United Bank of India has been making headlines lately for its proposed amalgamation into Punjab National Bank (PNB) along with OBC (Oriental Bank of Commerce) in the near future. The bank has also set the foundation for a pioneering collaboration of sorts, by tying up with NBFC Srei Equipment Finance for offering loans jointly to customers.
Srei Equipment Finance and United Bank of India are the first in the sector to tie-up for a co-lending arrangement based on the Co-Origination model followed by NBFCs (non-banking finance companies) and banks.
Key details about the tie-up
For offering loans to MSMEs (micro, small and medium enterprises) and retail borrowers, United Bank of India partnered Srei Equipment Finance Limited which is an NBFC wholly owned as a subsidiary of Srei Infrastructure Finance Limited. The two entities will offer home loans jointly under a new co-lending program. Under this model, United Bank of India and Srei recently organized Loan Utsavs throughout 20 Indian cities which has won praise from the Union Finance Minister Nirmala Sitharaman.
The Managing Director & CEO at United Bank of India, Ashok Kumar Pradhan, stated that Srei and United Bank of India are the first in the sector to foray into this arrangement for co-origination of loans under the model of co-origination between NBFCs and banks. He added that this model is vital for ensuring better priority sector credit. The arrangement enables tapping strengths of both these companies for mutually benefiting from the same. He added that the arrangement will be taken ahead in the near future as well. Collaboration is the key towards achieving future growth as per his statement and credit will be readily available for MSMEs in sync with the vision of the Government.
The joint Loan Utsavs will help the partners scale up their customers bases as well. Srei has already successfully conducted these loan fairs with United Bank of India across 20 locations which was attended by several dealers, manufacturers of equipment and customers according to Pradhan. They also received on-spot loan approvals for equipment loans.
Other aspects worth noting in this regard
The Managing Director at Srei Equipment Finance, Devendra Kumar Vyas, stated that the jointly taken initiative was aimed at fulfillment of the mission of the Government with regard to easier credit availability for MSMEs and retail borrowers at cheaper costs overall. Provision of best-in-segment financial solutions for customers has always been the priority at the NBFC according to him and customers also had the chance to get equipment from the best OEMs (original equipment managers) at the Loan Utsavs. Both partners could expand their base of customers according to him.
The Loan Utsavs were organized across Hyderabad, Delhi, Mumbai, Pune, Ahmedabad, Jaipur, Nagpur, Durgapur, Haldia, Keonjhar, Ranchi, Patna, Bolangir, Chandigarh, Vijayawada, Karnal, Lucknow, Rajkot, Udaipur and Bhopal. Loans were offered against purchases of construction equipment with reasonable EMI offers. Loans up to 90% of the equipment value were provided for tenors ranging up to 5 years. A 30-60 day moratorium period was also provided on the basis of the loan amount and overall structure.
Major developments at United Bank of India
- United Bank of India will soon be merged into Punjab National Bank (PNB) along with Oriental Bank of Commerce. This new entity will be the second biggest lender in the country.
- The new entity will have business worth Rs. 17.95 lakh crore across 11,437 branches as per the Union Finance Minister’s statement.
- United Bank of India has already report Rs. 123.88 crore in net profits for second quarter of the current financial year ending on the 30th of September, 2019.
- The bank is headquartered at Kolkata and its net loss stood at Rs. 883.17 crore for the period between July and September in the last financial year.
- In the first quarter of this financial year, net profit touched Rs. 105 crore for the period ending in June, 2019.
- Total income for United Bank of India increased to Rs. 3,013.74 crore for the quarter ending in September, 2019, as compared to Rs. 2,600.47 crore earned in the same period of the last financial year.
- NPAs (non-performing assets) were lowered by the bank to 7.88% on the 30th of September, 2019, as compared to 14.36% by end-September, last year.
- Gross NPAs or the bad loans came down to 15.51% of gross advances in this period as compared to 22.69% in the same period last year.