Bank consolidation is need of the hour, feels Leeladhar

There are far too many public sector banks in a country like India and sooner or later, there is a need for a consolidation in the banking industry, V Leeladhar, chairman and managing director of Union Bank of India, said in Ahmedabad on Sunday.

He, however, added the government will have to come out with an ordinance before a consolidation can take place in the Indian banking industry.

In Ahmedabad to inaugurate an automated teller machine at the city's SAL Hospital, Leeladhar said, "There are far too many banks in the country. Even the biggest public sector bank SBI is smaller compared with banks in other countries. The consolidation needs to take place not just between bigger and smaller banks but between big public sector banks as well."

Commenting on the agriculture lending, Leeladhar said that agriculture lending of UBI stood at 16.5 per cent, and Union Bank of India will meet the requirement of 18 per cent farm lending in this fiscal.

Priority sector advances of the bank continues to be an important sector and as of March 2004, the priority sector lending amounted to Rs 14,244 crore, constituting 49 per cent of the bank's credit.

Leeladhar said that as of today, 340 branches of the bank across the country have been brought under the Core Banking Solutions (CBS) platform and many more will be brought under the CBS platform by the year end.

"These 340 branches account for 52 per cent of the bank's business," he said. Union Bank of India is considering signing an MoU with Netafim Irrigation India Pvt Ltd, which is based at Vadodara for supply of drip irrigation systems to agriculturists with financial assistance from the bank.

One such project has already been financed by the bank in the Rajkot region involving a loan of Rs 22 lakh.

A dairy demonstration farm project (DDF) has also recently been sanctioned involving a Union Bank of India loan of Rs 7.20 crore to the Kaira District Co-operative Milk Producers Union Ltd, Anand.