According to company's top official, public sector United Bank of India (UBI) has placed a ceiling on its lending rates at 14.25% a year.

On the sidelines of the bank's first AGM, Mr. Bhaskar Sen, chairman and managing director, said, "Earlier in certain cases there was a provision for charging high interest rates like 15 percent or 16 percent but now we have streamlined it in our bank depending on the risk profile of the customers. The outer limit is 600 basis points over base rates."

The bank's base rate has been fixed at 8.25% and 600 basis points above the base rate would make the 14.25% as outer limit.

But, Mr. Sen does not expect drop in the bank's average lending rate with the initiation of base rate system.

Regarding the bank's fund raising plans, Mr. Sen stated that UBI is well capitalized.

The banking institution has taken nod from the stakeholders to lift around Rs 350 crore of tier I capital and Rs 250 crore of tier II capital for 2010-11.

However, it does not have any plan to lift capital during the first half of the existing financial year.

The bank's actual capital requirement for 2010-11 has been evaluated at Rs 540 crore as tier I capital, out of which it has already received Rs 250 crore from the government. It would require another Rs. 160 crore as tier II capital.

As of now the bank has Rs 1,525 crore exposure to tier I and tier II capital.

Asked about the projected deposit and advance growth for 2010-11, he said it would be over 20 per cent.

The bank's CAR stood at 12.8% on March 31, 2010. (With Inputs from Agencies)