The Hindu Business Line : United Bank targets diversified loan portfolio

THE biggest challenge facing the management of United Bank of India currently is how to help its employees imbibe a total business culture as a means to achieve higher profits with growth, according to Mr Parkash Singh, CMD of the bank.

By business culture what he essentially means is credit culture — lending, follow-up and recovery.

"So far the bank had been doing narrow banking and therefore earned modest profits with negligible growth while the present strategy is to achieve a much higher profits through high growth by means of volume increase in business on a much wider customer base,"

Mr Singh told Business Line. "We want to see United Bank emerging as a strong bank of the eastern region," he said.

Towards this, the bank has launched a multi-pronged strategy whose essence is to delegate more powers at all levels in matter of lending so that there is a quantum jump in advances.

"We want to have a balanced and diversified loan portfolio and we will leverage our branch network," Mr Singh said.

A beginning has already been made and some success is visible. In the first six months of the current fiscal, the bank posted an operating profit of Rs 331.16 crore (provisional) as compared with Rs 275.88 crore, thus recording an estimated 20 per cent growth. In terms of other parameters also, the performance has been enviable.

Thus, the net advance growth during the period was Rs 1,597 crore as compared with Rs 529 crore in the whole of 2003-04.

During the period under review, more than 39,000 new retail loan accounts were added with a total credit sanction of Rs 638 crore. "We are as much focused on manufacturing (iron & steel and others), infrastructure (road, power and telecom) as on services (education and health care) and retail (housing loan, consumer loan, car loan and personal loan),"

Mr Singh said explaining the objective of having a balanced portfolio. "But certainly the accent is on retail lending whose share in total advances has jumped to an estimated 14 per cent from less than 10 per cent earlier," he said. Agriculture credit was another area which received top most priority.

The bank charges nine per cent interest rate on advances up to Rs 25 lakh.

At the same time, there has been no let up in deposit mobilisation. The increase in deposits during the period was Rs 1,060 crore (Rs 1,727 crore).

The increase in the whole year, it is estimated, might be around Rs 2,742 crore, or an increase of more than Rs 1,000 crore over 2003-04.

Between April and September, two lakh new depositors signed up with the bank. The bank targets to add two lakh more in the second half. The NPAs also dropped significantly during the period, he added.

The management does not consider the bank's overwhelming presence in the North-Eastern region a drag on resources.

"Our branch network in the North-East is not a liability but a source of strength as we are convinced that the region will be the engine for growth in not too distant future and the signals are already very strong," said Mr K.N. Prithviraj, Executive Director, indicating that the bank would like to open more branches in the North-East.

Right now the bank has 244 branches, to be stepped up to 250 shortly.

"We are going to States like Sikkim and Mizoram where we do not have branches," Mr Prithviraj said.

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