BoI, IDFC and Union Bank team up

Alliance to fund 60 infrastructure projects worth Rs 45,000 crore.

Bank of India (BoI), Union Bank of India and Infrastructure Development Finance Corporation (IDFC) have teamed up to arrange funding for 60 infrastructure and industrial projects worth Rs 45,000 crore in the next twelve months.

The huge demand for funds from infrastructure and industrial projects is making two banks and financial institutions to join hands. In the coming five months, three of them will syndicate funds for 16 projects worth 11,500 crore, Union Bank chairman and managing director M V Nair said.

Besides loan syndication and direct financial exposure exposure, IDFC will bring experience of infrastructure project appraisal and public sector banks will chip in skills to assess working capital requirements, IDFC managing director and CEO Rajiv Lall said.

The arrangement among three financial sector players involved identification, marketing, appraisal and underwriting of project finance including infrastructure projects. The outstanding infrastructure credit of BoI and Union Bank is Rs 5,000 crore and Rs 5,500 crore, respectively.

Meanwhile taking cue from finance minister P Chidambaram's advice to PSBs on growing deposit base to fund credit growth, BoI and Union Bank have decided to intensify efforts mobilise deposits and rework credit strategy.

"Now we will try to identity new products for fund mobilisation and also tap overseas borrowings. Increasing the interest rate is not the only way for banks to attract funds", BoI chairman and managing director M Balachandran said. The uptake in advances has kept pace with the pace of growth of Indian economy.

Given the availability of resources, our lending strategy will be to give priority to infrastructure, productive sectors including SME and agriculture.

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BoI, Union Bank join hands

Bank of India and Union Bank of India have also signed pact to jointly offer cash management services( cheque collection facility), offer BoI's overseas branch operations and share training facilities.

Such arrangement is not a step for consolidation nor is a strategic alliance. It is functional arrangement which does not require approval of bank board. though it was kept informed, Union Bank CMD M V Nair said.

BoI and Union Bank had earlier mooted merger proposal to form a Western India-based financial behemoth. However, the merger plans were dropped in the face of resistance from unions.