Mumbai: Hit by losses, private sector lender Development Credit Bank (DCB), has decided to close down its unsecured personal loan portfolio in 2009-10 and focus on its secured loans portfolio, the bank MD & CEO Murali Natrajan said.
“A major part of the loss in the last financial year came from the unsecured personal loans. We plan to run off this portfolio gradually. The process could be completed by 2010-11,” Murali Natarajan said.
DCB started shutting down its unsecured personal loans business in mid-2008 when such lending contributed 34% to total advances. The bank has successfully reduced the portfolio size to 23%, Natarajan said.
The bank witnessed a net loss of Rs91.30 crore in the fourth quarter ended 31 March against a Rs7.6 crore dip in the same period in last year.
DCB’s gross non-performing assets (NPAs) escalated to 8.78% as on 31 March from 1.49% in FY09 while net NPAs grew to 3.58% from 0.66% in the same period last year.
The lender made a total provisioning of Rs163.4 crore in FY09 to cover its bad loans,Natarajan added.
Natarajan attributed the rise in NPAs to challenging market conditions and default from a single large coporate account.
DCB also plans to sell a part of its bad loans to asset reconstruction companies in the next few months and is in talks with a few players, Natrajan said.
As on 31 March the bank had deposited base of Rs4,646 crore and an advance base of Rs3,274 crore. It has targeted to grow its loan book at 10% in the current fiscal, he said.
Secured retail loans contributes 77% of DCB’s total advances, which is expected to go up to 85% by the end of this fiscal. It would also focus on corporate loans, which currently contribute 28% to total loans, Natrajan said.
As part of its strategy, DCB has also decided to reduce its dependence on expensive bulk deposits and hike the current, savings, account deposits (CASA), he said.
“CASA improved to 30.9% from 24.2% last year. We would like to maintain this margin in the current fiscal.” he added.
The lender increased the proportion of retail deposits from 42% to 51% of t he total deposit base over the last one year.
DCB has also chalked out plans to enhance its customer base to six lakh from five lakh at present, he said.