The outgoing chairman and managing director of Union Bank of India, Cherian Varghese said, We no more have the comfort of excess SLR securities. For the past two years we have witnessed a credit to deposit ratio of 100%. Funding of the robust credit growth has been possible by reducing our investments.
The current SLR levels of the bank is at 25.6%. He further added that going forward banks would require huge funds to finance large projects. The demand for investment credit is growing across the board. Also, term loans for agriculture disbursed by the bank in the first six months of the year has been equal to that of the total term loans for agriculture extended in the whole of last year. Although the current liquidity levels are comfortable, banks are seeking sustainable source of funding long term projects.
Commenting on the RBI hiking the FCNR rates, Mr Varghese said, This is a very welcome move to encourage more NRI inflows into the system. The borrowing cost through raising money through FCNR deposits proves to be attractive than other sources of borrowings. NRI deposits comprise 8% of the total deposits of the bank.
As part of its overseas foray, Union Bank of India plans to open full-fledged branch in Hong Kong and Doha for which it has received the permission from RBI and is seeking an approval from the local authorities of those countries.