BackUTI bank to raise $744 mn for overseas expansion
UTI bank to raise $744 mn for overseas expansion
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By Kartik Goyal, Bloomberg
New Delhi: UTI Bank Ltd., partly owned by a government-controlled mutual fund, said it plans to raise $744 million in debt in the first half of the year starting 1 April to fund overseas expansion.
The amount will be raised through medium term notes and used to finance overseas expansion, Chairman P.J. Nayak said today.
“We have a sanction to raise $1.2 billion," Nayak told reporters in New Delhi. “We are opening full-fledged branches in Hong Kong and Dubai in April."
ICICI Bank Ltd., Bank of Baroda and Bank of India are already adding branches abroad to service Indian companies that are acquiring overseas rivals and exporting more goods and services. The banks also want to tap growing remittances from Indians living overseas.
The Mumbai-based bank expects loans to grow as much as 40% next year, Nayak said. Loans in the nine months ended 31December grew 60% to Rs320 billion
The “cost of funds has gone up," after the Reserve Bank of India, nation’s central bank, raised interest rates. RBI on 31 January raised its key overnight rate by a quarter percentage point to a four-year high of 7.5% to contain inflation. On 13 February, it told banks to set aside 6% of funds as reserves starting 3 March from 5.5.
The bank’s consumer loans, which account for 28% of the total loans, has “not witnessed any" slowdown after the rate increases, Nayak said. ICICI Bank, India’s biggest lender to consumers, expects growth in loans for houses, cars and durables to decline to between 20% and 25% from as much as 45%, chief executive K.V. Kamath said yesterday.
UTI Bank’s shares gained Rs25, or 5.4%, to Rs485.2 on the Bombay Stock Exchange.
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