Union Bank of India said it would open a branch at the Dubai International Financial Centre, or DIFC, as part of its overseas expansion drive as the sixth largest public sector lender in India presses ahead with an aggressive branch network expansion in its home country.
D. Sarkar, the bank’s chairman and managing director, said the DIFC branch — the bank’s second overseas — would cater to the business requirements and expansion plans of Indian corporates in the overseas markets.
Speaking to Khaleej Times during his first visit to the UAE after taking over the reigns of the bank a few months ago, Sarkar said the DIFC branch is expected to serve as a vital geographical and time zone link between Europe and the US on the one hand and Hong Kong and Singapore on the other.
“This will be the most opportune time for the bank to enter the DIFC when the growing bilateral relations call for increased co-operation on the fronts of trade and commerce,” Sarkar said.
“The DIFC branch is a logical culmination of the five year old initiative taken by the bank to cater to the NRI [non-resident Indian] population in UAE having business and family linkages with India.”
Union Bank of India opened its first representative office in Abu Dhabi in 2007 and has since been serving India expatriates by providing them single window assistance in remittances and counselling. “India has traditionally had a strong linkage with UAE and the bilateral relationship has strengthened over time with UAE emerging as one of the largest trading partners of India,” Sarkar said.
The bank also has immediate plans to bolster its presence in other overseas markets, particularly in Sydney where it currently has representative offices. It also has branches in London, Shanghai, Beijing and Antwerp.
“We are looking at expansion in more European Union countries in keeping with economic growth potential and increasing scope for bilateral trade relationship. This will enable remittance service for expatriate Indians, besides meeting the growing needs of Indian corporate houses at these locations,” Sarkar said.
“Our global expansion is aimed at serving the vast growing Indian corporate and businesses abroad. We are doing this with all the regulatory compliances in place, for which Union Bank has set very high standards internally in India,” said Sarkar, a former executive director of Allahabad Bank, who was appointed as the head of Union Bank of India on March 31.
One of his top agendas as the bank’s new head, Sarkar said, is his focus on boosting retail business and recovery of non-performing assets. “We are placing more emphasis on tapping the home and vehicle loan segments to expand our retail portfolio that currently accounts for ten per cent of the bank’s total advances,” he said. “The bank is also keen to boost its support for small and medium enterprises.”
The bank, which opened about 130 branches in 2011, plans to set up 250 more this year to boost its network from 3,263 at present to 3,500 by March 2013.
Across India, the bank currently has a network of total of 7,475 outlets including 4,182 ATMs. “Out target is to boost the ATM network to 5,000 by 2013,” he said.
The bank, whose first branch was opened 92 years ago by the Father of the Nation, Mahatma Gandhi, is the first lender in India to launch “Talking ATMs”, meant for physically-challenged clients. “We opened 27 Talking ATMs and will have 100 such machines by March 2013,” Sarkar said.
He said the bank, which has raised $350 million through medium-term note for its overseas requirement, is expecting a capital infusion of Rs10 billion from the government to boost tier one capital to comply with Basel III norms. On banking sector reforms, Sarkar said the recent initiatives, including the move to allow foreign direct investment in the retail sector, has helped boost investor sentiments.
Another immediate agenda for the bank, which is forecasting a 15 per cent deposit growth and 18 per cent credit growth, is to bring down the ratio of non-performing assets, or NPAs. As at December 31, 2011, the gross NPA of the bank stood at 3.33 per cent while net NPAs were at 1.88 per cent.
Khaleej Times
