Union Bank increases rates for retail traders

Union Bank of India has increased its interest rate on loans to retail traders by 25-50 basis points with effect from July 1, 2006. The bank will take a call on home loan rates in a week's time.

M V Nair, chairman, Union Bank, said the bank is not likely to increase its prime lending rate (PLR) "at this point of time". The bank's PLR is currently 11.25 per cent. One basis point is one hundredth of 1 per cent.

Union Bank's interest rates on working capital for retail traders would increase from 9.5-10.5 per cent and on term loans from 10-11 per cent. Nair spoke to reporters on the sidelines of the launch of a new deposit product, Union Double.

The deposit product offers investors 100 per cent increase in the invested amount in 8 years and 9 months.

The bank's credit portfolio has grown by almost 29 per cent against the growth target of 25 per cent. Deposits have grown by 19 per cent (Rs 2,900 crore) against Rs 2,100 crore a year earlier. The rate of interest offered is 8 per cent and the annualised yield is 11.43 per cent.

The minimum deposit amount for the new product is Rs 5,000 and the maximum is Rs 1 crore. The scheme will be open during the whole of July.

The bank aims to raise around Rs 2,000 crore from the new scheme. This would be part of the Rs 40,000 crore deposit targeted in 2006-07.