Union Bank saves Rs 500 cr in FY15 on higher non-corp loans

Union Bank of India today said it saved as much as Rs 500 crore in capital cost last fiscal as its lending focus during the year was on retail, agriculture and small scale business units.
"We were able to save Rs 500 crore on capital cost in FY15 by focusing more on retail, agriculture and MSME sectors," the state-owned bank's chairman and managing director Arun Tiwari told reporters here.
A lender requires to make only lower provisioning for advances to retail, farm and MSME loans as these advances have lower risk weight, leading to lower provisioning. As against this, a bank has to make higher provision for corporate loans, considering higher risks to such exposure.

For the past few quarters, the bank was focusing on retail, agriculture and micro, small and medium enterprises (MSMEs), which has shown a growth of 26.6 per cent year-on- year, Tiwari said.
The bank announced a tie-up with Star Union Dai-Ichi Life Insurance and the New India Assurance to provide two social security insurance schemes to its savings account holders.
The bank signed an agreement with its insurance partner Star Union Dai-Ichi Life to offer life cover under the PM's Mantri Jeevan Jyoti Bima Yojana (PMJJBY), of Rs 2 lakh to its savings account holders, while it also inked an agreement with New India Assurance, the bank will provide accidental death and disability cover of Rs 2 lakh under the Pradhan Mantri Suraksha Bima Yojana (PMSBY).

All accounts holders in the age group of 18-70 can avail of both covers.
"These schemes are offered at an affordable premium and they will fulfil the objectives of social security as envisaged by the government," Tiwari said, adding that the bank will be charging a premium of Rs 330 per annum for life insurance cover and Rs 12 per annum for the non-life insurance.
The city-based lender has 5 crore customers and it has opened 2.32 crore accounts under the financial inclusion scheme.