City Union Bank set to double fee-based income

Chennai August 28, 2007

City Union Bank (CUB), one of the oldest scheduled commercial banks in the private sector with a significant presence in the south, plans to double its fee-based income in the current fiscal. To double its income from fee-based income, CUB has entered into five tie-ups in the current fiscal.

Of the five tie-ups, four will provide money transfer services, while the fifth will introduce cash management services from the bank for the first time. Besides boosting fee-based income, CUB's tie-ups will aid resource mobilization in the long run, and bring in more non-resident Indian (NRI) accounts, bank officials said.

The bank has signed agreements with L&T Finance Ltd, United Arab Emirates (UAE) Exchange, Bank of India, Singapore, Qatar-based Doha Bank and ICICI group's Moneytoindia.com .

CUB mobilised NRI deposits worth Rs 146.18 crore during 2006-07. Though the bank has set no specific target for NRI deposit mobilisation in the current fiscal, bank officials maintained that the new tie-ups would contribute significantly to CUB's total deposits target of Rs 6,500 crore.

The bank garnered around Rs 14 crore in fee-based income during 2006-07, whereas total income of the bank was recorded at Rs 454.13 crore.

The bank has also entered into a tie-up with L&T Finance Ltd, which is a non-banking finance company (NBFC) mainly into construction equipment finance, to provide cash management services to sub-contractors of Larsen & Toubro Ltd (L&T).

The bank is also in the process of extending cash management services to other customers.

"We have started providing cash management services in Kerala, Tamil Nadu and Andhra Pradesh. We will gradually introduce it in other states," S Balasubramanian, chairman and chief executive officer, CUB, said.

It may be recalled that the bank had approved the picking up of a 4.87 per cent by L&T in May this year.

CUB signed an agreement with UAE Exchange a fortnight ago for remittance services. Under this agreement, the bank offers two services to its customers - Express Money and  MoneyGram -, which allow money transfer from various countries to India, especially Gulf countries.

Under the agreement, CUB will act as sub-agent to offer MoneyGram International remittance services at CUB branches. Express Money is a service offered by UAE Exchange.

CUB signed an agreement with Bank of India, Singapore, to offer draft-drawing arrangements in June 2007. Under the tie-up, Bank of India customers will be able to issue demand drafts at select CUB branches.

In May 2007, the bank had entered into an agreement with Qatar-based Doha Bank for transfer of money remitted from abroad to CUB customer accounts at its 165 branches. "There is a huge NRI workforce in Dubai and the Gulf countries. This agreement will also help us get more NRI accounts," Balasubramanian added.

The bank has also tied-up with ICICI group's Moneytoindia.com to enable online fund transfers. Non-CUB customers can also avail of this service where their funds may be transferred to their respective bank accounts via the CUB branch network.