UCO Bank has opened four special rupee vostro accounts and has received permission from the Reserve Bank of India (RBI) to open eight more, the state-owned lender’s managing director and CEO Ashwani Kumar said.

Of these eight, six are with Russian banks and two are with banks in Belarus. “We will be opening these accounts soon. The account opening formalities are on,” said Kumar.

The Kolkata-headquartered bank has also received interest from four more banks for opening special rupee vostro accounts. “Four more banks have expressed interest. We will approach the RBI for seeking their permission,” Kumar said while speaking to reporters at a virtual press conference to announce the bank’s June quarter results on Friday.

Kumar said the volume of transaction under these accounts is still small but could pick up once the level of awareness increases.

The drive to open special rupee vostro accounts is to facilitate overseas trade in the rupee. India is trying to persuade other countries to show interest in the rupee settlement system.

Meanwhile, UCO Bank reported an 81% rise in net profit to Rs 223.48 crore during the April-June quarter compared to Rs 123.61 crore a year before. This came on the back of higher core income and lower provisioning.

Net interest income (NII) rose 21.78% to Rs 2,008.80 crore in the quarter ended June 2023, compared to Rs 1,649.54 crore in Q1FY23.

Net interest margin (NIM) improved to 2.86% from 2.74% a year before.

The bank’s total deposits grew nearly 11% to Rs 2,49,694 crore while advances increased by 25% to Rs 1,64,278 crore. 

Growth in credit was primarily driven by retail, agriculture and MSME sectors, Kumar said.

The bank’s total business grew by 16.06% year-on-year to Rs 4,13,972 crore.

The credit-to-deposit (CD) ratio improved to 65.79% as on 30 June versus 58.29% a year ago. 

Kumar said the bank was looking at maintaining NIM at around 3% in FY24 despite there being pressure on deposit rates to go up. “Since our CD ratio is around 66%, we do not have to tap deposit rates at unjustifiably higher interest rates,” he added.

The bank’s gross non-performing assets (NPA) improved to 4.48% during the June quarter from 7.42% a year before. Net NPA improved to 1.18% from 2.49%. 

Provision coverage ratio improved to 94.88% from 91.96% in the year-ago quarter.