Business Standard

Expect a rate hike of 25 basis points: UCO Bank

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To consider revising interest rates after RBI's review.

Amid mounting concerns about the sustained high inflation, the (RBI) is expected to hike the key rates by 25 basis points at its first quarterly review of monetary policy to be held on July 26, said a top official from .

"We expect that due to a sustained high inflation rate, the apex bank may hike the key rates by about 25 basis points at its quarterly review scheduled later this month," , chairman and managing director (CMD), UCO Bank told Business Standard on the sidelines of a function held in Ahmedabad on Saturday.

However, the bank has so far maintained its base rates at 10 per cent even after the RBI had hiked the repo rate by 25 basis points in June this year. "We have maintained our base rates and will take a call to revise it after the RBI's announcement in the quarterly review meet," he said.

He further maintained that there had been a slowdown in the credit demand in recent months, but the demand side pressure still persisted. "There is a demand side pressure, which is causing the prices to rise. Some sort of slowdown is there, but we have to wait for a little more time to see if the actual demand is going down or not," said Kaul.

Commenting on the new banking licenses being considered for the private players, Kaul mentioned that there was still much room for the new players to enter in the Indian banking sector. "India is a very large economy with a size of about $1.3 trillion. But more than 50 per cent of the population don't have the bank accounts. So there is a huge untapped market," he said.

"If you remember in 1992, the government had issued a lot of banking licenses. But many of them have not come into operations. Some of them I can recall like the , , and Centurion Bank. Where are they now? Actually, we have a large banking market with 1.2 billion people and 8 per cent being added every year," added Kaul.

The public sector lender inaugurated a Small and Medium Enterprises (SME) Loan Hub at Ahmedabad on Saturday. The initiative is aimed at providing fast and easy access to advances to the small businesses in the state. "We aim to provide fast and easy loan to the SMEs in Gujarat. This will become a single window delivery mechanism for SME units with hassle free procedures," informed Kaul, who was in Ahmedabad to inaugurate the SME loan hub.

The bank currently has SME loan hubs in Kolkata, Mumbai, Chennai, Chandigarh, Delhi and Bangalore.

UCO Bank has recorded a business of Rs 245,000 crore in 2010-11, showing a growth of about 20 per cent over the previous year.

The Gujarat business of the bank stands at around Rs 6,266 crore with deposits of Rs 2,789 crore and advances of Rs 3,477 crore. The bank has 81 branches in the state and 2200 branches are located across the country.

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