In a bid to take on foreign and private lenders, Union Bank of India is amongst the first state-owned banks, to put in place a combination of high-tech banking solutions, and the lender has stepped up its total business target to nearly Rs 3-lakh crore in FY10.
Embarking upon this high-tech business model in 2007, the sixth largest public sector bank in India proposes to step up its syndicated loans to Rs 25,000 crore this year as compared to Rs 4,400 crore in the last financial year.
“We aims to achieve Rs 2,92,000 crore by the end of this financial year as against the present level of Rs 2,37,000 crore. The loan book is well spread across various portfolios in order to avert stress in any particular sector,” Union Bank of India Chairman and Managing Director M V Nair said in an interview.
The lender, which has its bad loans lowest in the industry (net NPA at 0.35 per cent), has a comfortable capital adequacy ratio at 13.24 per cent. It has targeted a 25 per cent credit growth and a 23 per cent deposit growth in this financial year.
The bank plans to launch a scheme soon - single sign on - that will empower the customers to generate their own passwords for their Internet and mobile banking, Nair said.
Union Bank plans to open self-service lobbies attached to 100 branches in the country by the end of the financial year, Nair said. The self-service branches, one of which is operating in Hyderabad, will have automated solutions to cater to all classes of clients, he said. The automated solutions include ATMs, phone banking, Internet banking kiosks, passbook writers and a cheque drop-box with acknowledgment facility, the CMD said.
Union Bank has set up 19 specialised branches and 175 business banking branches for large and mid-sized companies respectively, Nair said.
The lender plans to launch 25 more business banking centres in the current financial year. “We have deployed specially-trained staff to man the corporate centres, which will exclusively cater to large corporate clients. Similarly, 175 business banking branches have products specially designed for medium-sized companies.”
Corporate loans comprise 30 per cent of Union Bank’s total loan-book, while SME and retail advances make up for around 16 per cent and 12.5 per cent, respectively.
The bank’s agriculture portfolio stands at around 18 per cent. “The strategy is not to take any loan segment, except corporate, above 20 per cent as this would spread the risk equally on all segments,” Nair said.
Currently, Union Bank has a branch strength of 2,600 and plans to open 500 more in the current financial year, Nair said. The lender would recruit 2,000 people this year that would take the total staff strength to 31,000.
Current and savings accounts together contribute 30 per cent to the total deposits and the number is likely to go up to 35 per cent by 2012, the bank Chairman said. The lender added 33 lakh savings accounts in the last one year as against 22 lakh in the previous year.
Union Bank has also successfully brought down the proportion of expensive bulk deposits to total deposits to 13 per cent from 19 per cent in last year.
