Bracing itself for increased competition from foreign and private banks, Dena Bank, one of the weak public sector banks, has drawn up a vision with clear cut goals. The bank is planning a change in its business mix to be achieved by 2008. | |
| Dena Bank has taken a definite decision to change its business mix. It plans to decrease its focus from the highly competitive corporate lending business and refocus its energies on the retail, SME and agriculture segments. |
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| About 200 managers are likely to be involved in the vision exercise and the finer contours of the plan will be drawn up by April 2005, said a senior executive of Dena Bank. |
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| By 2008, the bank aims to build 35 per cent of its total assets from the SME sector, 20 per cent from the retail segment, 18-20 per cent from agriculture and the remaining 27 per cent from the corporate sector. |
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| Currently, the business mix is in favour of corporate assets, being 47 per cent of its total assets, 23 per cent from the SME sector, 9 per cent from retail and 18 per cent from agriculture. |
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| The bank plans to recruit about a 100 MBAs from the second rung business schools for marketing its offerings as well. Dena Bank also plans to go for a core banking solution in the coming year. |
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| "Our business initiatives and our technology initiatives have to go hand in hand," said the official. |
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| The bank aims to bring its net no performing asset (NPA) ratio below 1 per cent by 2008. As on December 31, 2004, the net NPA ratio was as high as 7.21 per cent. |
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| The bank, which has for long been troubled by bad debts, has initiated a stringent monitoring mechanism to keep its asset quality under check. |
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| All loan accounts of over Rs 1 crore are constantly monitored for any propensity for it turning bad. Currently, the monitoring system is centralised in Mumbai, which may be extended to the individual branch level, said the official. |
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| The bank is also busy designing an internal rating mechanism for all its big-ticket loan accounts, said the official. |
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| The slippages of loan accounts (into the bad debt category) in FY05 has halved to Rs 230 crore from Rs 460 crore in the previous year. |
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