Union Bank of India, one of the most well-known public sector banks (PSBs) in the country, has officially reduced its MCLR (Marginal Cost of Funds-based Lending Rate) sometime earlier. The announcement was made by Union Bank of India after the RBI (Reserve Bank of India) kept the key policy rate absolutely unchanged as part of its bi-monthly review of the monetary policy. This cut in rates will be implemented from the 11th of February, 2020, onwards.
Union Bank of India has lowered the three month MCLR by 5 basis points. This now stands at 7.80% as compared to 7.85% previously. The 1-year MCLR now stands at 8.10% and is the 8th such cut in rates declared by Union Bank of India ever since July last year. Union Bank of India lowered its interest rates on home loans for different borrower categories up to 30 basis points recently to 7.90% from 8.20% previously.
Some other developments that you should be aware of
Union Bank of India has also changed its FD (Fixed Deposit) interest rates in recent times. The Overnight interest rate stands at 7 .75% while the 1-month interest rate is 7.8%. The 3-month and 6-month FD interest rates stand at 7.95% and 8.05%. The 1-year FD interest rate works out to 8.2%. The present repo rate of the RBI is 5.15% while the reverse repo rate stands at 4.90%.
Post the RBI keeping the repo rate unchanged, SBI (State Bank of India) has also lowered the MCLR by 5 basis points for all tenors. The 1-year MCLR at SBI has reduced to 7.85% per annum as compared to 7.90% per annum earlier. Union Bank of India has posted an increase in net profits to Rs. 574.6 crore for Q3FY20 or an increase of 275%. Net interest income or NII for the bank increased by 25.7% (year on year) to touch Rs. 3,134.6 crore as compared to Rs. 2,494.2 crore previously. Slippages for the quarter touched Rs. 5,112 crore which encompasses Rs. 2,267 crore in HFC exposure along with Rs. 300 crore in exposure to construction finance and Rs. 150 crore in road exposure.
The management at Union Bank of India has aimed for 7-9% of credit growth and growth of 9-11% in deposits. Recovery adding up to Rs. 328 crore has been received by Union Bank of India from ESSAR Steel for the quarter. Exposure to DHFL touched Rs. 2,267 crore with the PCR touching 25%. The investment exposure for DHFL also comes with 25% of PCR. Rs. 4,600 crore is tied up in exposure to power distribution facilities across Orissa and Karnataka. Real estate comprises of Rs. 700 crore out of the Rs. 3,800 crore book. The swap ratio may be released by the management in the near future and the integration procedure may require another 9-12 months on an average. Union Bank of India is expected to be merged soon with Andhra Bank and Corporation Bank. After this merger, it will become the fifth largest Indian bank with overall business of Rs. 14.59 lakh crore.