New Delhi, Dec. 2: Union Bank of India said today it will register higher profits in the current fiscal on the back of an increase in fee-based income and reduction of deposit-costs.
“The cost of deposits has come down due to falling interest rates whereas our fee-based income has gone up by 25 per cent,” said V Leeladhar, chairman and managing director of the bank.
The bank had reported a profit of Rs 311 crore for 2002-02. For the half-year period of the current fiscal (2002-03), it has registered a profit of Rs 207 crore. “Since the second half of the year is always more profitable than the first half we hope to clock a profit of around Rs 500 crore for the full year period,” the bank chief said.
Leeladhar added the government's move to empower banks to take possession of mortgaged securities and the finance minister’s one-time settlement scheme of Rs 10 crore was a great help.
The bank has sent around 750 notices to defaulters on the back of the Securitisation Bill. “Of these, 100 notices have been sent to defaulters whose outstanding amount is more than Rs 50 lakh. We have received good response from them…These are people who never used to come to the banks,” Leeladhar said. “We have settled two cases totalling Rs 5 crore through the Securitisation Bill.”
The recovery will help to reduce our non-performing asset level as well as boost our profits. “The recovered amount will again be used for lending purposes.” The bank has a liability of Rs 150 crore with the ailing IFCI, Leeladhar said. Asked to comment on the banks strategy to recover the due amount he said, “Talks are on regarding the recast plan and it will depend on the recast plan formulated by the bankers committee.”