UBI cuts down interest rates on deposits

Mumbai, July 23 (UNI) Ample liquidity in market coupled with lesser inflation, which is at 4.3 percent, has prompted Public lender Union Bank of India (UBI) to cut down the interest rates on deposits by 50 basis points.

UBI Chairman M V Naior said the rate cut is the response to the recent developments in money market.

''Inflation is down and there is enough liquidity in the market.

Cosidering these two facts the current rate hike is only logical,'' he said.

A cut by 50 basis points means a dip in deposit rates to 9.00 per cent annum instead of the existing 9.50 per cent from August 1.

Credits are expected to grow by 25 per cent in the current fiscal with the total business expected to grow close to Rs two lakh crore.

''A four pronged strategy has been fixed for this including retail, agriculture, SME and corporate. The target is Rs 1.05 lakh in deposits and Rs 80,000 crore in advances,'' he said.

Later speaking to reporters, Executive Director R S Reddy said focus will also be put on overseas business apart from augmenting fee-based income through non-credit related services.

The Bank will open repo offices in Shanghai, China and a branch in Hong Kong by this year.

For the quarter ended June 30, UBI posted a 35 per cent increase in net profits which rose to Rs 225 crore from Rs 525 crore in the last fiscal which brought down the net NPA rate to 0.78 per cent from 1.22 per cent in the previous fiscal. Gross NPA was also reduced to 2.78 per cent from 3.55 per cent.

Bank's capital adequacy ratio is at 12.66 per cent for the quarter from 11.25 per cent in June 2006. The revised rates, which is applicable for deposits accepted from one year to less than three years, will come into effect from August 1 this year.

UNI