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Tuesday, Feb 25, 2003

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Union Bank keen to tap captive insurance

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CHENNAI, Feb. 24

UNION Bank of India had a total credit portfolio of Rs 22,465 crore at the end of last financial year. Of this about Rs 19,000 crore were secured against insurable assets. Herein lies the potential that the bank expects to tap, through its corporate agency with New India Assurance.

At a press conference here today, the bank's Chairman and Managing Director, Mr V. Leeladhar, said that if the bank could get even 20 per cent of its borrowers to insure what they offer as collateral, with New India Assurance, the bank would earn a substantial commission.

The bank has tied up with the public sector general insurer for non-life corporate agency and with HDFC Standard Life for life insurance.

Answering a question, Mr Leeladhar said that over the years, the commission from its insurance agency business would come to a "substantial amount". For the first year, however, the bank has set itself a target of 2,000 policies per month, with an average premium of Rs 5,000 each — or, Rs 12 crore of premium income for the whole year.

Against this, the bank has sold 7,000 policies for a total sum assured of Rs 73 crore and a premium income of Rs five crore.

Mr Leeladhar said that by the end of this year, 20 of the bank's branches would be networked on a trial basis. In the next 18 months, around 500 branches, covering 65 per cent of the bank's business, would be networked, (using the core banking software of Infosys).

Responding to another question, Mr Leeladhar said that the Union Bank of India had extra-SLR securities worth about Rs 3,000 crore. He said that about 60 per cent of these investments were hedged with interest-rate swap arrangements.

Asked if he saw a rising trend in the deposit rates, Mr Leeladhar said much would depend upon the Budget announcements.

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