UTI Bank sets up NBFC for retail push

UTI Bank, the third largest private sector bank, today launched a subsidiary for selling loans, credit cards and other retail products.

The subsidiary, UBL Sales, opened its first branch in Bangalore and expects to sell Rs 2,000 crore of retail loans and one lakh credit cards in its first year of operations.

Sanjay Silas, managing director of UBL Sales, said the subsidiary will inaugurate its second branch in Hyderabad tomorrow, and expects to open another 12 branches by October 15.

By March 2007, UBL Sales Ltd will launch its operations at 42 locations across the country and hire about 3,500 sales staff for marketing the financial asset products of UTI Bank.

"The objective of the subsidiary will be to build competitive advantage in marketing of credit cards and retail loans," said Silas.

S Chatterjee, chairman of UBL Sales and executive director of UTI Bank, said UBL Sales will mainly focus on enhancing the bank's retail lending business by acquiring new customers and catering to their requirement of housing, personal and consumer loans.

"The retail market is growing at a rate of 35-40 per cent annually and we want to take full advantage of the opportunities available in expanding our retail customer base," he added UBL Sales would sell mutual funds, and general and life insurance products later. UBL Sales has an equity capital of Rs 5 crore.

UTI Bank shares today closed at Rs 369.95 on the National Stock Exchange, up nearly 6 per cent over its Tuesday's close.

Dwelling on UTI Bank's overseas plans, Chatterjee said the bank plans to further expand its overseas network later this year.

Having opened the bank's first international branch in Singapore early this year, the bank is now in the process of setting up a representative office at Shanghai in China.

He said the bank also plans to open a full fledged branch in Hong Kong later this year. "We have applied for a full banking license with the Hong Kong authorities and expect to get approval shortly," Chatterjee said.

The bank also proposes to open an investment banking arm in London and an offshore branch in Dubai. "We have applied to the RBI for approvals. We aim to build a distribution base in overseas markets to service our existing corporate clients and enhance our placement capabilities," he said. 

Clarification 
The headline of our report on UTI Bank launching the operations of UBL Sales Ltd, which will market asset products such as retail loans and credit cards (September 28), had wrongly identified it as an NBFC. We regret the error.