DCB eyes Rs 150 cr via QIP in H2, turnaround in Q3

Development Credit Bank (DCB) has said it plans to raise Rs 150 crore through qualified institutional placement in the next 6-12 months and aims to swing into black in the third quarter of fiscal 2010-11.
    
"We have obtained Board approval to raise Rs 150 crore through a QIP. This will, however, be done only in the next 6-12 months depending upon market conditions. Our first aim is to return to profitability," DCB Managing Director and CEO Murali Natrajan told PTI here.
    
The bank had posted a loss of Rs 78 crore in financial year 2010-11, reducing it from Rs 88 crore in the year-ago period.
    
"We aim to return to profit after the first two quarters of this fiscal. We are well-capitalised with our capital adequacy ratio at 14.9 per cent (Basel II) and hence there is no urgency to raise funds," Natrajan said.
    
Credit growth is expected to pick up going forward and the bank would consider this as well as market conditions before going in for fund-raising, he said.
    
The Board's approval has also been obtained to raise up to Rs 200 crore through a rights issue but this might not be resorted to, he added.
    
DCB's strategy now is to totally exit from unsecured personal, commercial vehicles and construction equipment loans and replace them with those to micro, small and medium enterprises (MSMEs) and SMEs, corporate, retail mortgages, rural banking and agri-SMEs.
    
"We have already begun the process of exiting from unsecured personal loans and in the next 12-18 months, we will be totally out of it," Natrajan said.
    
The bank will also strongly focus on ramping up its Current Account Savings Account (CASA), which in FY 10 increased to 35.3 per cent of its total deposits from 30.9 per cent in the year-ago period.
    
After returning to profit it will approach the Reserve Bank of India (RBI) for permission to open more branches. At present, it has 80 branches.
    
"Our aim is to have a 150 strong branch network in the next three to five years," Natrajan said.