UBI in hinterland thrust

United Bank of India (UBI) intends to focus on the rural segment to grow its asset book. The bank, which has Rs 18,000 crore in deposits, expects to grow its advances book to Rs 9,000 crore by the end of fiscal 2004.

"There is a good amount of business one can write in the state of West Bengal in terms of agriculture, large and mid-sized corporates as well as small-scale sector," said UBI chairman and managing director Madhukar.

The Kolkata-based bank had posted a net profit of Rs 242 crore as on December 31, 2003. It was born in 1950 following merger of four banks.

With an accumulated loss of Rs 1,359 crore (and an additional Rs 281 crore in arrears expenses as of March 31, 2001) eminent bankers including K V Kamath (ICICI Bank CEO and managing director) and M S Verma (former SBI chairman) said that the bank ought be closed down, pointed out Madhukar.

The bank's turn around has been possible through the reconciliation of old loans and recovery of assets, said Madhukar.

He will step down from office by the end of the week. Well over Rs 1,200 crore of funds were not reconciled and hence capital had been locked up, he said, adding that the bank had also forgotten to recover pension payments made to state government employees.

UBI's capital adequacy ratio stood at 16.63 per cent amounting to Rs 1,308 crore. Of this, the tier I capital stands at 15.47 per cent and tier II at 1.16 per cent. Madhukar ruled out any public issue in immediate future saying "at 16 per cent plus capital adequacy ratio, it would be a waste of money."

Madhukar was speaking on the sidelines of a press conference for the tie up of UBI with Tata AIG Life Insurance Company, with the public sector bank having already brought in Rs 1.5 crore worth of business for the insurance company.

Madhukar said that the bank hopes to sell insurance products to its rural customers, where the aim is to develop simple products with "no fine prints".

The public sector bank has 1.25 crore deposit customers today. Commenting on how banks today are rushing to grow their books, Madhukar said: "As banks try to grow their balance sheet, in the current deregulated market, they have a wrong focus. It is not possible for them to grow their books when deposit costs are increasing and yields on advances are falling," he questioned.