Union Bank plans Rs 2,000-crore bond issue

MUMBAI: Public-sector lender Union Bank today said it is likely to get Rs 500 crore from government next month and is also planning to raise Rs 2,000 crore through tier II bonds during the quarter, a top banker said today.

"We have received in-principle approval from the government for Rs 500 crore of capital infusion and hopefully, we will get it by mid-December," bank's outgoing Chairman and Managing Director D Sarkar told reporters at 95th foundation day here.

"We also have an option for future expansion and we are in process of issuing tier II bonds," Sarkar said, adding that the capital infusion will be done on preferential basis.

After capital infusion and the proposed Rs 2,000 crore Tier-II bond issue, the bank's capital adequacy ratio will improve to near 10.5 per cent from current 9.72 per cent, he said.

Sarkar also said the bank may also look at capital raising through qualified institutional placement in the last quarter, depending on the market conditions.

Despite some of the PSU bank increasing their base rate after the RBI increased repo rate last month.

"As of now we are not thinking of increasing our base rate. Our Casa is not improving and demand is also very low," Sarkar said.

The state-run bank, last week, revised its fixed deposit rates on select maturity by up to 1.25 per cent in line with other lenders.

Fixed deposits between 46 days to 120 days would now fetch 0.25 per cent higher interest rate of 7.50 per cent against existing 7.25 per cent.

Similarly, in the slab of 31 to 45 days, interest rate is increased by 1.25 per cent to 6 per cent, the bank had said.

On the foundation day, the bank opened 111 more branches and 111 ATMs.