UCO Bank says RBI begins "corrective action" over high bad loans

The Reserve Bank of India (RBI) has initiated "prompt corrective action" for state-run UCO Bank over its high bad loans and negative return on assets, UCO said on Friday. UCO, in a filing to the stock exchanges, said the action "will not have any material impact" on its performance, but did not give details of the corrective action. It is the second state-run lender to come under the curbs of the Reserve Bank of India after the regulator revised the so-called prompt corrective action framework last month, tightening thresholds around bad loans. 

Earlier on Friday, UCO reported a narrowing of its quarterly loss and bad-loan ratio. It had net non-performing loans (NPLs) of 8.94 percent at the end of March. Under RBI rules, prompt corrective action is triggered if a bank's net NPL ratio crosses 6 percent. IDBI Bank, another state-run lender, said on Tuesday it was facing corrective action by the regulator. Analysts say more lenders could come under central bank curbs as regulators strive to clean up bad loans of $150 billion in the sector.

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