United Bank of India's chairperson and managing director Archana Bhargava has resigned, almost a year ahead of the end of her tenure amid growing concerns over sharp rise in its non-performing assets in recent times and apprehensions that there were serious lapses in its detection and reporting in the books over the years.

''Ministry of Finance vide its letter dated February 21 has communicated its acceptance to the application for voluntary retirement of Archana Bhargava. In absence of chairman and managing director both the executive directors shall jointly remain in charge of the bank till such time that a regular incumbent takes over the charge of CMD," the Kolkata-headquartered bank said in a statement.

Bhargava's exit, curiously, is being seen by a section of the banking circle as a precursor to fulfilment of her political ambition -- she is speculated to be emerging as a Congress candidate in the forming Lok Sabha polls -- and not entirely influenced by the current state of affairs at the bank.

While is has been revealed post a forensic audit by Deloitte that there was systematic flaws in United Bank's NPA detection mechanism for years, the shooting up of dud assets since the second quarter in the books coincided with Bhargava's entry as the CMD in April, which means she was responsible not for generation of the NPAs but their exposure.

In fact, her insistence in revealing NPAs proactively didn't go down well with senior management, sources said. ''There were differences in opinion between the CMD and the GMs in the way she was managing the affairs," a person in the know said.

The current crisis in UBI erupted in end of September quarter with sharp rise in NPAs to 7.52% at gross level from 4.25% as on March-end, which along with an increase in cost of funds led to a significant drop in its core profitability. Also, despite the bank creating higher credit provisions in the first half, solvency profile (net NPA as a ratio of net worth) worsened to 109% by September from 44% in March.Then in December quarter, NPAs again shot up to 16.4% in Q3, and the bank reported a loss of Rs 1,238 crore while capital adequacy dropped to 9.01% as against 9.48% in September and solvency further worsening to an alarming 162%.

This led successive downgrading of UBI's lower tier 2 bond rating by Icra from AA to AA- and then again to A- over the two quarters.

The Reserve Bank of India (RBI) then asked UBI to virtually stop lending activity while the finance ministry appointed Deloitte to carry out a forensic audit which is believed to have detected serious lapse in NPA detection.

The government, for the time being, has prevented the crisis from triggering a panic among UBI's customers by pumping in Rs 1,000 crore of tier 1 capital.

Yet, for the old timers in UBI's Kolkata headquarters, it's a sense of déjà vu, bringing back memories of 1996-97, when UBI, along with another city-based bank UCO and Indian Bank collectively turned 'weak banks' when Verma Committee was formed to detect systematic weaknesses in them.

A study of the report, however, shows much of the lessons learnt then have gone in vain with little efforts made to overcome the shortcomings.

"The malady has been deep in the case of three banks. Continuous decline in profitability and efficiency of these banks and their dependence on capital support from government are causes for concern. They are trapped in a vicious circle of declining capability to attract good business and increasing need for capital support. There is also the question of concentration of branches in specific areas with which United Bank of India and UCO Bank are faced. There is an urgent need to consider rationalisation of branches in all the three weak banks," the report said.

While flawed strategy of capital infusion to get over systematic inefficiency is still being followed, UBI has now admitted that part of the current trouble stems from its concentration of its branches in east and north-eastern parts of the country, a flawed feature which the committee had pointed out way back in 1999.