Union Bank?s treasury-based income may slip in current fiscal

The state-run, Union Bank of India (UBI) is likely to see a downtrend in its treasury-based income during the current fiscal on Y-O-Y basis.

But the bank has projected the growth of 35% in its core fee-based income during the next financial year. MV Nair, chairman and managing director, confirmed that his bank may see a downtrend on the front of treasury-based income, which stood at 119% during the third quarter of the current fiscal and 74% Y-O-Y basis for the nine-month period.

Currently, the agriculture portfolio of the bank stands at Rs 7,000 crore out of a total loan book size of Rs 70,000 crore. ”The loan overdue to the agriculture sector as on December 31,2007 was Rs 400 crore.”

On money raising issue, Nair said that though there was headroom for Rs 1200 crore, the bank may go for the capital raising to the extent of Rs 600 crore during the new financial year.

However, it all depends on the fact how does the market behaves, said Nair. Nair said that on Y-O-Y basis, we expect credit to grow at 28% whereas the deposit was likely to grow at 25% during the current fiscal.

Asked to comment on the finance minister?s urge to the banks for rate-cut for the home loans upto Rs 20 lakh, Nair said that it may be difficult this time as the bank has already cut its BPLR by 50 basis points.

Supporting the government on the issue of the loan waiver to the farmers, Nair said that it will increase the engagement of rural credit.

Once the bad loan due to the small and marginal farmers was waived off, it will increase the purchasing power of the farmers, stressed Nair. This will further help increase in the liquidity into the system, he added. While recovery in collection from the farm sector was going up, there was a downtrend in the NPAs in the agriculture sector, said Nair.

Asked to comment on ATM sharing issue, Nair said that his bank has already gone for the Union Super Salary Account (USSA) under which no ATM charge was being imposed by his bank to those corporate clients that are having a minimum of 15 employees under the scheme and hence it will not be a difficult task to implement the RBI guidelines on the issue.