Union Bank of India today said it expects Rs 1,500 crore capital infusion from the government to increase its business.
"We have requested government for financial support of Rs 1,500 crore and are awaiting response," Union Bank of India Executive Director S C Kalia said.
Earlier in June this year, the government announced a capital infusion of Rs 6,211 crore into five public sector banks. Of this, Union Bank of India got Rs 111 crore by way of perpetual non-cumulative preference shares (PNCPS).
It is expected that the government would announce the second tranche of capital infusion soon.
The government has proposed to provide a sum of Rs 16,500 crore during the current fiscal to ensure that the public sector banks are able to attain a minimum 8 per cent tier-I capital by March 31, 2011.
Meanwhile, Union Bank of India said it will take a call on upward revision of interest rates next month.
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"This (lending and deposit rates) we have to see when the Base Rate would be revisited in the month of October," Union Bank of India Chairman and Managing Director M V Nair said.
The statement assumes significance as RBI last week increased key short term policy rates by up to 50 basis points putting pressure banks to respond to rate hike.
As of now liquidity is in deficit mode and credit growth is likely to pick up from the next month, Nair said, adding, there is pressure on interest rate to go up.
At the same time, deposit growth on annual basis is 14.5 per cent much lower than RBI's projection of 18 per cent.
Spelling out reasons for lower deposit growth, Nair said it could be because savers are earning negative returns due to high rate of inflation.
One year fixed deposit earns about 7 per cent while annual inflation for the month of August stood at 8.5 per cent. So, depositors are getting a negative return of 1.5 per cent or more on their fixed deposits.
In case, he said, deposit growth does not keep pace then naturally the deposit rates would go up, he said.