Mumbai: Private sector lender, Development Credit Bank (DCB), in which the Aga Khan Foundation holds over 23% stake, expects to reduce the promoter stake by around five per cent through its proposed Rs150 cr qualified institutional placement in December, a top official said.
The issue is being launched as part of the bank’s efforts to bring down the promoter holding to 10% as stipulated by the Reserve Bank. Earlier, the apex bank had put pressure on the Mumbai-based lender to reduce Aga Khan’s stake and has not issued any new branch licenses over the past three years.
“The aim is to launch the Rs150 cr issue by December. The Bank’s shareholders had recently approved the proposal. Post issue, the promoter holding will be down by nearly five per cent to nearly 18%. The issue is a part of the bank’s efforts to reduce the promoter stake in the bank in a gradual manner,” DCB managing director and CEO, Murali Natrajan, told PTI.
After the apex bank had asked the private sector lender to reduce the promoter holding, DCB had submitted a detailed roadmap to the Reserve Bank to minimise the promoter holding to 10% by March, 2014.
The lender, which has been posting losses for the past several quarters, is aiming to return to the profit path by the third quarter of FY 11 and has restrategised its business model by giving more thrust to SME and retail business, Natrajan said.
As of now, nearly 40% of the bank’s loans are in retail, around 33% of the loans corporate and nearly 20% in small and medium enterprises. Moving ahead, it plans to realign the loan-book by changing 40% of total loans as SME loans, 33% retail and around 25% corporate and other advances, Natrajan said.
DCB’s loan-book currently stands at Rs3,460 crore while it has a deposit-base of Rs4,787 crore as on 31 March, 2010. Current and savings account deposits contribute around 36% of the total deposits of the lender.
It has targeted a 20% growth in both deposits and advances in the current fiscal as against 4% and 6% respectively in last year. According to Natrajan, an expected tightening in the RBI’s key rates is likely to put additional pressure on lending and borrowing rate moving ahead.
The bank posted a loss of Rs eight crore in the quarter ended 31 March as against a loss of around Rs91 crore in the same period in Q4 of previous year while its losses for the full financial year stood at Rs 78 crore as against Rs88 crore in FY 09.
“The bank has been expanding its balance sheet for the last six months and there is a roadmap to bring down the bad-loan ratios. In absolute terms, the bad loans of the bank has not increased over the last six months and recovery has been good,“ Natrajan said.
The bank has a gross non-performing asset level of around 8.7% and a net NPA ratio of 3.1%. It aims to reduce these numbers to 6% and 2%respectively by the end of this financial year, he said.
The lender has reduced its unsecured personal loans to around Rs90 crore as at end-March from over 300 crore in the year-ago period, Natrajan said. The bank has capital adequacy ratio of around 14.85%.