DCB defers Rs 150 cr QIP plan to June

Sloppy market conditions have forced Development Credit Bank (DCB) to defer its QIP issue to next fiscal and the small private lender is now hoping to raise up to Rs 120 crore in the first quarter of FY 13.

“We should do a QIP (qualified institutional placement) of up to Rs 120 crore by June... the market conditions have not been so good,” DCB Managing Director and Chief Executive, Mr Murali Natrajan said.

In January, last year, the bank had announced plans to raise up to Rs 150 crore through a QIP issue by August.

Mr Natrajan said the exact timing of the issue depends on the market condition and added it is unlikely that the issue will happen this fiscal.

The bank’s capital adequacy stood at a healthy 13 per cent as of the December quarter with the core tier—I at 11.15 per cent. Post—fund infusion, tier—I will go up to 14 per cent, he said.

Apart from raising its already healthy capital adequacy, it will also help dilute the promoter Aga Khan Foundation’s holding in the city—headquartered bank in compliance with the Reserve Bank’s requirement.

The central bank rules do not allow more than 10 per cent holding in a private sector by any single individual or the promoter group entity. The QIP issue will ensure the promoter holding will come down by up to 3 per cent from the present 23.07 per cent, Mr Natrajan said.

The promoters of DCB Bank, which changed into a private sector lender from being a cooperative one, has been asked by the Reserve Bank of India (RBI) to bring down its stake to under 10 per cent by March 2014.

Post—infusion, the bank will not be requiring any fresh capital for up to two years, he said.

The bank’s net profit had almost doubled to Rs 15.6 crore for the December quarter against Rs 8.2 crore in the year—ago period.

The bank, which has 82 branches, has charted a roadmap to increase this number to 150 in three years and is on its way to add 10 more before the end of the current fiscal, he said.

Credit growth likely to be 15-16% this fiscal, says DCB Bank CEO

DCB Bank is likely to end the current financial year with a 15-16 per cent growth in loans and over 20 per cent growth in deposits. The bank is looking to lend more to the micro, small and medium enterprises and retail segments, said Mr Murali Natarajan, Managing Director and CEO.

SB rates

The private sector bank is not looking to increase savings bank deposit rates and will wait for bigger banks to take the lead, he said on the sidelines of a press conference to announce its pre-paid card, jointly with ItzCash and Visa.

The share of MSME and SME loans is 25 per cent and the target is to increase it to 40 per cent in three years. The segment has seen a year-on-year growth of 30 per cent.

Prepaid card

The card is a prepaid card in the open loop category, which means it can be used at 5 lakh Point of Sales (POS) terminals that are part of the Visa network. It will be accepted at over 10,000 ItzCash merchants for digital payments.

The initial load is Rs 1,000 and it can be reloaded with a minimum amount of Rs 250 and a maximum of Rs 50,000.

It comes with a five-year validity and can also be used to withdraw cash from over 65,000 ATMs and PoS.

Cardholders also have the option to open no-frills accounts with DCB Bank.

To begin, it will be available at all ItzCash franchisees and within three months it will be available at all DCB branches.

The issue charge for the card is Rs 50 in the initial phase of the launch and it would be later hiked to Rs 100. The annual fee is Rs 20.

DCB Bank will target to issue at least 10 lakh Freedom Prepaid Cards and open about one lakh no-frills savings bank accounts, Mr Natarajan said.

The bank currently has a CASA share (current and savings account) of 33 per cent.

“Our focus is on getting more CASA,” Mr Natarajan said.

priyan@thehindu.co.in