The Hindu Business Line : UCO Bank begins moving recap bonds into SLR slot

NEW BRANCH IB CHENNAI: Mr V. Sridar (right), CMD, UCO Bank and Mr A.H. Krishnamurthy, General Manager, at a press conference in Chennai on Thursday. - Bijoy Ghosh

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Chennai Feb. 22 UCO Bank, which sits on Rs 2,260 crore of government recapitalisation bonds, has got a part of it converted into bonds eligible for `SLR status', the bank's Chairman and Managing Director, Mr V. Sridhar, told Business Line on Thursday.

"(Bonds worth) Rs 860 crore was credited to our account day-before-yesterday (Tuesday)," he said. The rest of the bonds are expected to get SLR status in the next financial year.

Mr Sridhar said that the Government would issue fresh bonds in exchange for the old recapitalisation bonds, but said that the interest income from the stock of government bonds might, at worst, fall marginally.

But because banks are required to park a fourth of the deposits they collect in government securities to maintain the statutory liquidity, the exchange of recap bonds for SLR-eligible securities obviates the need to set aside funds out of fresh deposits to meet the statutory liquidity ratio.

Therefore, for incremental deposits up to Rs 3,440 crore (i.e., four times Rs 860 crore), the bank does not need to set aside funds to invest in SLR securities. All the deposits could be used for lending — a big help when the regulator is tightening liquidity.

Mr Sridhar, who was here in connection with the inauguration of a mid-corporate branch in T Nagar, Chennai, said that UCO Bank looked to earning a commission income of at least Rs 12 crore from selling (LIC's and National's) insurance products.

He said that the bank would soon start selling gold coins. It would then be the first bank in Eastern India to do so, he said.

Answering a question, he said that UCO Bank would not get into any alliance with any other bank (such as the one formed by Indian Bank, Corporation Bank and Oriental Bank of Commerce.)