The Hindu Business Line : DCB plans to lower credit growth, check rise in NPAs

Kolkata, Sept. 5 The Development Credit Bank plans to lower its credit growth to 20 per cent in 2008-09, down from 45 per cent in 2007-08, to keep a check on the rise in non-performing assets (NPA), according to Mr Gautam Vir, Managing Director and Chief Executive Officer, DCB.

Net NPA of the bank as on March 31, 2008 was at 0.7 per cent, however, this could move up, said Mr Vir speaking at an interactive session organised by the Merchants Chamber of Commerce here on Friday. “There is a pressure on NPAs, particularly on the retail front,” he said refusing to give further details.

Net interest margin was at 2.9 per cent as on March 31, 2008 and the bank plans to take it to 3 per cent in 2008-09. “Our NIM is under pressure due to the hike in cash reserve ratio. We will therefore slow down our loan growth and try to improve the share of current account and savings account (CASA) to total deposits in order to maintain the NIM at current levels,” he said.

CASA was at 27 per cent in 2007-2008 and the bank plans to increase it to 29 per cent this year.

Loan portfolio

The bank also plans to scale down the personal loan portfolio at 12-13 per cent in 2008-09, down from 17 per cent this year. “We will further try to bring it down to 12-13 per cent within a year and a half. DCB’s loan portfolio will be granular and will focus more on secured assets,” he said.

Focus areas

The bank, according to the CEO, will focus on small and medium enterprises and trade finance segments this year. SME currently accounts for 15 per cent of the bank’s total advances and it plans to increase it to 33 per cent in the next two to three years.

DCB plans to tie-up with some technology provider for introducing mobile payment platform for its customers.

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