The Hindu : Development Credit Bank to expand capital

Online edition of India's National Newspaper
Wednesday, Oct 22, 2003

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Business

Development Credit Bank to expand capital

By Our Staff Correspondent

KOLKATA OCT. 21. The Development Credit Bank plans to enhance its share capital by Rs. 120-130 crores, preferably by issuing fresh shares on a private placement basis to FIIs. An additional Rs. 56 crores will be raised through Tier-II capital. Apart from funding the future expansion plans, fresh capital infusion would improve the bank's capital adequacy ratio.

Talking to newspersons in connection with the opening of branches in the Eastern region, the Managing Director and CEO, H. V. Sheshadri, said the Tier-I capital would be raised by the end of this fiscal. Ernst & Young was appointed as the issue consultant.

Though the decision on private placement was yet to be finalised, the bank had initiated talks with two leading foreign private investors to place the shares, Mr. Sheshadri said

Informed sources in the bank revealed that the bank was negotiating with Warbug Pincus and AMP of Australia for preferential allotment at a premium of Rs. 60. Stating that there was no immediate plan to go public for raising capital, he said a part of the proposed issue proceeds would be utilised to clear high cost debts. The bank will expand the branch network from 65 to 100 in two years. The ATM network will also be expanded from the existing 52.

The bank is expecting a 35 per cent growth in the operating profit in the first half of this fiscal and bring down the non-performing assets to 4.9 per cent by the end of this fiscal from as high as 7.76 per cent during the last fiscal.

"In the past DCB was a high cost deposit bank. We are working to bring the cost of deposit to 6.38 per cent in this fiscal from 9.45 per cent as on September 2001.''

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