Equity market is going through despair banks have something to celebrate about FDs people are approaching them with surplus cash as banks are offering attractive returns on short-term fixed deposits (FDs). Most of the banks are offering interest rates ranging from 9% to 10.5% on deposits for periods ranging from six months to two years.

Albert Tauro, chairman and managing director of Vijaya Bank said, “FDs are yielding positive returns as it beats inflation levels.”

V K Dhingra, executive director of UCO Bank said, “The rate hike is thanks to the credit crunch banks were facing a while ago. Post our hike in FD rates to 10.5% for one-year deposits earlier this year, people began pulling funds out of stocks and mutual funds and began investing in FDs.”

The bank is having an enormous Rs 82,000 crore FD amount, and is growing at 17% year on year.

DBS Bank is the latest one to hike interest rates on deposits. In the beginning of this month, it raised interest rates on FDs with maturity between 180 and 270 days by up to 125 basis points to 10.75%.

According to bankers these short-term FDs offer a good option for people who are waiting for a clear picture on the economy to emerge.

C Abraham, general manager of Union Bank, said, “Investors can stay invested for a short tenure with assured returns at a healthy interest rate.”

In August Union Bank had introduced a new term deposit product of 444 days on which it offered an interest rate of 10% per annum.

George Joseph, CMD of Syndicate Bank, said some depositors are taking out the money from their savings account to reinvest in FDs. FDs giving 10.5% per annum, offer a safe hedge against inflation, which was on the edge of 10% mark.

Syndicate Bank is carrying out a door-to-door campaign to raise deposits from high net worth individuals (HNIs).

Joseph said, “We have raised Rs 700 crore of HNI money from Delhi and Kolkata in November, of which 60% were FDs.” The bank is having Rs 36,000 crore FD portfolios which grew at 30% year-on-year last quarter and is expected to maintain it for this fiscal.

Though, the party might not last very long. The Reserve Bank of India has propelled in enough liquidity into the system with its monetary measures. Therefore banks might not have to rely on FDs for mopping up funds much longer.

While Syndicate Bank and Corporation Bank have announced that they will be reducing interest rates on one-year deposits starting December 1. Other banks are also expected to follow suit.

Until the special interest rates being offered, there is an opportunity for investors to approach the nearest bank and invest some money in FDs.

UCO bank to set up 60 new branches by 2009

By March 2009 UCO Bank, a leading banking service provider will be setting up 60 new branches across the country from which 13 units will be set up in rural areas.

During the launch of bank’s pre-funded cheque scheme, UCO bank General Manager N Kumaraswamy told the reporters that all the new branches will be providing Core Banking Solutions (CBS). "We will be opening up 20 new branches within a couple of months", he added.

He told that setting up CBS in all branches will be completed by 2009. "Currently out of our total 1,980 branches in India, 975 branches would provide CBS".

Kumaraswamy said there are plans of increasing banks revenue by 20 per cent this fiscal.

He informed the bank will be concentrating more on providing education loans to students in the country. "More than 4,000 students were provided education loan in South India alone to the tune of Rs 120 crore."

Regarding the pre-funded cheque scheme, he said it will protect against dishonor of cheques due to insufficiency of funds. The customer will also be able to earn interest on funds kept in the savings bank account and at the same time, can save on commission normally charged at the time of issuing demand drafts.

Under the scheme, the customer will get Rs 1,000, Rs 5000 and Rs 10000 pre-determined denominations cheque book.

He said in the beginning the new product will be launched at 261 select CBS branches of the bank in the country. "We hope to increase our saving bank deposits and current deposits through aggressive marketing of pre-funded cheques", he said.

UCO bank launched technology enabled product "Pre Funded Cheque"

UCO Bank as a unique initiative launched a technology enabled new product “Pre-Funded Cheque” in Jalandhar. At the time of launching the product R K Mittal, Zonal Manager of the bank informed that the new product is going to benefit the customers a long way, who were desirous of having “Order Cheques” having adequate back up funds.

Mittal said the "Pre Funded Cheques" are secured against the dishonor of cheque on account of insufficiency of funds as back up funds are arranged at the time of issuance itself. He added that through new product interest can be earned on the funds kept in the savings bank account and will also help in saving on commission which is normally charged on the issuance of the Demand Drafts, Traveler Cheques or Gift cheques.

He told that the Pre Funded Cheques will be issued in three pre-determined denominations of Rs 1000, Rs 5000 and Rs 10000 in cheque books which will have multi-colored cheque leaves and the cheque books can be obtained on payment of very nominal charges.

He said initially the new product will be introduced at 261 selected CBS branches of the bank and it is expected that the new product will help in increasing its savings bank deposits and current deposits through aggressive marketing of pre funded cheques.

UCO launched retail loan shoppe, offers automobile, education, personal loans

United Commercial Bank (UCO) the Kolkata-based bank has opened its retail loan shoppe in Bangalore with an aim to achieve a target of Rs 100 crore businesses annually from its 40 branches in and around Bangalore.

Bank sources informed that soon the facility will be extended to other regions.

Addressing to presspersons on the sidelines of the launch program, General Manager S. K. Das informed that the bank has opened two different channels having a network of 20 branches in Bangalore. The network will be managed by the “lending automation and purchase system”. Through shoppe bank will be offering automobiles, consumer goods, education and personal loans.

Mr. Das told presspersons that the bank has been selected for a national award for its performance in agriculture and small and medium enterprises sectors. The award will be presented by Prime Minister Manmohan Singh in a ceremony in New Delhi on August 30. On this occasion, the bank will be launching “Pre-Funded Cheques”, which can be used as a multi-function instrument as a traveller’s cheque and a self drawn demand draft.

UCO bank will hike deposit and lending rates by 50 bps

State-run UCO Bank sources said in the next few days bank will be increasing both lending and short-term deposit rates by up to 50 basis points.

UCO Bank Chairman and Managing Director S K Goel stated, "Short-term deposit rates for up to six months will go up by 50 basis points." He said the final decision on the rate hike will be taken by next week. The minimum interest rate for six months time slab will hike up to 4 per cent from the existing 3.5 per cent and the maximum fixed deposit rates in the category will be 7 per cent.

He further added there will be slight adjustment in the non-priority sector lending rates as well, these would include housing loan above Rs 30 lakh, corporate loans etc. Adding further he explained that these are the segments where bank has discretion to swindle with the rates as these are not linked to the PLR. He said at present bank has no plans to change PLR.

In addition to this bank is also planning to raise about Rs 825 crore from the market to fund its business growth.

"We are looking to raise Rs 325 crore through perpetual non-convertible preference shares during the second quarter and about Rs 500 crore from follow-on public offer in the third quarter of this fiscal," Goel said.

He explained that the capital raised will help the bank to record 25 per cent loan growth for the next two year.

When ssked about bottom line target for the current fiscal, Goel replied the bank is expecting to earn a profit of Rs 750 crore this fiscal as against Rs 412 crore in the previous year. The profit would increase by 82 per cent over the last fiscal.

UCO to slash interest rates on home, education loans

The United Commercial Bank Ltd (UCO Bank) has decided to reduce the interest rates it charges on home and education loans. Speaking about this new development, UCO Bank Chairman and Managing director S K Goyel, said, "Home and education loans will be our focus areas for the current financial year and hence we do not mind giving a little interest rate concession to our customers. Though the matter will be discussed at the next board meeting, we are likely to slash lending rates on these items by 25 to 50 basis points."

In line with RBI's decision to reduce the risk weight to 50 per cent on home loans up to Rs 30 lakh, there is an expectation of new rates for home loans to be applicable for advances up to Rs 30 lakh. "With home loans up to Rs 30 lakh coming under the priority sector lending, this will be our special focus area in the category," he added.

The Kolkata-based bank gave out home loans to the tune of Rs 3,257 crore as on April 30, 2008, with housing loans posting a 15 per cent growth during the last financial year.

"We are looking at a growth of 20 per cent in home loan advances in the current financial year," Goyel said.

Presently, floating interest rates in the category vary between 9.75 per cent and 11.75 per cent, depending upon the term and the amount of the loan.

In the education loans segment, UCO Bank advanced loans worth Rs 336 crore till April 30, 2008. The interest rates in this category range between 11.25 per cent and 11.75 per cent. During 2007-08, the bank posted a growth of 38 per cent in education loan advances.

UCO bank was established in 1943 in Kolkata. Today, UCO Bank has nearly 2000 branches and 34 regional offices spread all over India. The Bank also operates in two major international financial centres namely, Hongkong and Singapore.

UCO bank announce 5000 educational loans for students

UCO BANK, Chennai Zone following the directives given by Honorable Finance Minister has announced to give educational loan to students. Educational loan will be distributed through 81 branches of the bank in Tamil Nadu.

The bank has a target of sanctioning 5000 educational loans to students for studies from Plus two to any higher course, engineering, medical or any professional course in India or abroad for this academic year. The bank sources said the needy students can approach any branch of UCO bank in Tamil Nadu or email their request to ro.chennai@ucobank.co.in

FM: by 2018 one of top five banks in the world will be from India

Speaking at the 13th triennial conference of UCO Bank finance minister P. Chidambaram said by 2018 one of top five banks in the world will be from India.

He said: "Our plan is to make six public sector banks reach the top 100 banks in the world."

He said that the government will put all efforts to make the Indian banking system world class in ten years to achieve the two targets.

Repeating the government's commitment in retaining majority ownership in its banks, the minister said additional capital would be poured for this purpose.

He expressed satisfaction at the turnaround achieved by the UCO Bank from a loss making unit to a profitable bank, further he asked the officials to make efforts to increase credit in industrial sector business-deposits and advances.

UCO to slash interest rates on home and education loans

Kolkata – headquartered UCO Bank will be slashing interest rates on home loans and education loans. In an interview given to Business Standard UCO Bank Chairman and Managing director S K Goyel said, "Home and education loans will be our focus areas for the current financial year and hence we do not mind giving a little interest rate concession to our customers. Though the matter will be discussed at the next board meeting, we are likely to slash lending rates on these items by 25 to 50 basis points."

In home loan segment new rates will be valid for advances up to Rs 30 lakh, which is in line with RBI's decision to reduce the risk weight to 50 per cent on home loans up to Rs 30 lakh.

He added, "With home loans up to Rs 30 lakh coming under the priority sector lending, this will be our special focus area in the category."

The total exposure of home loans as on April 30, 2008, was Rs 3,257 crore however housing loans showed a growth of 15 per cent during the last financial year.

At present, in this category floating interest rates vary between 9.75 per cent and 11.75 per cent, depending upon the term and the amount of the loan.

"We are looking at a growth of 20 per cent in home loan advances in the current financial year," Goyel said.

While in education loan segment UCO Bank advanced worth Rs 336 crore at the end of April 30, 2008, and interest rates in this category range between 11.25 per cent and 11.75 per cent.

Bank advances in education loan segment posted a growth of 38 per cent during the financial year 2007-08.