The United Bank of India will lift restrictions on retail lending, according to the local media.
Indian newspaper The Financial Express reported that the bank has decided to resume lending operations after generating INR50bn ($807bn) through suspending loans after a disastrous third quarter.
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The newspaper reported that a bank source said: "The management informed officers last Wednesday evening through an internal email communication that they can henceforth disburse fresh housing, personal as well as demand loans."
The source also said the decision may be linked to reports that the government may give the lender an injection of fresh capital.
The bank initially decided to suspend lending in December after posting a net loss of INR12.4bn with non-performing loans of INR85.5bn.
The Financial Express said that the bank would focus on recovering bad loans for the time being.
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By GlobalDataThe newspaper reported that a senior bank official said: "A monitoring department has already been set up for recovery.
"We shall soon start extensive training programmes on recovery of bad loans for our employees in every branch."
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