Public sector lender Union Bank of India, which posted a healthy 29.6% year-on-year jump in net income at `5,332 crore in the June quarter, is eyeing to mop up $1.5-2 billion from the ongoing special forex deposit scheme for non-resident Indians by the end of September.
The ambitious target is despite the city-based bank managing to garner only $106 million halfway through the drive began early June.
“We have so far garnered around 4106 million. But our target is to get $1.5-2 billion the time the scheme gets over. We also have plans to raise $200-300 million in overseas foreign currency borrowing (OFCB) under the special RBI window,” the bank’s chief executive Asheesh Pande told reporters here on Wednesday.
When asked how confident the bank is given nearly half the window is over (early June to September 30) along with limited number of NRI branches (only five), to meet the targeted amount, Pande said, “Very confident as there is tremendous response to make the deposits from among our customers.
“Also, we are adding 20 more branches which have large NRI customer base, to our NRI-only branch list, along with our London, Dubai (DFIC branch) and Sydney branches, he said, adding the money so far flown are mostly from Australia and the UAE.
Pande also said the bank is not planning to increase the current pricing of 6.1-6.5% being offered to these depositors.
On Tuesday, bankers told the central bank governor Sanjay Malhotra that system-wide they mopped up over $9 billion in forex deposits under the scheme, for which banks pay no charges as the RBI will be footing that bill.
Meanwhile, on earnings, the bank management attributed the robust numbers to improved asset quality and higher net interest income, along with improved margins.
While net interest income rose 10.15% to `10,037 crore in the reporting quarter, its net interest margin inched up 4 bps to 2.80% and the overall asset quality saw significant improvement with gross NPAs coming down by 87 bps to 2.65% and net NPAs improving by 15 bps to 0.47%. Higher recoveries of `740 crore also helped buoy the bottom-line, he said.
The bank’s strategy will be to continue defending the NIM, Pande said. The bank also saw the credit-to-deposit ratio increasing to 86.1% from 79.2% a year ago as its deposits rose 3.52% to `12.8 lakh crore, while loans grew at a much faster clip of 12.5% to `10.9 lakh crore.
The bank’s current account savings account (Casa) ratio increased 258 bps to 35.09 in the quarter under review, but dipped 11 bps from the March quarter.