United Bank shelves IPO

United Bank of India (UBI) has shelved its IPO plan for the current fiscal. The decision comes after its capital restructuring plans were not cleared by the Reserve Bank of India (RBI) and the Finance Ministry.

The Kolkata-based bank, however, has Rs 800 crore headroom in the upper and lower tier II levels, which can be used to fund business growth, if required, P K Gupta, chairman and managing director, UBI said.

The bank has a CAR of 12.02 per cent as of March 2007 and there was no requirement to raise funds for growth at the moment.

Gupta hoped that there would not be any further requirement to jack up interest rates to collect deposits. "Interest rates on deposits have reached the roof and I do not foresee any further rise in the cost of deposits," Gupta said.

UBI had proposed to convert 40 per cent of its equity to preference share. But it did not get approval from the RBI and the finance ministry.

The bank later informed the finance ministry that it is not in immediate need of capital and it would go ahead with its restructuring plan only after a couple of years. To fund the growth of the bank had already raised Rs 200 crore as tier II capital earlier during 2006-07.

UBI reported 32.3 per cent growth in business to Rs 59808 crore. While the deposits grew by 27.1 per cent to Rs 37,167 crore, the advances grew by 41.8 per cent to Rs 22,641 crore. The net profit grew by 30.7 per cent from Rs 204.57 crore to Rs 267.28 crore

The bank's net NPA ratio declined to 1.50 per cent in March 2007 while the gross NPA level declined to 3.60 per cent. During the year, the Bank sold 17 NPAs having book value of Rs 75.37 crore to Arcil.