Many countries including Sri Lanka, Bangladesh and some African nations may evince interest in the rupee settlement system for international trade with India, Soma Sankara Prasad, MD & CEO, UCO Bank, said on Tuesday. He, however, said it would take time for the system to gather momentum.
So far, Kolkata-based UCO Bank opened special vostro accounts with Russia to facilitate overseas trade in the rupee.
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Asked whether the bank expects other countries to show interest in the rupee settlement system, he said, “There are a lot of countries. For instance, Sri Lanka and Bangladesh, or any other country which is having an issue of hard currency (dollar) reserves, and may be some countries in Africa, and all the countries with whom India has a lot of trade…so these are countries which I think might evince interest in this mechanism.”
He was speaking to reporters on the sidelines of the bank’s celebration of completion of 80 years of operations here.
The Reserve Bank of India has recently allowed banks from 18 countries to open Special Vostro Rupee Accounts (SVRAs) for settling payments in Indian rupees.
UCO Bank earlier said the rupee payment mechanism was hardly witnessing actual transactions even until January this year despite the necessary infrastructure being put in place as trade invoicing was not happening in rupee terms.
Responding to a query on the recent Supreme Court verdict stating that banks are bound to give borrowers a personal hearing opportunity before classifying accounts as fraudulent, Prasad said it might lengthen the process for lenders.
“It will only lengthen the process for us. Now, you will have to give notices to the borrowers, listen to him and then take a call (on classifying accounts as fraudulent). Of course, the Supreme Court has gone by the principles of natural justice,” he said.
He said the bank was witnessing a “good” corporate loan growth. ‘But, (the growth is) in certain sectors such as renewable energy, infrastructure, steel, cement and ethanol-based projects,” he informed.
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On the occasion of the bank‘s celebration of completion of 80 years, 50 branches were inaugurated on Tuesday. For this fiscal, the lender had a target of opening 200 new branches. At the end of the financial year, the bank will have over 3,200 branches across the country.
The bank, which has recently raised close to Rs 500 crore tier I capital, has the board approval to raise another Rs 1,000 crore. It might look at going in for an equity issue, mainly to bring down government holding, sometime next fiscal. Government holding in the bank currently stands at 95.39%.
