Union Bank hikes lending rates for retail traders

Mumbai: Union Bank of India (UBI) has announced a 25-30 basis point increase in lending rates for retail trade with immediate effect. The bank, however, kept its prime lending rate unchanged at 11.25 per cent.

UBI would raise interest rates on working capital for retail traders from 9.5 per cent to 10.5 per cent and on term loans from 10 per cent to 11 per cent, reports quoting chairman M V Nair said.

UBI also announced the launch of a new deposit product, Union Double, which offers investors 100 per cent increase in the invested amount in 8 years and 9 months. The rate of interest offered is 8 per cent and the annualised yield comes to 11.43 per cent, Mr Nair said.

The minimum deposit amount for the new product is Rs 5,000 and the maximum is Rs 1 crore. The scheme will be open during the whole of July, he said, adding that the bank expects to raise around Rs 2,000 crore from the new scheme.

He said the bank's credit portfolio has grown by almost 29 per cent against the growth target of 25 per cent, while deposits have grown by 19 per cent (Rs 2,900 crore) against Rs 2,100 crore the previous year. The bank has targeted deposits of Rs 40,000 crore in 2006-07.