Union Bank eyes SHGs in urban areas

Having tapped the self-help groups (SHGs) market in the rural areas, the Union Bank of India is now looking at increasing its focus on SHGs in the urban areas.

The bank has already started this process with 130 SHGs in Mumbai and is now looking at extending this initiative to other cities as well.

"Around 2,000 members of the 130 SHGs in Mumbai are now under the Union Bank of India's thrift-cum-loan initiative wherein we disburse loans by encouraging savings. The ratio between savings and loans is 1:4. This means that for every Rs 500 saved, Rs 2,000 is disbursed as loan," V S R Murthy, general manager, retail banking department, Union Bank of India, said.

"We would like to extend this to other cities as well and will take some decisions in this regard in March this year," Murthy added. The SHG members covered in Mumbai by the Union Bank of India include rickshaw-pullers, labourers, etc.

Murthy was speaking on the sidelines of a press conference organised to announce the bank's follow-on public offer.

The price band for the bank's public issue of equity shares of Rs 10 each has been fixed at Rs 100-110. The minimum bid size for the issue is 50 shares. The issue of 45 million shares will open on February 15, 2006, and close on February 21, 2006.