With sanctions on Iran expected to be lifted over the next few months, UCO Bank is bracing for a hit on margins. To offset the setback, the bank has launched an aggressive campaign to mobilize low cost CASA deposits. The bank is set to lose out interest-free deposits of around Rs 15,000 crore, which is around 8% of its total deposits, once trade with Iran resumes in dollar denomination, CPI Financial reported Wednesday.
In 2012, after US imposed sanctions on Iran, UCO Bank started a new rupee trade mechanism through which 45% of oil imports of Indian oil companies are settled in rupee denomination-the only bank to do so. Under the mechanism, a few Iranian banks have opened Indian rupee accounts with UCO Bank.
