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Sunday, July 21, 2013

Union Bank to approach FinMin with fresh capital-raising plan

Union Bank of India, is planning to submit a fresh capital raising plan to the Ministry of Finance “within a couple of days”.

According to Debabrata Sarkar, CMD, though the bank is currently well capitalised, it might have to raise capital to fund its growth needs beyond 2015.

“Our bank will be in a comfortable position in terms of capital till 2015. For the period post-2015, we will require more funds,” Sarkar said here on Friday. He was addressing an interactive session on bank credit organised by the Kolkata-based MCC Chamber of Commerce and Industry.

Meanwhile, he said, the bank witnessed good demand from the agriculture, retail and SME sectors, but demand from the corporate sector has been subdued.

Sarkar also pointed out that improper management of infrastructure projects in the country was hurting the financial stability of the banks. “For example, average maturity tenure of deposits for UBI is 1.7 years. But, an infrastructure project takes no less than 10 years. How can I match my asset and liability?” he asked.

Sarkar confirmed that the bank would not increase interest rates. “We have recently reduced our base rate to 10 per cent (from 10.25). We are not thinking of tinkering with the base rate now,” he said.

Source: thehindubusinessline


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