In order to gain more from advances, United Bank of India has decided to change its rate of interest on advances, which are presently below the prime lending rate (PLR), which is the interest rate that commercial banks charge their most credit-worthy customers. Generally a bank's best customers consist of large corporations.

Mr T.M. Bhasin, Executive Director of the bank, said: "Some of our advances are below PLR. Now we want to realign them in a way to increase our yield on advances." The bank has decided to discharge finances from its investments and reallocate them to the retail and small and medium enterprises in order to get better returns. "We plan to release close to 3 per cent of the money from investments in order to boost the credit-deposit ratio," Mr Bhasin said.

Mr. Bhasin further added, that the bank would be targeting a 25 per cent growth in advances and 20 per cent growth in deposits in fiscal year(FY) 2008-09, wherein the focus of the bank would be on the SME (Small to Medium Enterprise) and SSI (Small-Scale Integration) segments as they ensure better returns.

The bank’s retail portfolio is Rs 7,158 crore and it plans to increase it by 30 per cent during the current financial year. "We will lay greater emphasis on the SME, SSI and agricultural segments this year," he said. A portfolio is a collection of investments all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices.

UBI plans to recover Rs 500 crore from its written-off accounts and non-performing assets (NPA) portfolio. "In 2007-08, we recovered about Rs 427 crore. This year (2008-09) we want to recover about Rs 500 crore," he said. To meet this goal, the bank has been organising recovery camps in various regions. A non-performing asset is a loan or lease that is not meeting its stated principal and interest payments. Banks usually classify as nonperforming assets any commercial loans which are more than 90 days overdue and any consumer loans which are more than 180 days overdue, more generally, an asset which is not producing income. The net NPA of the bank declined to 1.1 per cent (1.50 per cent) in 2007-08.

After the announcement of the reduction in risk weightage on home loans by the Reserve Bank of India in the annual Credit Policy for 2008, the bank has slashed the rate of interest on housing loans by 25 basis points (25 percent) of up to Rs 30 lakh. "There is an increase in demand for housing loan in the eastern region and we want to tap the market," Mr Bhasin said.