UBI in talks for SME tie-ups

United Bank of India has entered into talks with Exim Bank and National Bank for Agriculture and Rural Development (Nabard) for two different tie-ups under which the banks would service small and medium sized units.

The bank is also likely to postpone its initial public offer to the 2005-06 when it has wiped off its entire accumulated losses from Rs 280 crore.

"UBI has entered into talks with Exim Bank for a tie-up that would enable the banks to jointly provide term loan as well as working capital loan to export oriented units. This would basically be a consortium lending where Exim Bank and UBI would jointly lend to these units enabling us to increase our exposure in the export segment," explained P K Gupta, chairman and managing director of UBI, while talking to reporters at the sideline of banking conclave organised by FICCI.

"Talks have just been initiated and details of the deals are yet to be worked out. This will take some time before the two banks actually sign on the dotted line," he added.

The second tie-up, with Nabard, would be for units operating under its area of operations, mainly agriculture.

"This tie-up would also be to jointly provide finance to units in the agriculture sector like food processing and other allied activities in the segment," he added.

UBI has recently tied up with National Small Industries Corporation for effectively financing units in the small scale sector.

Talking about the bank's profitability for 2005-06, Gupta said, "Net profit was expected to touch Rs 500 crore this year while total business was slated to be around Rs 50,000 crore."

At UBI we expect a total of Rs 18,000 crore of credit disbursal while deposits would be around Rs 32,000 crore."

In the first quarter of the current fiscal, UBI registered Rs 1,000 crore of fresh disbursal while new deposits touched Rs 600 crore.

Earlier in the day, Gupta told the audience at the banking conclave that the economy could achieve double digit growth only if enough attention was paid to agriculture, SME, housing, infrastructure, entertainment and health and education sectors.