Credit growth of United Bank of India (UBI) at the end of financial year 2016-17 (FY17) will be as low as 7-8% due to demonetisation impact, its MD and CEO P Bajaj said.

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"Due to demonetisation, banks are flush with funds. But, there are avenues to advance credit. So, credit growth will be 7% to 8% at the end of fiscal 2017," Bajaj said at a session organised by the Merchants Chamber of Commerce in Kolkata on Monday.

Not only for UBI, credit offtake would be muted for most of the banks.

Bajaj said out of the Rs 15 lakh crore-odd money which had been taken out of the system, 30% of the money returned had been withdrawn.

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The remaining 70% is with the banks in the form of current and saving accounts (CASA), he said adding, the cost of deposits had been in the range of 3.5% to 3.75%, he said.

Besides, banks had to meet the incremental cash reserve ratio (CRR) requirements post demonetisation which had cost the banks as they had to pay interest.

Talking of stressed assets, Bajaj said its percentage of total credit of all the banks was 12%.

"Hopefully by the June quarter, things will improve," he said.

About UBI's future exposure, he said the bank would extend credit to the micro, small and medium enterprises (MSME), agriculture, retail and mid-corporates. 

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