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Union Bank of India defers Rs 1,386-cr QIP issue to next fiscal

State-owned Union Bank of India has deferred its plan to raise Rs 1,386 crore fund through qualified institutional placement (QIP) to the next fiscal.

“We have got everything in place. We will hit the market at the right time. We have taken approval for Rs 1,386 crore (fund raising) through QIP,” Union Bank of India Chairman and Managing Director Arun Tiwari told PTI.

Last year in June, the bank had taken shareholders’ nod for extension of approval for raising capital. The bank had planned to raise funds during the current fiscal, but given the market condition it has been deferred.

“Where is the demand, why unnecessarily raise capital and sit over it as there is no demand for credit at this point of time,” he said.

Besides, Union Bank of India plans to raise Rs 2,000 crore capital through issuance of Additional Tier 1 Bonds.

It would be Basel III compliant Tier 1 perpetual bonds.

Asked about expectations from RBI monetary policy on April 7, he said that looking at the current situation it is highly unlikely that RBI would ease rate further.

“They have already done twice in quick succession,” he said.

Earlier this month, RBI surprised markets by reducing the benchmark interest rate by 0.25 per cent to 7.5 per cent on the back of softening inflation and the government’s commitment to continue the fiscal consolidation programme.

This was the second time in two months that RBI cut interest rates outside the regular policy review.

Last time on January 15, it had cut the repo rate by 0.25 per cent to 7.75 per cent.