KOLKATA: United Bank of India (UBI) has shelved plans to tap the market with an initial public offering at least for a year. This follows the union government's lack of support to the bank's Rs 1,200-crore capital recast plan.

If approved, the recast would have enabled the bank to have attractive ratios once it hit the stock market.

?We will not look into a fresh capital restructuring plan this year and hence going public will not happen now. Anyway, with good profitability expected and enough capital, we are in a comfortable situation,? P K Gupta, chairman and managing director, UBI, said.

The bank has posted a 31% increase in net profit for the year ending March 31, 2007, at Rs 267.28 crore. Operating profit rose 11.7% to Rs 719.10 crore. The total business grew by 32.3% to Rs 59,808 crore. While deposits increased by 27.1% during the year, advances grew by 41.8% to Rs 22,641 crore. Net NPAs of the bank have decreased to 1.5%.

UBI expects a growth of at least 25% in the current year.

?We expect to grow by at least 25% in the current year. Advances grew by over 41% last fiscal. Although we may moderate growth, it would be higher than average as the bank has ample liquidity and scope to leverage growth,? Gupta said.

Banking industry sources hinted that the government is not too comfortable treating UBI as a special case when it comes to restructuring its capital and allowing a relaxation on preference capital.

The RBI guidelines place a 40% cap on preference capital. In UBI's case, the amount put forward for conversion happens to be over 75% of equity capital. If the government goes ahead, this may set precedence for other banks too.

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