Union Bank of India chairman and managing director MV Nair has said that he does not foresee the much anticipated amalgamation between Bank of India (BoI) and Union Bank of India in future.
Nair said that Union Bank of India has also communicated to its real estate developer clients to lower the property prices in a bid to create demand in the housing sector. He said, ?At the moment, asking for an interest rate subvention from the government becomes inevitable, if we were to further lower our home loan interest rates.?
The bank?s current exposure to housing finance companies is around Rs 6,000 crore. ?We will also focus more on funding the housing finance companies post the recent guidelines released by the regulator,? said Nair.
While speaking to FE on the sidelines at an event held in Mumbai on Thursday to announce the unveiling of the bank?s specialised banking branches dedicated to service the country?s micro, small and medium enterprises (MSMEs), Nair said, ?Our proposed merger with Bank of India is merely a media speculation. It?s ruled out for the moment as no such talks have been initiated so far. Size is not the only important parameter to succeed in the Indian banking space. If core banking principles are not comprised, even small banks can make huge profits.?
The latest initiative of Union Bank of India is aimed to disburse loans at 12.50% within 14 days turnaround time to the qualifying MSMEs through an extensive network of its 100 specialised branches spread across the country.
?Also, our aim will be to support the Indian MSMEs that are currently facing a severe downturn. On a case to case basis, our bank will thus offer them adhoc advancing, extend their stock holding period, reschedule loan tenures as well as interest rates and the repayment installments, and convert their working capital facilities into working capital term loans,? said Nair.
Commenting on his bank?s performance in the prevailing scenario, Nair said that the average delinquency across all loan portfolios of Union Bank of India was 1.16% as on September 30, 2008. ?Due to the slowdown in the Indian economy, the possibility of a rise in our delinquency ratio is not ruled out. At present, our clients in sectors like automobile, steel, cement, diamonds, textile, real estate etc are under maximum stress,? he said.
