UCO Bank customers ‘erroneously’ receive ₹820 cr; lender halts 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) system as certain transaction(s) initiated by holders of other banks resulted in credit to its account holders without actual receipt of money from them.

"The bank, as a precautionary measure, has made the IMPS channel offline and closely with the stakeholders to resolve the issue and restore the IMPS services at the earliest," UCO Bank says in a statement.

The development happened after the bank observed some issues in the IMPS system from November 10 to November 13, 2023. The lender said it was an "internal technical issue", caused by certain account holders receiving some erroneous credits via IMPS.

The matter was reported to the law enforcement agencies for necessary actions. As a precautionary measure, UCO Bank later said it made the “IMPS channel offline” and was working closely with stakeholders to resolve the issue and restore the IMPS services.

"The bank blocked the recipients' accounts and has been able to retain and recover around ₹649 crore out of ₹820 crore, which is about 79% of the amount," it said. The bank has initiated necessary actions to recover the balance amount of ₹171 crore, it added. Several account holders reportedly received crores of rupees in their bank accounts due to the tech glitch, which caused panic among many and some reported the incident to police.

UCO Bank said apart from temporarily suspending “IMPS transactions”, all other critical systems of the lender are operational and available. "The bank continues to provide safe and secured services to customers. The financial impact, if any, due to the aforesaid, is yet to ascertained and the bank will endeavour to intimate the same on ascertainment."

Amid the development, UCO Bank shares are trading 1.18% down at ₹39.36 on the BSE. At the current levels, shares are trading 17.8% down from the 52-week high achieved 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 against ₹628 crore in the year-ago period. The profit for the quarter that ended September 2023 was ₹402 crore against ₹223 crore in Q1 FY24, registering a growth of 79.74%.

The net interest margin (NIM)-domestic for the half year was 3.12% against 2.91% in the same period last year. Its total business grew 10.56% YoY to ₹4,17,145 crore as of September 30, 2023.

The bank's gross NPA reduced by 244 bps to 4.14% as of Q2 FY23 whereas net NPA reduced by 88 bps to 1.11% in the half-year period. 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 overseas branches in Hongkong and Singapore & 1 representative office in Iran. Out of the total branches, the bank has 61.78 % i.e. 1,985 branches in rural and semi-urban areas.