UBI expects Centre's capital infusion of Rs 1,000 cr in 2012-13

Public sector lender Union Bank of India (UBI) is expecting capital infusion of about Rs 1,000 crore from the Union government this financial year.

The bank is expecting an 18-20 per cent growth this year, increasing business from Rs 4 lakh crore to Rs 4.30-4.40 lakh crore, said D Sarkar, chairman and managing director, UBI. The request for capital infusion is part of the bank’s growth plans. The fund would be enough for the near future and the bank is not looking at additional fund raising, he said.

The bank would launch three overseas branches this financial year, Sarkar said, and plans for a branch in Belgium is in the pipeline.

 

Speaking to reporters after opening of the 161st Union Xperience branch, branches with most modern technology for customer service, he said, “We will launch branch operation in London, where we recently launched a subsidiary, and another branch in Sydney. Operations will also commence in the Dubai International Finance Centre.”

The overseas branches would support corporate customers who have operations in the countries concerned.

On the restructuring of the bank’s non-performing assets (NPA), he said restructuring is necessary in some cases. For instance, UBI has around Rs 13,000 crore of bad debts restructured, of which around Rs 3,000 crore is from two state electricity boards. This consists of around Rs 1,400 crore of Uttar Pradesh Electricity Board and around Rs 1,200 crore of Rajasthan State Electricity Board.

“Restructuring is required when the NPA is from state electricity boards and we cannot avoid such measures. However, it is to be taken into account that 50 per cent of dues would be taken up by the government and we have only 50 per cent of the bad debt left with us,” said Sarkar.

The steel and construction sectors are the other major segments that added to the NPA accounts, he said.

The bank’s gross NPA stood at 3.76 per cent as on June 30, 2012, and the net NPA ratio was at 2.20 per cent during the same period, according to UBI’s quarterly results.

The bank has launched its Union Xperience branch, a project to remodel branches in metro and urban cities to deliver improved customer experience. It has implemented automation through self-service machines such as passbook printers, cheque deposit machines and queue management, and also revamped the sales and service model in select branches as part of the plan to become the number one retail bank.