Employees of the erstwhile Andhra Bank (denoted as e-AB) and e-Corporation Bank (e-CB) have adapted well to the consolidated Union Bank of India (UBI), according to Rajkiran Rai G, MD & CEO, UBI.

In an interaction with BusinessLine , the UBI chief emphasised that there is no large-bank-employee versus small-bank-employee issue. Every employee is equally and as important as the other.

The amalgamation of e-AB and e-CB with UBI became effective from April 1, 2020. The latter now has 9,590 branches, 13,287 ATMs, over 75,000 employees and total business (deposits plus advances) of ₹15.37-lakh crore.

Rai said about 500 branches will be rationalised as IT integration of the erstwhile banks gathers pace. The public sector bank will close down about 160 ATMs by March-end 2021. Edited excerpts:

How did you manage the HR challenge that arose due to the amalgamation?

HR (human resources) is the biggest issue in any amalgamation. We had organised a two-day mega leadership summit ‘ Triveni Sangam’ (confluence of three rivers) in December 2019, bringing together the top management of the three public sector banks (UBI, AB and CB) so that there was good rapport between them. We gave comfort to the top management of the merging banks that in the combined entity, all employees will be treated with fairness. Now, there is no large-bank-employee versus small-bank-employee issue. Everybody is important. So, they got the comfort. Employees of the merged banks have adapted to Union Bank very well. We really appreciate this. We sent out all the right messages for giving comfort to them that they will be taken care of, whether it is promotion, transfer or posting.

Also read: Bank employee unions oppose large-scale engagement of apprentices

Are you considering closing down some of the branches and ATMs due to overlaps?

We have started branch and ATM rationalisation work. We have identified about 500 branches which can be rationalised. The reason for this is that these are located in the same vicinity as another branch. This (rationalisation) will gain momentum once the IT integration is completed (integration of e-CB branches was completed on November 30, 2020, and e-AB branches are expected to be integrated in the January-March 2021 quarter). We will close down about 160 ATMs, which are not viable, before March-end 2021. After this, some more ATM rationalisation will happen.

Do you see signs of pick-up in corporate credit?

Corporate credit will pick up and by March-end it will be a good number. Many good corporates and non-banking finance companies (NBFCs) have raised resources via non-convertible debentures (NCDs). The RBI came out with targeted long-term repo operations. So, most of the entities raised about ₹1-lakh crore to ₹1.5-lakh crore more than normal. So, when these companies raised more (via corporate bonds in which banks invested), they paid off our loan. So, our investment book has grown. But this is not counted as credit. Generally, our investment is only in central and state government securities. For the first time, public sector banks have good investments in corporate bonds also. In a way, this is also credit.

We are building a good corporate credit portfolio. And we have a lot of sanctions in the pipeline. Many infrastructure projects are getting off the ground. We are also underwriting loans. So, if a good corporate wants ₹1,000 crore, we can underwrite the loan. After that we can down sell. There are companies which are slowly coming for working capital.

Also read: Union Bank of India plans to raise up to ₹6,800 crore

Is there enough credit absorption capacity in the economy?

When the economy is down, banks cannot expand credit. Banks should not be pushing credit more than what can be absorbed by the system. Credit growth is directly linked to the credit absorption capacity of the economy. Credit absorption will increase once demand gathers pace in the economy.

Many times companies say they need credit but banks are not giving. This is not correct. Banks are very prudent now, having learned lessons from the past. The company may be having some other issue. For example, a textile company has supplied goods worth ₹100 crore to a large US-based department store chain, which has suddenly gone into bankruptcy protection. So, this money is not coming back. Now, the exporting company has a solvency problem. Now, to write off this amount, it needs to have equity. It can’t write off the bank’s loan. Now many times what companies do is, they try to cover that (loss) by taking more money. That is what happened in 2008. Companies need to plan and get equity. We can’t give money to write-off their receivables. It is their business risk. I think banks are very prudent.

Banks are ready to give credit to any good businessman. Good ‘AA’ and ‘AAA’ rated corporates are borrowing at below 7 per cent today. This is only because there are more banks which are ready to lend.

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