"Banks unable to attract low-cost funds"

Chairman and Managing Director of Union Bank of India (UBI), D Sarker, has said the banking sector, in general, is unable to attract low cost deposits as people are moving away to other asset classes like gold, jewellery, etc.

“We are more worried as the low cost funds (deposits) are not coming to the banks, as earlier, more and more people are being attracted to other asset classes,” Sarkar told reporters while summing up the banking scene the country. He was in Hyderabad in connection with “Banking Technology Excellence” awards function organised by IDRBT.

Responding to a question, Sarkar said that even the corporate advances have also falling the companies are not taking up expansion plans, on the other, there is no new project coming up. Sarkar said, as a first step in attract deposits, his bank is now focusing to enter rural banking in a big-way and convert most of the business transactions in villages routed through banking system, which are now being done through cash transactions.

UBI CMD said that the bank working out a branch expansion plan, accordingly, about 22 new branches will be opened in Andhra Pradesh, while 5 will be under Hyderabad region. As of now, the bank is operating with 3,500 branch network and over 5,000 ATMs, across the country.

On expanding the capital under Basel norms, Sarkar said that there is no immediate requirement to increase the capital. “We may have to enhance capital after 2015. We have submitted out requirement to the government,” he said.According to an estimated (as worked out against 20 per cent growth), the bank may require an increase of capital to the tune of about Rs 3,000 crore, he added.