Money & Banking

Union Bank rules out interest rates hike

PTI New Delhi | Updated on March 18, 2011 Published on March 18, 2011

Mr M V Nair, CMD, Union Bank of India - Photo: Paul Noronha   -  Business Line

Public sector lender Union Bank of India (UBI) today said it is unlikely to increase its deposit and lending rates in the next one month even as the Reserve Bank has raised key policy rates by 25 basis points (bps).

“Immediate future in about a month time, I don’t think interest rates are going up as far as Union Bank is concerned,” bank’s Chairman and Managing Director, Mr M V Nair said here.

In immediate future, the bank is not going to raise both lending and deposit rates, he said after announcing Union Bank of India partnership with Nokia for mobile banking.

Yesterday, the RBI hiked its key short term lending and borrowing rates by 25 basis points each 6.75 per cent and 5.75 per cent respectively.

On Net Interest Margin (NIM), Mr Nair said that the bank is going to end the current fiscal with the NIM of 3.25 per cent and next fiscal it expects 3.10 per cent.

“As a matter of fact, our NIM was 2.7, it has gone up to 3.25 per cent but the next year our expectations have come down for the reason this year we had certain benefits because deposit cost did not go up substantially. Last 2-3 months we increase deposit rates that would have impact on the next year (NIM),” he said.

Credit growth in the next fiscal for the Union Bank of India is likely to be 25 per cent while deposit growth expected to be 22 per cent in next fiscal (2011—12).

On increasing overseas presence, he said the bank is planning to open branches in Australia and Belgium and a subsidiary in the UK.

The bank has got RBI approval for opening up of branches and a subsidiary and is seeking regulatory clearances from the respective countries.

Meanwhile, Union Bank of India in association with mobile handset provider Nokia launched mobile banking facility to further the objective of financial inclusion.

The facility which is launched in NCR region would be available in 26 cities by June and across the country by end of the year.

This initiative will target those users who do not have bank account by providing access to financial services through their mobile phones, Mr Nair said.

The facility would allow fund transfer and withdrawal through the mobile phone.

Published on March 18, 2011
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