The Hindu Business Line : DCB meet to allot shares on preferential basis

Development Credit Bank (DCB) plans to double its balance sheet size from the current level of about Rs 5,500 crore to Rs 11,000 crore by end March 2009, its Managing Director and Chief Executive Officer (CEO), Mr Gautam Vir, has said.

This optimism stems from the buoyancy in economic growth of the country, which is expected to post close to a nine per cent growth this fiscal also. “I don’t see why we can’t grow to double our balance sheet size by 2009 given the 8-9 per cent average growth levels in GDP. This year the bank is aiming at credit growth of 50-60 per cent,” Mr Vir told Business Line.

Retail & SME bank

DCB wants to eventually transform itself into retail and small and medium enterprises (SME) focused bank. “Of the total business of the bank, we want retail to account for 55 per cent from the current level of 40 per cent. Eventually, we want DCB to be retail and SME bank. The yield on loan to small business is higher. We are going to bet less on large corporates,” Mr Vir added.

He said that the board of directors of DCB would meet on Thursday to allot shares (Tier-I equity) on a preferential allotment basis to set of “high pedigree” investors including Tata Capital Company (along with its associate company), Al Bateen Investment Company of the UAE.

Pref allotment

These shares would have a lock-in period of one year. The preferential allotment would be at Rs 105 per share and aggregate to about 16.5 per cent of the post issue equity capital. Mr Vir said that the capital (including the premium) infusion would be about Rs 280 crore.

Meanwhile, DCB has received licences from the Reserve Bank of India (RBI) for opening eight more branches across the country. Mr Vir said that all the eight new branches would be opened by end-September and the bank plans to apply to the RBI for 30-40 more branch licences next month. “We are in 72 locations now and our intent is to be in 150 locations by 2009”, he said.

DCB had recorded a turnaround in financial year 2006-07, posting an operating profit of Rs 40.25 crore (operating loss of Rs 19.66 crore in 2005-06) and net profit of Rs 7.37 crore (net loss of Rs 85.26 crore in 2005-06).

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