UCO Bank customers ‘mistakenly’ receive ₹820 cr; Lender discontinues IMPS services

Shares of Kolkata-based UCO Bank fell 1.15% today after the bank said it has “temporarily suspended” the Online Immediate Payment System (IMPS) due to certain transactions initiated by holders of other banks were credited to their account holders without actually receiving any money from them.

“As a precautionary measure, the bank has taken the IMPS channel offline and has been working closely with stakeholders to resolve the issue and restore IMPS services as quickly as possible,” UCO Bank said in a statement.

The development came after the bank found some issues in the IMPS system from November 10 to 13, 2023. The lender said it was an “internal technical issue” caused by certain account holders receiving some incorrect credits via IMPS.

The case has been reported to law enforcement authorities so that they can take necessary action. As a precautionary measure, UCO Bank later said it had taken the “IMPS channel offline” and was working closely with stakeholders to resolve the issue and restore IMPS services.

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“The bank blocked the accounts of the recipients and was able to withhold and recover around ₹ 649 crore out of ₹ 820 crore, which is about 79% of the amount,” it said. The bank has initiated necessary measures to recover the balance amount of ₹171 crore, it added. According to reports, several account holders received millions of rupees in their bank accounts due to the technical glitch, causing panic among many and some reporting the incident to the police.

UCO Bank said apart from the temporary suspension of “IMPS transactions”, all of the lender’s other critical systems are operational and available. “The bank continues to provide safe and secure services to its customers. The financial impact that may arise as a result of the above remains to be determined and the Bank will endeavor to communicate this during the investigation.”

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Against this backdrop, shares of UCO Bank are trading down 1.18% at ₹39.36 on the BSE. At current levels, shares are 17.8% below the 52-week high reached on September 18, 2023. The bank’s M-cap stands at ₹47,094.52 crore.

The bank’s net profit for the half year ended September 30, 2023 stood at ₹625 crore as compared to ₹628 crore in the same period last year. Profit for the quarter ended September 2023 was ₹402 crore as against ₹223 crore in Q1FY24, registering a growth of 79.74%.

The domestic net interest margin (NIM) was 3.12% in the half year compared to 2.91% in the same period last year. Total business grew 10.56% YoY to ₹4,17,145 Crore as on September 30, 2023.

The bank’s gross NPA fell 244 basis points to 4.14% in the second quarter of FY2023, while net NPA fell 88 basis points to 1.11% in the half-year period. The capital adequacy ratio (CRAR) improved to 16.83% as of September 30, 2023. The bank has a network of 3,213 domestic branches and 2 foreign branches in Hong Kong and Singapore and 1 representative office in Iran. Of the total number of branches, the bank has 61.78% i.e. 1,985 branches in rural and semi-urban areas.

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Sybil Alvarez

"Incurable gamer. Infuriatingly humble coffee specialist. Professional music advocate."

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