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Saturday, July 14, 2012

Nabard celebrates foundation day

The regional office of the National Bank for Agriculture and Rural Development (Nabard) celebrated its 31st foundation day here on Thursday.

Mr K. C. Joseph, Minister for Rural Development, inaugurated the function, which was presided over by Mr R. Amalorpavanathan, chief general manager, Nabard.


The minister appreciated the support extended by Nabard to the State’s developmental efforts over a period of three decades.

He specifically mentioned the creation of infrastructure and empowerment of poor through joint liability groups or self-help groups.

He also appreciated the Nabard programmes to reach developmental agenda to the remote areas.

The Minister expressed the hope that Nabard would continue to extend its support to the State in all its future endeavours.

He said the apex bank had done full justice to its incorporation by striving hard to achieve the objectives for which it was formed.


Mr Amalorpavanathan acknowledged the efforts made by the government, the Reserve Bank, banks and community-based organisations for the State’s development.

He also thanked these agencies and the government for the support and cooperation extended to Nabard in furthering the developmental agenda.

He said Nabard intended to undertake new interventions to further the developmental agenda of the State.

Mr Jose T. Abraham, secretary of the employees association, threw light on the challenges faced by development financial institutions in recent times.


He urged the government to provide necessary support to Nabard to successfully carry out its mission.

Among those who were present included Mr Salim Gangadharan, regional director, Reserve Bank of India, and Mr G. Sreeram, Convenor, State-Level Bankers Committee.

Mr K. R. Rao, general manager, Nabard, welcomed the dignitaries and other guests.
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AxisDirect launches biz partner programme

AxisDirect, an online trading platform of Axis Securities and Sales, a 100 per cent subsidiary of Axis Bank, has launched AxisDirect - Business Partner Programme.

This is a pan-India initiative aimed at partnering independent financial advisors, insurance agents and financial planners to expand its client base.

The partner would refer clients to AxisDirect for opening a 3-in-1 investment account through which a client can invest in equities, derivatives, equity SIPs, IPOs, mutual funds, MF SIPs, bonds, and fixed deposits.

The business partner would also tie-up with Axis Bank for offering a range of retail asset solutions to its clients including home loans, auto loans, loan against shares, and loan against properties.

Speaking at the launch, Mr Nilesh Shah, Director, AxisDirect, said: “Till now, the financial advisory business has focused on the investment side of the clients’ requirements, but not much on the liability side of clients’ requirements''. The latter refers to home loans, auto loans, loan against property, etc.

The AxisDirect business partner programme, in association with Axis Bank, empowers a financial advisor to introduce its clients to an online retail broking platform and a wide range of retail asset solutions.
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SIB in pact with Saudi bank

South Indian Bank has entered into SIB Express remittance arrangement with Arab National Bank for providing fast remittance services to NRI expatriates in Indian rupee.

Arab National Bank has 93 centres across Saudi Arabia. SIB at present has remittance arrangement with Al Rajhi Bank and AJamoudi Exchange Company in Saudi Arabia.

This is the second hank in Saudi Arabia with whom SIB has entered into remittance arrangement, a press release said.
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State Bank group opens financial literacy, counselling centre

The State Bank group has opened a financial literacy and credit counselling centre at Citizen Service Centre, Tank Bund, here.

The centre, headed by an experienced/retired officer, would offer free counselling in person or over telephone/email on aspects such as calculation of interest on deposits, advances or loans, nomination facility, customer rights and fair practice codes, preparation of debt restructuring plans and service charges.

State Bank of Hyderabad, State Bank of India and their sponsored regional rural banks in Andhra Pradesh had earlier established a joint society called ‘Runa Viveka Aacharana’ with its headquarters at head office, State Bank of Hyderabad here, to establish financial literacy and credit counselling centres (FLCCs).

According to the Reserve Bank of India’s model scheme, lead banks will have to open FLCCs in district headquarters, mandals and towns in a phased manner.

With this opening of new centre, the State Bank group had completed the target of setting up FLCCs in 12 lead districts in which it was operating, the released added.
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LIC Housing Finance opens property fair in Chennai

Mr V.K. Sharma, Director and Chief Executive of LIC Housing Finance, inaugurated the company’s annual property fair, “Ungal Illam 2012,” on Friday. The three-day fair will be open till Sunday and will have 55 builders showcase their residential projects in and around Chennai.

New projects

At the event, its 15th edition, new projects will be launched and most projects have been approved by LIC Housing. Customers can expect attractive deals, discounts and LIC Housing will provide ‘on the spot loan sanctions’ with special processing fee offer at the venue.

On the occasion the company announced that its home loan disbursement has jumped by 28 per cent in the southern region during 2011-12.

Home loan

Retail home loan disbursement reached Rs 4,798 crore during the year as compared with Rs 3,751 crore previously. The region covers Tamil Nadu and Kerala with 36 marketing offices with headquarters in Chennai.
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Need to evolve strong farm loan recovery mechanism, says Andhra Bank CMD

The sharp increase in bad loans and poor availability of institutional credit in the agriculture sector are areas of concern, according to banking experts.

Mr B. A. Prabhakar, Chairman and Managing Director of Andhra Bank, has said that NPAs in the agriculture sector stood at a high 47 per cent. This would impede recycling of funds. “We need to evolve a strong recovery mechanism in this sector and create awareness on the need to repay the loans,” he said.

Addressing the 30th anniversary of National Bank for Agriculture and Rural Development (Nabard) here on Thursday, he said improving investment credit in this sector was a major challenge. Creation of a successful business model for financial inclusion programmes was also important. “We seek Nabard support in developing low-cost financial inclusion delivery,” he said.

Mr G. Gopalakrishna, Executive Director of Reserve Bank of India, asked Nabard to study the feasibility of evolving a two-tier system as against the three-tier system in order to improve credit flows.

Mr P. Mohanaiah, Chief General Manager of Nabard (AP), said one of the focus areas for the bank was to strengthen primary agriculture cooperative societies (PACS). “We need to bring farmers to closure to the market in order to reduce layers. This will result in increased incomes to the farmers,” he said.


Mr D Srinivasulu, Principal Secretary (Industry and Textiles, Govt of AP), felt that the effort should be bring in competitiveness in rural credit distribution. “There is no point in replacing moneylenders who ensure quick delivery of credit in rural areas. What we should do is to bring competition (so that they reduce rates),” he told the bankers.

Mr Vadde Sobhanadreeswara Rao, former Agriculture Minister, criticised the banking sector for systematically reducing the number of branches in rural areas, while increasing the branch network in semi-urban and urban areas.
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From Aug 1, bank charges for small value e-transfers will be reduced

Come August 1, transferring small value transactions up to Rs 10,000 from one bank account to another using national electronic funds transfer (NEFT) will become cheaper.

The Reserve Bank of India, on Friday, said it has rationalised the charges that banks can levy on customers for transfer of funds through NEFT.

This move is aimed at promoting greater use of the electronic payment system and providing the large number of people being covered under the financial inclusion programme with an efficient and affordable remittance mechanism.

Banks can levy not more than Rs 2.50 (exclusive of service tax) for funds transfer up to Rs 10,000, said a RBI notification.

Charges for transfers beyond Rs 10,000, however, remain unchanged — Rs 5 for transfers between Rs 10,001 to Rs 1 lakh; Rs 15 for transfers between Rs 1 lakh and above and up to Rs 2 lakh; and Rs 25 for transfers beyond Rs 2 lakh.

Hitherto, there used to be three value bands for NEFT. But now the RBI has created four NEFT bands by carving up the up to Rs 1 lakh band into two — up to Rs 10,000 and between Rs 10,001 to Rs 1 lakh.

Nationwide system

NEFT is a nation-wide payment system facilitating one-to-one funds transfer. Under this scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the scheme.

There is no limit — either minimum or maximum — on the amount of funds that could be transferred using NEFT. However, the maximum amount per transaction is limited to Rs 50,000 for cash-based remittances and remittances to Nepal.

At present, NEFT operates in hourly batches — there are eleven settlements from 9 a.m. to 7 p.m. on week days (Monday through Friday) and five settlements from 9 a.m. to 1 p.m. on Saturdays.

Last month, the former Finance Minister, Mr Pranab Mukherjee, had asked public sector banks to follow the decision taken by Oriental Bank of Commerce to waive all charges for all Net based real-time gross settlement/NEFT transactions up to Rs 1 lakh.

Central Bank of India has made all NEFT transactions up to Rs 1 lakh free from levy of any charges with effect from July 1, 2012.
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SKS Micro pegs Q1 operational loss at Rs 30-50 cr

SKS Microfinance Ltd has indicated that the operational loss during the first quarter of current financial year could be between Rs 30 crore and Rs 50 crore.

In its guidance to the Bombay Stock Exchange on Friday, the Hyderabad-based company said the “adverse financial performance of the company may continue for the rest of fiscal 2013.”

Explaining the reasons, it said an increase in the amount of loans assigned by it resulted in the enhanced levels of cash bank balance at Rs 689 crore as on March 31, 2012. This was not quickly redeployed, which in turn resulted in a relatively lower outstanding portfolio of loans.

“These and other factors resulted in our operational income being insufficient to meet the finance costs, personnel expenses and operating expenditure of the company,” SKS said.

As a consequence of these factors and present business conditions, the company expects to incur an operational loss in the first quarter of fiscal 2013.

In the fourth quarter of 2011-12, it suffered a net loss of Rs 330 crore.


Meanwhile, the board of directors had decided on a QIP (Qualified Institutional Placement)e by way of issue of equity shares at its meeting held on Thursday.

July 12 was fixed as the relevant date for the purpose and accordingly the floor price is Rs 75.40 a share.

It approved preferential allotment of 44.50 lakh equity shares at issue price of Rs 75.40 a share to Kumaon Investment Holdings, a promoter of the company.

Shares of the Hyderabad-based company declined by 7.26 per cent to close at Rs 84.30 on the BSE on Friday.
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Thursday, July 12, 2012

IDBI Bank to hire 500 executives

IDBI Bank will recruit 500 executives to work in its branches across the country.

According to a notification, the appointments will be made on contractual basis for one year and would be extendable for a further period of two years. On the successful completion of three years of contractual services, the executives may become eligible for appointment as assistant managers – Grade A through a separate selection basis.

Graduates in any discipline are eligible to apply with the upper age limit of candidates being 25 years. Selection will be based on a nation-wide written examination followed by a personal interview.

The last date for online submission of applications is July 23, 2012.
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HDFC net rises 19% in Q1 on robust lending

Strong growth in loans helped Housing Development Finance Corporation (HDFC) report a 19 per cent increase in net profit in the first quarter of 2012-13.

In the April-June period, India’s biggest standalone mortgage lender posted a net profit of Rs 1,002 crore against Rs 845 crore in the year-ago period.

The company’s loan book, inclusive of loans sold, grew 23 per cent in the first-quarter. Individual loans accounted for about 90 per cent (about Rs 6,600 crore) of the overall loan growth. Corporate loans grew by about Rs 750 crore.

“Though there is a lot of talk of slowdown, we do not see any slowdown,” said Mr Keki Mistry, Vice-Chairman and CEO.

In 2012-13, the company expects its loan book to grow by 18-20 per cent.

The company said it will not need fresh capital as it has enough Tier-I capital (at about 11.8 per cent). Besides, the conversion of warrants into equity shares by August-end, if completed, will bring in an additional Rs 2,750 crore.

“The growth for the company is coming from Chennai, National Capital Region and Tier-II cities,” Ms Renu Sud Karnad, Managing Director of the company said. In Mumbai, housing growth has slowed, she said.

The company disbursed 20 per cent more loans and approved 17 per cent more loans in the quarter under review from a year-ago period.

The cost-to-income ratio of the company for the first-quarter was 8.8 per cent.

Shares of Mumbai-headquartered HDFC closed at Rs 678.30, down 0.62 per cent, on the Bombay Stock Exchange on Wednesday.
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SBI rolls out more schemes to boost deposits

State Bank of India, the country's largest commercial bank, is taking some more steps to retain its existing customers, attract new ones and beef up its deposit base.

Recently, it had tweaked the ‘minimum balance’ policy and announced a waiver of that requirement. Now, the bank has introduced multi-city cheques with a limit of Rs 5 lakh for (personal banking) customers.


A multi-city cheque is a facility wherein the customer can issue cheques that are drawn at the base branch in one city and payable at a branch of the bank at any other city. These cheques will be treated as local cheques at the remote branch. There will be no collection charges and the amount will be credited on the same day, as in the case of local cheques.

No collection charges are applicable even if the cheque is dropped at a bank other than the base bank.

The first 50 cheque leaves will be given free to every customer and the charge for subsequent issues has been reduced from Rs 3 to Rs 2 per cheque leaf.


The bank has introduced a personal accident insurance product at a very nominal rate for savings customers to create demand for the savings product. It also plans to roll out a medical insurance policy for customers over the next two months. Personal banking divisions have been created at 433 branches to focus especially on personal domestic deposits.

The bank has also installed customer amenities such as air-conditioners at large branches.


The bank has just announced performance incentives in two slabs for achieving deposit targets of 20 per cent and 25 per cent above March 31, 2012, levels.

But only middle management and senior management cadres have been included in the scheme.Officers, clerks and other staff are not eligible.
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IDBI Federal Life unveils Suvidha Insurance scheme

IDBI Federal Life Insurance Company said it has launched “Suvidha Savings Insurance Plan,” with a maximum life cover of Rs 3 lakhs.

The company said the scheme does not require any medical tests. Besides, the company will also add Rs 50 for every Rs 1000 of sum insured for the first 3 policy years.

“This hassle-free plan is designed to provide a life cover of up to Rs. 3 lakhs till the age of 65 years with guaranteed additions, plus bonuses plan also insures customers against accidental death during the policy term,” Mr. Aneesh Khanna, Head Marketing and Product Management, IDBI Federal Life Insurance said in a statement.
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Tuesday, July 10, 2012

RBI launches website to explain detection of fake currency

Seeking to spread awareness among public about fake notes, the Reserve Bank has launched a website explaining ways to detect counterfeit notes.

With a tagline 'Pehchano Paise Ki Boli, Kyunki Paisa Bolta Hai', the website -- – gives visual presentation with pointers on currency notes of 10, 20, 50, 100, 500 and 1,000 rupee denominations.

Consumers have the option to download posters of these currency notes, which can be used as reference to identify counterfeit notes. A documentary film on it can also be downloaded.

The link for this website is available on RBI's main website as well.

The site also gives details of the number of fake currency notes detected.

RBI said considering there were 64,577 million pieces of banknotes in circulation as on March 31, 2011, the detection of forged notes during 2010-11 was to the tune of 6.74 pieces per million pieces of banknotes in circulation.

In the past as well, the Reserve Bank has come out with various notifications warning against circulation of counterfeit currency notes.

Referring to the fake currency notes in circulation, RBI Governor D Subbarao said in Kozhikode on Friday that the government and police are taking several measures to deal with the menace.

He emphasised the need to educate people on ways to distinguish fake currency notes from the genuine ones.

Source: Financial Express
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Bankers agree rate cut by RBI can't lower inflation, but still want it

Bankers agreed that inflationary conditions offered little room for lowering interest rates, but stuck to their demand for a rate cut, saying it was the only tool available to revive the "animal spirits" in the economy in the absence of policy action.

In their customary pre-monetary policy meeting with Reserve Bank of India (RBI) Deputy Governor Subir Gokarn, bank chiefs also acknowledged that rate cut was not a panacea for the nation's economic ills.

Lenders demanded that RBI cut repo rate - the rate at which it lends to banks - by 25 bps to 7.75% and reduce cash reserve ratio - the proportion of deposits to be kept with RBI. These can be 'symbolic' gestures to industry and investors, bankers told Gokarn, according to bank officials present at the meeting.

The central bank will announce its quarterly monetary policy review on July 31.

"We know that RBI alone can't revive the economy and that a cut by itself will not boost growth," said a banker who attended the meeting, but did not want to be identified. "But a cut would be symbolic, especially in the absence of any action from the government."

A senior bank chief said a rate cut was unlikely.

"Monetary policy can't be a panacea for all ills," said Aditya Puri, chief executive at HDFC Bank. "A rate cut at this time with high inflation is not feasible," he said, adding that the government needs to take measures to tackle supply-side issues that are pushing up prices.

For more than a year, RBI has been pleading with the government to put its house in order as record borrowings by the Centre - Rs 5.7 lakh crore this year - have been crowding out private investments. It also said subsidies, notably on diesel, are distorting the market and leading to high deficit.

But there's little on the ground to show that the government will comply with these requests as political compulsions make it difficult to raise prices of diesel and cooking gas.

According to two bankers who did not want to be identified, Gokarn is supposed to have asked bank chiefs whether they were asking for a rate cut because the government had done something to improve the fiscal position, or were they expecting RBI to do so irrespective of government inaction.

But these statements could not be independently verified from the deputy governor.

RBI Bearing the Burden

RBI is being pushed to bear the burden of revitalising an economy that has fallen from being one of the top four growth economies in the world - the so-called BRIC - two years ago to possibly becoming the first among them to get a junk rating.

Years of fiscal profligacy by the government have caused structural damage to the economy that is now staring at stagflation - slow growth and high inflation. The central bank, which some say was slow to raise rates in 2010 when the economy rebounded rapidly from the Lehman crisis, has since defied calls for easy rates despite slumping industrial output.

Governor Duvvuri Subbarao on June 18 stunned investors by holding interest rates, contrary to expectations of a cut after the March quarter GDP growth fell to a nine-year low. But inflation at 7.6% and consumer prices rising at more than 10% at the time led the governor not to yield to industry and investors' demands.

RBI, after surprising the market with a more-than-expected 50-basis-point cut in April, had said the government needs to act for its policy to be effective.

"The fiscal deficit of the central government has remained elevated since 2008-09," Subbarao said in his annual monetary policy on April 17. "Large fiscal deficit also has led to large borrowing requirements by the government. Large borrowings have the potential to crowd out credit to the private sector. Crowding out of the more productive private credit demand will become more critical if there is fiscal slippage."

Source: EconomicTimes
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RBI to launch plastic currency on pilot basis in 5 centres

Amid instances of counterfeiting of notes, the Reserve Bank said it is working on launching plastic currency and will soon launch a pilot project for the same.

"Counterfeiting of plastic notes is very difficult. So we are planning to launch some plastic money on pilot basis in 4-5 centres. Like Jaipur, Shimla, Bhubaneshwar and other centres. We are working on it," RBI Deputy Governor H R Khan told reporters here.

Under the pilot project for issue of plastic currency notes, notes of Rs 10 denomination would be distributed through the central bank's five regional offices.

The proposed shift to plastic currency notes, instead of the normal paper notes, is primarily aimed at checking the counterfeiting as also high cost associated with printing of paper currency, as they need early replacement due to soiling and mutilation.

These notes would have an average life span of 5 years compared to one year for the currency notes, and also these notes are cleaner than paper notes and it would be difficult to counterfeit the currency.

Besides studying the potential cost savings through plastic notes, the pilot project will also look into the environmental impact of the proposed plastic notes.

The polymer notes were first introduced in Australia to safeguard against counterfeiting of currency. Besides Australia, other countries which have introduced plastic notes include New Zealand, Papua New Guinea, Romania, Bermuda, Brunei and Vietnam.

Source: Financial Express
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Dena Bank to rejig farm lending

Ms Nupur Mitra, Chairperson and Managing Director, Dena Bank, said that the delay in monsoons might affect the credit offtake in the agriculture sector.

The bank, however, aims to grow its agriculture loan book by focusing on allied sectors by way of investment credit or term loans.

Term loans are usually given for allied activities such as digging of wells, drip irrigation, and purchase of agricultural equipment and machinery. It also includes loans to agri-industries such as horticulture, sericulture, fisheries, dairy and poultry.

“Monsoon has been delayed and there is no adequate alternative irrigation facility. Naturally the offtake will be affected,” Ms Mitra told newspersons on the sidelines of an interactive session organised by the Bharat Chamber of Commerce here on Monday.

The bank aims to disburse close to Rs 500 crore to the agriculture sector this year. “Agricultural portfolio is not only crop-oriented. There are also other sectors which are not monsoon-dependent. So we will concentrate on those sectors so that the total agricultural portfolio is not affected,” she pointed out.

Power sector

The bank has brought down its exposure to the power sector to 15 per cent this year, as compared with 20 per cent during the previous year.

“We have curtailed lending to the sector as we did not want concentration risk,” she said.
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SIDBI plumps for factoring

Small and medium enterprises will benefit from the Factoring Regulation Act, 2012, the Small Industries Development Bank of India has said.

Factoring can help micro, small and medium enterprises to do business in new ways, said Mr N.K. Maini, deputy managing director, SIDBI. He was speaking at a factoring awareness seminar for MSME manufacturers.

These units supply their products on credit terms to domestic purchasers. They can now get funds based on the strength of the transaction between the client and its debtor rather than on collaterals.

Scope for new products

Factoring organisations would bring in new products. New NBFCs could register themselves with the Reserve Bank to take up factoring.

Before the Act was passed, the parties faced high stamp duty, no legal recourse on the buyer and limited legal recourse on the client.

There was no central registry for creating charge; it made them vulnerable to frauds such as double financing and legal remedy for recovering debts was slow.

Worldwide, factoring increased from €724 billion in 2002 to €2015 billion in 2011. Asia’s factoring volume is around 25 per cent of this. National share in the Asian factoring business is just 0.6 per cent.

Growing at 11 per cent a year, the 30-million-strong MSME sector is the second largest employer at seven crore jobs. It contributes 45 per cent of the manufacturing output and 40 per cent of exports.
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IRDA slaps Rs 15 lakh penalty on Indusind Bank

Hyderabad,: The Insurance Regulatory and Development Authority has imposed a penalty of Rs 15 lakh on Indusind Bank Ltd for violating corporate agency norms.

Indusind Bank is a corporate agent of Cholamandalam General Insurance Company and Aviva Life Insurance Company.

On the basis of data submitted by Cholamandalam General Insurance, the regulator has found that Indusind had received higher payments than permissible from the insurer as a corporate agent.

The payments were received in the form of database sharing/incentives to the employees of corporate agent and infrastructure setting up costs for the three financial years commencing from 2007-08, IRDA said in an order.

Indusind Bank was ordered to pay Rs 5 lakh fine for each of the three financial years within 15 days, according to order.
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Union Bank to open three overseas branches this fiscal

Union Bank of India has said it plans to open three overseas branches in Sydney, Dubai and London before the fiscal end.

“I am hopeful that at least three overseas branches are expected by March 2013,” bank Chairman and Managing Director Mr D Sarkar told PTI here.

On the geographies which the bank is targeting, Mr Sarkar said Australia (Sydney), England (London) and UAE (Dubai) are the areas where the branches will be located.

The city-headquartered Union Bank has already incorporated a subsidiary in England for its London branch, he said, adding the process for setting up the other two is underway.

In line with many of its peers among the domestic lenders like IDBI Bank, Union Bank is also planning to have a branch in the Dubai International Finance Centre which will help it raise money in foreign currencies and on-lend to borrowers in non-rupee denominations, he said.

The exact timelines for opening of the branches will depend on the view taken on its applications by local regulators in these countries, he said.

At present, Union Bank’s international footprint includes a branch in Hong Kong and five representative offices elsewhere, he said, stressing that it is spreading its network ‘slowly’.

The bank is targeting a credit growth of 18-20 per cent this fiscal and in-line with the general trend, its asset expansion in the first quarter has been subdued, Mr Sarkar said, adding that factors like progress of monsoons, which has been lagging behind, will help it achieve the desired growth.

On deposit growth, he declined to cite a number for last quarter saying the bank is in pre-earnings silent period.

The bank, which posted a margin of 3.21 per cent last quarter, is confident of maintaining its net interest margin above 3 per cent, he said.

Meanwhile, the bank inaugurated second of its special automated teller machines (ATMs) for visually-challenged in the adjoining Thane suburb over the weekend.

Mr Sarkar said the bank plans to open 50 such ATMs before September and take it to 100 before the fiscal end.
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