Union Bank ties up with post offices in Maharashtra to disburse farm loans

Mumbai: Union Bank of India has signed a memorandum of understanding (MoU) with the department of posts, Maharashtra circle, for disbursement of loans to farmers in six districts of the state.

"We have allocated Rs 100 crore to be disbursed through this tie-up for the financial year 2007-08," M V Nair, chairman and managing director, Union Bank, said.

The bank plans to lend up to Rs 2 lakh to farmers without insisting on any collateral, he added.

The tie-up will help the bank in acquiring new business at less the cost, R S Reddy, executive director, Union Bank said. However, there won't be any change in interest rate for loans disbursed through post offices.

Reports, meanwhile, said the government is seriously considering a merger between Union Bank and Bank of India proposed by the boards of both the banks.

Union Bank of India stock is faring well on account of its better capital adequacy, improvement in asset quality and stabilisation of margins.

Compared to Q1 and Q2, the bank has shown better sequential decline in gross as well as net NPAs in absolute terms. Better treasury profits and higher fee and other income have resulted in better net profit growth of 11.7 per cent at Rs 255.8 crore in Q3 FY07.