Union Bank of India has made capital savings of ₹500 crore in FY2015 due to its focus on giving loans to the retail, agriculture and micro, small and medium enterprise (MSME) segments, a top official said.

Given that these segments are relatively less risky (vis-a-vis corporate loans), the amount of capital the bank had to set aside to make the loans was less.

Loan growth According to Arun Tiwari, Chairman and Managing Director, capital conservation efforts of his bank have paid off in the form of 26 basis points savings in capital. This translates into a saving of ₹500 crore.

Pointing out that retail, agriculture and MSME segments have seen about 30 per cent loan growth in the last four quarters, Tiwari said utilisation of loans made to these segments is better and they carry less risk weight.

Corporate loan growth, however, has been muted for the public sector bank in FY2015. Tiwari said credit demand could gather steam from the third or fourth quarter onwards.

New tie-up “Working capital demand will pick up first. Credit demand from brown-field projects will up come next.

“Credit demand from green field projects will then follow,” said Tiwari after announcing his bank’s tie-up with Star Union Dai-ichi Life Insurance and New India Assurance for launching ‘Pradhan Mantri Jeevan Jyoti Bima Yojana’ and ‘Pradhan Mantri Suraksh Bima Yojana’, respectively.

Under the Jeevan Jyoti Bima Yojana, the life of a savings bank account holder, who is between 18 and 50 years, will be covered for a sum assured of ₹2 lakh. The annual premium for this policy is ₹330.

The Suraksh Bima Yojana offers a one-year accidental insurance cover of up to ₹2 lakh to a savings bank account holder, who is between 18 and 70 years. The annual premium for this policy is ₹12.

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