UNION BANK OF INDIA

GOLD LOANS TODOMESTIC JEWELLERY

MANUFACTURERS

Agenda

Bullion business

Regulations on Metal loan

Products and services

Internal Guidelines

Overview of Union Bank of India

Vision Statement“ To become the Bank of

first choice in

our chosen areas

by building beneficial

and lasting relationships

with customers

through a process of continuous improvement.”

• One of India’s leading commercial banks. 5th in Public Sector banks

• Incorporated on November 11, 1919 , Nationalized on July 19, 1969

• 55.43% share holding by Government of India ,19.72 by FII & NRI, 8.95 by Banks & Mutual Funds as on 31.03.2007

• Head Office & Corporate Office : Mumbai

• Initial Public Offer in 2002 and Follow-on Public Offer in 2006

Promoter Promoter & History& History

• 2,202 branches in 25 states and 3 union territories

• 1021 branches/Offices net worked , 902 ATM’s and 1200 alliance ATM “ Cash Tree”and with tie up with other banks

• Workforce of 27,536 people

• 18 mn customers

PresencePresence

Overview of Union Bank of India

•• Cash Management Services

• Depository Services of Shares, Bonds in Electronic form

• Distribution of Mutual Funds and Life and Non Life Insurance Products

• Government Tax collection and online payment

• Utility Bill Payment Services

• Online Equity Trading

• Payment gateways to number of utility/Government Tax collection/Ticketing

• Credit cards and Debit cards

Business Business InitiativesInitiatives

Overview of Union Bank of India

As on 31.03.2006 31.03.07 YOY GROWTH

• Total Assets : 89,126 1,02,678 15.20 %

• Total Deposits : 74,094 85,180 14.96 %

• Total Advances : 54,644 63,658 16.50%

Key Key StatisticsStatistics

Key RatiosKey Ratios

As on March 06 March 07

• Cost of Deposit: 4.75% 5.23%

• EPS: Rs14.58 Rs16.74

• Net NPA 1.56% 0.96%

As on March 06 March 07

• NIM: 3.03% 3.05%

• RoNW: 16.55% 17.88%

• BV/Share: Rs 80.77 Rs93.60

As on March 06 March 07 YOY GROWTH

• Total Income: 6,358 8,069 26.91%

• Net Profit: 675 845 25.19%

Key Key FinancialsFinancials

Overview of Union Bank of India(Rs in Crore)

Products and services• Export and Import finance in Foreign Currency as

well as in Rupees• Term loans for the new projects, expansion and

modernisations in Foreign Currency as well as in Rupees

• Derivative Products for Hedging the exposures of currency and Interest rate risks

• Financing and Services related to Overseas Investments in JV and WOS

• Facilitation for buyers credit and External commercial borrowings

Products and services

• Opening ,advising and confirmation of Letters of credit

• Standby LC for international trade• Advisory service on managing the exchange

and interest risks• Approval for commodity hedging• Sale and loan of Bullion(Gold) for Exporters

and Domestic Jewelers

Products and servicesInternet banking

View of all operative accounts on real time basis • Packing Credit/Operative accounts• L/C opened • Bill status • Setting up alerts for due dates of bills up to any period at the

customers choice

– Opening of Import L/C online – Online transfer of funds to any operative account in

1021 branches of the bank

Products and services Treasury• Offers competitive exchange rate for all major

currency and Gold• Active derivative desk for forwards, options and

swaps • Handles large value payments of Corporate, PSU

and Government• Merchant turnover Rs 72,777 Crore last year and

Rs18,358 crore for first 3 months

Bullion business• Bank is designated Agency for import of Gold• DGFT approval to import gold in 11 centres• Custom Bonded Warehouses in five branches • Operates in 11 centers and plans to add few more during

the year• Bullion Trading Desk in at our Centralised Treasury at

Mumbai.• Transactions carried out in Singapore, European and US

markets

Bullion business

• DBOD.No.IBD.BC.3323.67.0012005-06 dated 05-09-2005 of RBI permits nominated Banks to extend Metal Loans to Domestic Jewellery manufacturers.

• Metal Loans Scheme envisages loans in metal(Gold) form to eligible domestic jewellers manufacturers who are not exporters of jewellery

Regulations on Metal loanThe Gold (Metal) Loans provided by banks will be subject to the following conditions:i. The tenor of the gold loan for the domestic jewellery manufacturers should not exceed 180 days.-ii. Interest charged to the borrowers should be linked to the international gold interest rate. iii. The gold borrowings will be subject to normal reserve requirements. iv. The loan will be subject to capital adequacy and other prudential requirements. v. Banks should ensure end-use of gold loans to jewellery manufacturers and adhere to KYC guidelines. vi. Any mismatch arising out of the gold borrowings and lending should be within the prudential risk limits approved by the nominated banks Board. vii. The banks should carefully assess the overall risks on granting gold loans and lay down a detailed lending policy with the approval of the Board

Regulations on Metal loancustomers of other scheduled commercial banks, can

avail loan by giving stand-by letter of credit or bank guarantee issued by their bankers in favour of the nominated banks subject to authorised banks' own norms for lending and other conditions stipulated by RBI.

The stand-by LC / BG shall be extended only on behalf of domestic jewelry manufacturers and shall cover at all times the full value of the quantity of gold borrowed by these entities.

The stand-by LC/BG shall be issued by scheduled commercial banks in favour of a nominated bank only and not to any other entity which may otherwise be having permission to import gold

Regulations on Metal loanThe bank issuing the stand-by LC / BG (only inland letter of credit

/ bank guarantee) should do so only after carrying out proper credit appraisal. The bank should ensure that adequate margin is available to it at all times consistent with the volatility of the gold prices.

The stand-by LC / BG facilities will be denominated in Indian Rupees and not in foreign currency.

Stand-by LC / BG issued by the non-nominated banks will be subject to extant capital adequacy and prudential norms.

The banks issuing stand-by LC / BG should also carefully assess the overall risks on granting these facilities and lay down a detailed lending policy with the approval of their Board.

ADVANTAGES TO JEWELERSCurrently the exiting stock of Jewelry and in process are subject to pricing risk The jewelers are now able to obtain Gold with out price riskGold Loan helps jewelers to price the Gold procured around the time of sale of jewelry and hence no price risk.As the Metal Loan rate is linked to international lease/LIBOR rates , the cost of carry is also lower.

Internal GuidelinesELIGIBLITYA. Customers having rating of up to Credit Rating CR 4

under the Bank’s Credit rating system B. Others offering sufficient cash margin / Bank

Guarantee subject to KYC complianceThe applicants should have a valid business license as Jeweller (Trade or Manufacture)Borrowers should have good track record for a minimum period of 3 years in gold jewellery

A. However this stipulation relaxed if the loan is backed by good securities as collateral

B. The minimum track record of 3 years won’t be insisted upon where the loan is backed by Bank Guarantees / cash Margin.

Internal GuidelinesSECURITYA. In case of Customers, Metal (Gold) Loans can be sanctioned separately or

as sub-limit carved out of overall Working Capital limits covered by securities as under:

1. Cash margin for part value of the notional cost of gold lent 2. Hypothecation of Gold purchased from bank or jewellery manufactured as

primary security3. Adequate tangible collateral security, especially in respect of those borrowers

for whom “minimum track record” stipulation has been reduced or waived.4. Personal Guarantee of partners / directors as applicable

B. Where the Loan is sanctioned as a stand alone facility1. Cash margin including lien on fixed deposits to cover the notional cost of

gold lent OR2. A Bank guarantee acceptable to us for the notional cost of gold lent

Internal GuidelinesQUANTUM OF LOAN

Bank has set up per party limits for loans against LC/LG exposure apart from limit to the counter party banksLoan to customers will be as per requirement based on the projected sales and other financialsThe minimum quantity for each drawl of loan shall be 1Kg Loan period- Not to exceed 180 days

Internal GuidelinesREPAYMENT

Interest recovered monthly, in metal Repayment period may be decided depending on the operating cycle. Borrower to indicate due date for payment , maximum period of 180 days.On maturity the borrower will pay the loan in rupee at the prevailing rate on the date of maturity (OR) at the contracted rate in case a forward contract is booked.Prepayment before due date is permissible with certain conditions. Pricing of metal at any time during the loan by Gold forward Exchange rate can be fixed at any time after GOFO

Visit us at :

www.unionbankofindia.com

-Thank you !