PNB open to buying out UTI Mutual

Punjab National Bank (PNB) would consider any proposal to take control of UTI Mutual Fund, currently managed by UTI Asset Management Company, S C Gupta, chairman and managing director, said here today.

"We have yet not received any concrete proposal for taking control of UTI MF. But given any proposal, PNB will surely consider it ,"said Gupta on the sidelines of 'Banking Conclave' organised by the Federation of Indian Chambers of Commerce and Industry (Ficci), where he spoke on 'Banking for Double Digit Growth of Indian Economy'.

PNB is one among the four sponsors of UTI MF, the other three being State Bank of India (SBI), Bank of Baroda and Life Insurance Corporation of India (LIC).

There has been reports that SBI was one of the prime potential acquirer of UTI MF.

PNB is expecting a 18.40 per cent growth in its business to Rs 1.90 lakh crore in 2005-06 from the last year's Rs 1.63 lakh crore, added Gupta.

"The target for this financial year is expected to be around Rs 1.90 lakh crore, comprising Rs 1.40 lakh crore deposit and the remaining as advance," said Gupta.

About the capital base of the bank, Gupta sad the capital adequacy ratio (CAR) of PNB was 14.78 as on March, 2005 and claimed that it was a comfortable figure for the bank.

PNB will not be willing to dilute its stake any further, he hinted. Currently, Indian promoters hold 57.8 per cent stake in PNB.

Gupta further hinted that PNB Gilts Ltd, a wholly owned subsidiary of PNB, will be showing a significant improvement in its results, unlike 2004-05.

The first quarter results will be announced on 21st July, he added. PNB, as a new human resource step, is also thinking of introducing performance-based incentive scheme, added Gupta.

"We are developing performance-based pay to satisfy our employees and that too without causing any 'heartburn' to any. This is a part of the managerial autonomy that has been granted to public sector banks by the ministry of finance," said Gupta.

Following the same autonomy power, PNB has also created two 'chief general manager' positions in control and operations departments. They will report to the chairman and executive director, he added.

PNB has also appointed Boston Consulting Group (BCG) to reorganise its business model, use of different products and increasing profitability, Gupta said.

Indian banks are moving towards more fee-based income, similar to international banks, he said.

"Currently, Indian public banks earn 85 per cent from interest and 15 per cent from fee based earning, unlike the international banks where the figure are 60 per cent and 40 per cent respectively. But with time Indian banks are moving towards the same trend," Gupta said.