Capital market regulator Sebi has received complaints about possible violations to its corporate governance norms at the bank, while it may also look into potential lapses with regard to its other regulations including those about related party transactions and insider trading, sources said.
Besides, the Institute of Chartered Accountants of India (ICAI) is believed to be looking at the role of the bank's auditors, sources said, although there was no official word on these fresh probes.
UBI posted net loss of Rs 1,238 crore for the three months ended December 2013. Raising alarm, the lender's gross Non Performing Assets (NPAs) touched Rs 8,546 crore during the same period.
The amount of NPAs surged from just Rs 2,964 crore at the end of March last year.
Besides, there are apprehensions about the books of UBI amid fears that rising bad loans might have not been properly reported for quite sometime.
In the wake of rising concerns over the bank's financial health, its Chairman and Managing Director (CMD) Archana Bhargava quit in February. She opted for voluntary retirement on health grounds and her request was accepted by the Finance Ministry.
Bhargava had taken charge as CMD in April 2013, and her term was to end in February 2015.
An administrative enquiry is underway to find out why the lender's NPAs had been under-reported. Following a sharp surge in NPAs, the Reserve Bank of India has already ordered a forensic audit by a firm, which has submitted its report.
The government, which holds 88 per cent stake in the bank, had provided Rs 700 crore as capital in this financial year, ending March 31.
Besides, UBI plans to raise an additional Rs 1,000 crore as capital.