Union Bank expects Rs. 1,500 crore capital infusion

Union Finance Minister Pranab Mukherjee (left) and M. V. Nair, CMD, Union Bank of India, releasing the book 'Bankers Beacon The Story of Union Bank of India' at the 92nd Foundation Day function, in New Delhi on Thursday.

Union Bank of India on Thursday requested Rs.1,500-crore capital infusion from the government.

“We have requested the Centre for capital infusion. It is up to the government to decide on how much to give. The equity infusion of Rs. 1,500 crore should take the government's holding from the present 55 per cent to 60 per cent,'' bank Chairman and Managing Director M. V. Nair said at the bank's 92nd Foundation Day function here.

The government had infused Rs.6,211 crore in five public sector banks in June, out of which Union Bank got Rs.111 crore in the form of perpetual non-cumulative preference shares.

“If the government hikes its stake to 60 per cent, this will make the option of raising funds through a rights issue or dilution of government's holding available to the bank to meet future capital requirements. We hope that the decision about capital infusion would be announced before March, 2011,'' he remarked.

Mr. Nair said the bank planned to enhance its portfolio of loans at a 5 per cent faster growth rate than the industry average.

This year, the bank was expecting 25 per cent growth in credit, he added.

To sustain this kind of growth over 4-5 years, the bank would require substantial Tier I capital, he said.

The bank would conduct a review of the base rate and the benchmark lending rate (BPLR) in the next two months, he added.

“By December we will review the base rate. The adjustment of other rates would depend on the base rate review,'' Mr. Nair added.