The Hindu Business Line : Dena Bank to raise Rs 300 cr via Tier-II bonds

Mumbai, Sept. 17 Dena Bank is looking to raise between Rs 200 crore and Rs 300 crore through lower Tier -II bonds this fiscal and is awaiting the ratings for the bond issuance.

The bank has total headroom of Rs 1,000 crore, which includes both Tier-I and Tier -II capital, said Mr Bhaskar Sen, Executive Director.

According to the ‘Report on currency & finance’ of Reserve Bank of India, in three banks the Government stake is close to the minimum prescribed level of 51 per cent. In the case of Dena Bank, it is at 51.19 per cent. This rules out equity raising by the bank. However, the bank’s capital situation is currently comfortable, Mr Sen said.

The bank’s capital adequacy ratio as on June 30, was at 11.27 per cent. With the lower Tier- II capital it is planning to raise and a targeted credit growth of 22 per cent, the bank will be able to maintain CAR over 11 per cent this fiscal, after meeting Basel II requirements, he added.

According to RBI estimates, the banking sector would need Rs 5.68 lakh crore capital in the next five years if they are to maintain capital-to-risk-weighted assets ratio at 12 per cent.

“Possibly, we may have to pay more in terms of spreads for the bonds given the current scenario. But the yields on bonds are easing,” Mr Sen said.

The bank is also looking to reduce the non-performing assets in its home loans segment, by starting specialised branches, appointing legal experts, physical verification in case defaults cross 90 days and taking course to SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act). The gross NPAs in the home loan segment are high at 4 per cent, but are coming down, Mr Sen said. “In housing loans, we have seen some indications of frauds or potential NPAs. So we have started a centralised data base and stringent monitoring which will help in bringing down the NPAs,” he said.

For corporate loans, the bank is actively monitoring all accounts above Rs 25 lakh to ensure that the slippages are reduced.

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