Credit growth of United Bank of India (UBI) at the end of FY 2016-17 will be as low as seven-eight per cent due to demonetisation impact, its MD & CEO P Bajaj said. “Due to demonetisation, banks are flush with funds. But, there are avenues to advance credit. So, credit growth will be seven to eight per cent at the end of fiscal 2017,” Bajaj said at a session organised by the Merchants Chamber of Commerce here today.
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Not only for UBI, credit offtake would be muted for most of the banks.
Bajaj said out of the Rs 15 lakh crore-odd money which had been taken out of the system, 30 per cent of the money returned had been withdrawn.
The remaining 70 per cent is with the banks in the form of CASA, he said adding, the cost of deposits had been in the range of 3.5 per cent to 3.75 per cent, he said.
Besides, banks had to meet the incremental CRR requirements post demonetisation which had cost the banks as they had to pay interest.
Talking of stressed assets, Bajaj said its percentage of total credit of all the banks was 12 per cent.
“Hopefully by the June quarter, things will improve,” he said.
About UBI’s future exposure, he said the bank would extend credit to the MSME, agriculture, retail and mid-corporates.