United Bank of India (UBI) has decided to join hands with Kotak Mahindra for selling mutual fund schemes.

The asset management companies including HDFC, UTI, Franklin Templeton, Reliance and ICICI Prudential are already selling UBI’s mutual fund schemes across the country.

Swapan Biswas, General Manager, (Marketing and New Initiatives) stated, “The tie up with Kotak Mahindra has been finalised and we will sign an MoU with them within two-three weeks. We will ink similar deals with four other companies shortly.”

As part of its plan to strengthen non-interest income, UBI is also selling insurance plans along with mutual fund schemes.

P.K. Gupta, CMD of United Bank of India has also made announcement about its affiliation with Tata AIG Life in order to launch a new health insurance package named “United Health Solutions” – a customized health insurance package for customers of UBI.

UBI and Tata AIG will jointly launch pension plans shortly, he said.

“With Net Interest Margins declining, unless we raise non-interest income, it will hurt our bottomline,” Mr. Gupta added.

“We are looking at this segment to contribute 10 per cent of the total non-interest income by next fiscal,” Mr. Gupta also said.

At present, UBI’s business from mutual fund and insurance schemes stood at Rs 14.5 crore, which is about 5% of total non-interest income.

In addition, United Bank of India is eyeing to double up its business to Rs 150,000 crore by 2011. It has also roped in Indian Institute of Management, Calcutta to devise a mid-term strategic plan.
 
"Our total business by the end of this fiscal would be around Rs 75,000 crore and we are planning to double it in another three years time. At present, our team is working along with IIM Calcutta on the quantitative as well as the qualitative aspects of what would be required to support our expansion plans," PK Gupta said.

The bank is hoping to see its credit portfolio grow 25 per cent in 2008-09.