UBI Expects 10% Credit Growth In Current FY

Product innovation and technology upgradation are facilitating growth for Union Bank of India

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RBI data indicate that credit growth has drastically reduced to 5.08% in the financial year 2016-17, as against 10.69% a year ago. The outstanding credit of banks as of 31 March 2017 stood at ₹78.81 trillion compared to ₹75.01 trillion as of 1 April 2016. The credit growth in 2016-17 is the lowest since 1953-54 when it was up by merely 1.7%.

During FY 2016-17, growth in advances of the Union Bank of India (UBI) was 8.62% against the industry average of 5%. Due to encouraging growth of 15.2% in retail, agriculture and MSME sectors, domestic advances of the bank increased by 8.2% from ₹2.516 trillion as on 31 March 2016 to ₹2.722 trillion as on 31 March 2017. A.K. Goel, ED of the bank, says: “Retail, agriculture and MSME sectors together contributed substantially in the incremental credit of the bank. These 3 sectors now have a share of 53.8% in domestic advances of the bank, up from 50.5% a year ago.”

NEW LOAN PRODUCTS

The growth in credit has also come about as a result of product diversification. During FY 2016-17, the bank entered into tieups with automobile manufacturers for increasing credit through financing light commercial vehicles up to ₹10 lakh. Under this, commercial vehicle loans up to ₹10 lakh are collateral free and require very minimal documentation. The bank also created a special scheme for financing road transport operators for purchase of light commercial vehicles (LCVs) under tie-ups with various manufacturers. Says Goel: “We financed purchase of 28,224 LCVs aggregating ₹706 crore in 2016-17. Some of the prominent names, with whom the bank has tie-ups are Ashok Leyland, Tata Motors, Mahindra & Mahindra, VECV and Piagio.”