There is a common thread that connects four public sector banks – the Kolkata-based United Bank of India (UBI) and Allahabad Bank and the Mumbai-headquartered State Bank of India (SBI) and Bank of India (BoI). All these banks are led by women chairpersons.

The ‘connection’ end there either: of the four, three banks scored unimpressive performance in the third quarter ending December 2013 – barring BoI, the others had high non-performing assets (NPAs).

Vijaylakshmi Iyer, CMD of Mumbai-based Bank of India, can offer a ray of hope to the other three banks. Having joined BoI in November 2012, Iyer has consistently focused on improving the entire recovery department. The efforts fructified as gross NPA came down to 2.81 percent for the third quarter this fiscal from 2.93 percent for the same period in 2012.

Even net NPA came down to 1.75 percent, while the bank was able to sell Rs 1,700 crore worth assets of bad loans.

On the other hand, if you apply for a new loan proposal in any of the branches in United Bank of India, chances are you might not get a loan. Reason: the bank has decided not to approve any fresh loans for an indefinite period, as it hit 10.8 percent of bad loans in the third financial quarter. The bank’s poor performance has sent tremors in the department of financial services (DFS) and the Reserve Bank of India (RBI). The government holds 87.99 percent share in the bank but the RBI has some damning report about this bank.

Archana Bhargava joined UBI as the CMD in April 2013.

Professional services firm Deloitte, which conducted a forensic audit at UBI on the RBI’s instruction found major faults in the credit appraisal and automated NPA detection system of the bank. According to the audit, the bank’s bad loans increased by three times to Rs. 8,545 crore in December 2013, and the bank posted net loss of Rs. 1,238 crore on a year-on-year basis.

The forensic audit also found that NPAs were not being detected for the last two and half years – a period much before Bhargava took over as CMD. Loans taken during Bhargava’s tenure is now being audited.

Interestingly, the bank had registered profit of Rs. 42.2 crore only a year ago. Its financial strength calculated in terms of capital adequacy ratio fell to 9.01 percent at the end of the December quarter.

The State Bank of India, meanwhile, saw a 34-percent decline of profit, but what was more worrying in terms of financial strength was that its gross NPA ratio deteriorated to 5.73 percent –against 5.30 percent at the end of the December 2012 fiscal. It stood at Rs 67,799 crore at the end of the third quarter – up from Rs 53,457 crore in the year-ago period. Net NPAs during the third quarter rose to 3.24 percent from 2.59 per cent in the period a year earlier.
Arundhati Bhattacharya took over as the first ever woman chairperson of the 207-year-old bank last year.

While UBI is still to announce steps (only concern came from government and RBI), SBI, the country’s largest lender, quickly swung into action to tackle the menace. “We have decided to move stressed assets recovery branches that were reporting to the national banking group (NBG) so as to have better focus and outcomes…We have now changed the structure and created four general managers in all the four zones - north, south, east and west - who will be reporting to the stress management group and will actually be owning these stress asset recovery branches in the circles,” Bhattacharya said in Mumbai while announcing the third quarter results of the bank.

The situation is not good in Kolkata-headquartered bank Allahabad Bank either. The December quarter result shows that the bank’s portfolio of net NPA stood at Rs 5,650 crore – against Rs 2,477 crore for the same period last year. The bank’s NPA was 5.5 percent for the third financial quarter – up from 2.9 percent recorded last year. But the bank’s total recovery stood at Rs 1,473 crore while fresh slippages were Rs. 1,461 crore.

“The increase in NPA ratios is primarily because our loan growth was slow,” said Shubhalakshmi Panse, CMD of the bank.