UCO Bank chief presages hiccups over ownership norms

UCO Bank chairman and managing director V P Shetty said that the new draft norms on ownership and governance of private banks proposed by the Reserve Bank of India (RBI) may cause "some amount of problem" for the industry.

Shetty who was in Bangalore on Monday to inaugurate the Karnataka region's international banking branch, said: "As a bank, we will not be affected by these new norms. However, the industry may have some problem if they would want to raise capital."

It may be recalled that the draft policy framework for ownership and governance of private banks, released recently by RBI, had stated that no private bank and foreign banks operating in India will be allowed to hold more than a 5 per cent stake in another private bank.

The draft also suggested capping the stake of one single entity or a group of related entities through the foreign direct investment route in private banks at 10 per cent.

The same limit is applicable to foreign institutional investors (FIIs) too and will not be allowed to hold more than 10 per cent within the overall FII limit of 49 per cent.

Commenting on UCO Bank's growth plans he said that the Karnataka region is a promising one and the industrial and corporate credit is on a growth path.

He further reiterated that the forex business purely on merchant turnover has doubled to Rs 8,600 crore during 2003-04 from Rs 4,500 crore during 2002-03.

"Our export credit currently at Rs 900 crore which is not sufficient. We are targetting to touch Rs 1,500 crore during the current fiscal," Shetty noted.

Shetty further said that UCO Bank will shortly start sign agreements with Reliance and UTI to distribute their mutual fund products through its network. He added that the Bank is putting in efforts to bring down the net NPA to 2 per cent from the current 3.65 per cent.