| The bonds are being raised to meet the capital adequacy requirements and fund the business growth in the current financial year. |
| The 15-year bonds are being taken at a coupon rate of 10.65 per cent, according to Chairman and Managing Director P K Gupta. The Bank has a call option to pay half a percentage extra as pre-closure charges at the end of 10 years. The bond has AA rating from credit-rating agencies CARE and Icra. |
| Gupta said the bank was targeting a business of Rs 73,000 crore in the current financial year, with advances of Rs 29,500 crore and deposits of Rs 43,500 crore. |
| The bank had a credit-deposit ratio of 65.5 per cent as against 61 per cent last year, Gupta informed on the sidelines of a Ficci banking conclave. With Basel-II round the corner, UBI has decided to go for the rating-based lending. |
| "With the Basel-II coming into force, risk rating will become important. The pricing of the credit will depend on the ratings. It will be more competitive, if the ratings are good," Gupta said. |
| UBI has already started encouraging its clients to go for rating of their businesses. Rating would become more important in the case of sticky borrowers such as small and medium enterprises, Gupta said. |
| The bank, with a Rs 400-crore lending exposure to the tea sector, has approached the Reserve Bank of India (RBI) for time to meet the changed priority sector lending norms for financing corporates for agriculture and allied activities (dairy, fishery, piggery, poultry, bee-keeping, etc). |
| According to the new norms, banks are supposed to finance up to an aggregate amount of Rs 1 crore a borrower as short-term loans for raising crops amd a third of the loans in excess of Rs 1 crore in aggregate per borrower for agriculture and allied activities. |
| This implies that UBI will have to lend more for agriculture and allied activities. The bank had asked for a 10-year period to meet the requirements, Gupta said. |
Top Section
Explore Business Standard