RBI found bad loan divergence in Union Bank

Last Updated: May 15, 2019

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RBI found bad loan divergence in Union Bank
15 May 2019 Current Affairs: Union Bank of India, a Public sector lender, reported a Rs.3,370 crore loss in the January-March period of 2018-19 even as the Reserve Bank of India’s (RBI) annual inspection found the lender had under-provided, also known as divergence in banking parlance, in 2017-18.
The divergence is also because of its exposure to troubled infrastructure conglomerate, Infrastructure Leasing and Financial Services (IL&FS), which turned bad. Following the RBI inspection report, the bank had to make additional provisioning of Rs.2,281 crore in Q4. For IL&FS, an Rs.880 crore provision was made.
The net interest income of the bank grew 18.6% to Rs.2,602 crore during the reporting period while non-interest income rose 16.2% to Rs.1,272 crore. The net interest margin for Q4 of FY19 was at 2.27% compared with 1.9%.
While overall loan growth remained muted at 3.7% as the bank curtailed international operations, this year the lender has targeted 10-11% growth in advances and 8% in deposits.

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