Union Bank to raise Rs 500 cr from bonds by March 2009

NEW DELHI: Union Bank of India today said it would mop-up about Rs 500 crore in the remaining months of the current fiscal to meet capital requirement.

"We may raise about Rs 500 crore by March 2009 both from Tier II and perpetual bonds together," Union Bank of India Chairman and Managing Director M V Nair told reporters on the sidelines of signing of an MoU with National Small Industries
Corporation Ltd (NSIC).

The bank expects its Capital Adequacy Ratio over 12 percent under Basel II by the end of current financial year, he said.

By March 2009, the CAR would be around 12.3 per cent as per the Basel II norms compared to 11.7 as of September.

Asked if the bank is planning to cut deposit rates, Nair said, "I think deposit rates to come down. Inflation is coming down. RBI has already given indication by reducing the repo rate by 100 basis points."

"So, deposit rates should come down and benefits should be passed on to borrowers," he said, adding that with lag effect rates should come down.

Speaking about the credit disbursal, Nair said that in some sector demand has come down and when demand is less it is difficult to finance.

"In commercial vehicle there is reduction in demand, textile is passing through some difficulties and all connected sector are having some kind of impact," he said.