Union Bank chief expects rate hike by central bank

Mumbai: State-owned lender Union Bank of India may revise its lending rates in case there is any hike in the key policy rates in the annual monetary and credit policy by Reserve Bank of India(RBI), due on May 3.  However, the bank is not looking at revising its deposit rates even after the revision in the key policy rates said MV Nair, CMD, Union Bank.  The bank crossed a total business of R3,55,000 crore as of March 2011 and has recorded growth of 19.1% in deposits and 26.3% in advances.  “We do expect that the RBI might increase its key policy rates when it announces its annual monetary policy early next month as it was during inflation. So, we will wait for the policy before revising our lending rates. However, in any case, we may not revise our deposit rates,” he said.  Commenting on the recent RBI regulation on provision coverage ratio (PCR) where RBI has said banks need not provide beyond 70% of their gross non perfoming assets, Nair said the bank has already reached the regulatory requirement level of 70%. “Now we will start creating a buffer,” he added.  Replying to a query that what would be the hit on his bank out of the second option of pension for the bank’s retired employees, which banks have been asked to do within last year’s balancesheet, Nair said the bank will have to take a hit of R480 crore. “We are ready for it. The bank expects to achieve credit growth of 23% and deposit growth of 20-21% during the current fiscal. In any case, we want to be above the industry level by about 2-3% when it comes to credit and deposit growth for the current fiscal,” said Nair.  Nair said his bank was looking at an NIM of 3-3.1% for the current fiscal, as against the currently existing mark of 3.25%.  At present, the bank is focused on implementing two key initiatives with the support of consultants. One is on the HR front and another in the area of customer service excellence.  As a part of its relationship value to customers, the bank is aggressively promoting various online payments to government and its agencies and to the integrated services under government schemes, by leveraging on technology.