UBI caps interest rates at 14.25 percent

Kolkata, July 9 (IANS) Public sector United Bank of India (UBI) has capped its maximum interest rates at 14.25 percent, a top company official said here Friday.

‘Earlier in certain cases there was a provision for charging high interest rates like 15 percent or 16 percent but now we have streamlined it in our bank depending on the risk profile of the customers. The outer limit is 600 basis points over base rates,’ Bhaskar Sen, chairman and managing director, told reporters on the sidelines of the bank’s first annual general meeting.

The base rate of the bank has been fixed at 8.25 percent, and 600 basis points above the base rate would make the 14.25 percent as outer limit.

However, Sen does not expect fall in the bank’s average lending rate with the introduction of base rate system. ‘Rates of interest that we used to charge earlier would be protected,’ he said.

About the bank’s fund raising plans, he said the bank is well capitalized. The bank has taken permission from the shareholders to raise Rs.350 crore of tier I capital and Rs.250 crore of tier II capital for the financial year 2010-11.

However, it does not have any plan to raise capital in the first half of the fiscal. Capital raising may take place on the second half.

The bank’s actual requirement of capital for 2010-11 has been assessed at Rs.540 crore as tier I capital, of which it has already got Rs.250 crore from the government. It would require another Rs.160 crore as tier II capital.

As of now the bank has Rs.1,525 crore exposure to tier I and tier II capital.

Asked about the expected deposit and advance growth for the fiscal, he said it would be more than 20 percent.

The capital adequacy ratio of the bank was 12.8 percent on March 31, 2010.

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