DCB Bank says expansion that spooked investors will see off rivals

MUMBAI (Reuters) - An expansion plan that will see Indian lender DCB Bank double its branches to 300 in a year is aimed at tackling increased competition and will not dent profits indefinitely, the bank said, brushing off investor jitters that sent shares tumbling on Wednesday.

Shares in DCB, one of India's smaller private sector banks, fell by their maximum daily limit of 20 percent on Wednesday, a day after the lender said it planned to add more than 150 branches to its network within a year.

Its earlier plan had been to open up to 30 branches a year.

"Competition is going to become stronger because of the 23 bank licences that have come up," DCB Chief Executive Murali Natrajan told Reuters in an interview.

 

"We have to increase our pace and (get) slightly ahead of the game before full-fledged competition comes in."

Natrajan said the branch expansion would likely hit the bank's earnings for the next 18 to 24 months, at worst.

(Reporting by Devidutta Tripathy; Editing by Clara Ferreira Marques)