 "Union Bank of India raises deposit rates")
State-run Union Bank of India has raised short-term retail deposit rates on select maturities to boost deposit accretion. For maturities of 46-120 days, the rate has been increased by 25 basis points (bps) to 7. 5 per cent, while for 31-45 days, the increase is by 125 bps to six per cent.
The new rates, which came into effect on Monday, will be applicable for deposits of less than Rs 1 crore. While the bank has raised short-term rates, it has reduced the rate for deposits of five to seven years tenure by 25 bps.
Explaining the rationale behind the move, Union Bank’s Chairman and Managing Director D Sarkar said: “Retail deposit growth has not really picked up on the expected lines.”
While addressing a press meet to celebrate Union Bank’s 95th foundation day on Monday, Sarkar said the bank is likely to raise Rs 2,500 crore capital this financial year to boost its capital adequacy ratio. While the government will infuse Rs 500 crore, which will boost its tier-I capital, the remaining amount will be raised via tier-II bonds.
“The overall impact on capital adequacy ratio due to the fund raising will be 100 bps,” said Sarkar. The bank’s capital adequacy ratio, according to Basel-III requirements, was 9.72 per cent as on September 30. Tier-I capital of the bank was 7.11 per cent.
The bank has crossed total business of Rs 5 lakh crore during the last quarter, a growth of 26.3 per cent, on an year-on-year basis.
The new rates, which came into effect on Monday, will be applicable for deposits of less than Rs 1 crore. While the bank has raised short-term rates, it has reduced the rate for deposits of five to seven years tenure by 25 bps.
Explaining the rationale behind the move, Union Bank’s Chairman and Managing Director D Sarkar said: “Retail deposit growth has not really picked up on the expected lines.”
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He, however, added the bank is not planning to increase the base rate — the minimum lending rate to which all the interest rates are linked to — in the immediate future. The bank’s base rate is 10.25 per cent.
While addressing a press meet to celebrate Union Bank’s 95th foundation day on Monday, Sarkar said the bank is likely to raise Rs 2,500 crore capital this financial year to boost its capital adequacy ratio. While the government will infuse Rs 500 crore, which will boost its tier-I capital, the remaining amount will be raised via tier-II bonds.
“The overall impact on capital adequacy ratio due to the fund raising will be 100 bps,” said Sarkar. The bank’s capital adequacy ratio, according to Basel-III requirements, was 9.72 per cent as on September 30. Tier-I capital of the bank was 7.11 per cent.
The bank has crossed total business of Rs 5 lakh crore during the last quarter, a growth of 26.3 per cent, on an year-on-year basis.