UCO Bank Secures $730 Million via FCNR Deposits to Boost Liquidity
The Kolkata-based lender exceeded its $500 million target to support rapid credit growth.
1Strategic Capital Mobilization
UCO Bank successfully raised $730 million through foreign currency non-resident deposits, significantly surpassing its initial $500 million target. This capital injection was essential to support a 24.7% year-on-year growth in advances during the September quarter. By securing these funds, the bank effectively avoided relying on expensive domestic bulk deposits for liquidity.
2Managing Liquidity Requirements
The bank utilized the majority of the mobilized foreign currency to meet immediate liquidity needs. Instead of issuing fresh bulk deposits at higher interest rates, management opted to renew maturing deposits. This approach helped maintain cost efficiency while the bank experienced credit growth well above its annual guidance of 12-14%.
3Addressing CASA Challenges
Managing Director Rajendra Kumar Saboo identified the mobilization of low-cost current account and savings account funds as a primary challenge for the banking sector. Changing customer investment patterns have forced banks to innovate. UCO Bank is responding by introducing bundled banking products, digital services, and corporate cash management solutions to attract deposits.
4New Institutional Services
UCO Bank plans to launch specialized cash management services in the current quarter to capture institutional and corporate current accounts. These services aim to provide liquidity management solutions for companies. Additionally, the bank is promoting a 535-day fixed deposit scheme offering 6.6% interest, with rates reaching 7.1% for senior citizens.
5GIFT City Expansion
The bank’s international operations are growing through its new GIFT City branch, which opened on August 10. The branch has already extended $350 million in loans. Currently, 75% of its resources are sourced through borrowings, while 25% comes from deposits, marking a significant step in the bank's international lending strategy.
6Net Interest Margin Performance
UCO Bank reported a global net interest margin of 3% for the September quarter, outperforming its annual guidance of 2.8-2.9%. This performance is supported by the repricing of loans linked to the Reserve Bank of India's repo rate. Approximately 66% of domestic advances are currently tied to external benchmark lending rates.
7Asset Quality Improvements
The lender has already achieved its full-year asset quality targets ahead of schedule. The gross non-performing asset ratio declined to 1.96% in September, well below the March 2027 target of 2%. Furthermore, the net NPA ratio fell to 0.18%, while the provision coverage ratio improved significantly to 90.88% from 83.68%.
8Future Growth Outlook
UCO Bank expects healthy demand across retail, MSME, and corporate sectors despite recent repo rate increases. The bank plans to add 100-110 new branches by the end of the financial year, building on the 18 opened in the first half. Management remains committed to maintaining a balanced portfolio with a 65-66% RAM share.