UPDATE 1-Union Bank to raise 10 bln rupees via debt

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MUMBAI, Sept 1 (Reuters) - State-run Union Bank of India (UNBK.BO: Quote, Profile, Research) plans to raise 10 billion rupees via debt in a month's time, Chairman M.V. Nair said on Monday.

The bank has headroom to raise up to 35 billion rupees and it would try to raise the amount by the end of 2008, he added. "We will raise as and when we require".

It would be a mix of perpetual and Tier-II bonds, he added.

The bank would like to maintain its capital adequacy ratio at around 12 percent and the ratings of its loans above 100 million rupees would relax its CAR by 0.70 percent, he said.

It was looking at a credit growth of 22 percent for the current fiscal.

The state-owned lender also plans to start insurance operations in December and a mutual fund in six months, Nair told reporters.

The bank has got the preliminary approval from the Insurance Regulatory and Development Authority and the first product would be launched by December, he said.

In December, the bank formed a life insurance joint venture with Bank of India (BOI.BO: Quote, Profile, Research) and Japan's Dai-Ichi Mutual Life Insurance Co.