Development Credit Bank (DCB) plans to raise Rs 150 crore through a QIP after six-months by which time it expects to return to profitability, a top bank official said.
"We have obtained our Board approval to raise Rs 150 crore through a QIP. This will, however, be done only in the next 6-12 months depending upon market conditions. Our first aim is to return to profitability," DCB's managing director and CEO, Murali Natrajan, said here.
The bank posted a loss of Rs 78 crore in FY 10, reducing it from Rs 88 crore in the year-ago period. In Q4 FY 10, its loss stood at Rs eight crore, substantially down from the Rs 91 crore in the year-ago period.
"We aim to return to profit after the first two quarters of this fiscal. We are well-capitalised with our capital adequacy ratio at 14.9 per cent (Basel II) and hence there is no urgency to raise funds," Natrajan said.
Credit growth is expected to pick-up going forward and the bank would consider this aspect, as well as prevailing market conditions before going-in for fund-raising, he said.
Board approval has also been obtained to raise up to Rs 200 crore through a rights issue but this might not be resorted to, he said.
DCB's strategy now is to totally exit from unsecured personal loans and loans for commercial vehicles and construction equipment and replace them with micro SMEs and SMEs, corporate, retail mortgages, rural banking and agri-SMEs.
"We have already begun the process of exiting from unsecured personal loans and in the next 12-18 months, we will be totally out of it," Natrajan said.
The bank will also strongly focus on ramping-up its Current Account, Savings Account (CASA) which, in FY 10, has increased to 35.3 per cent of its total deposits from the 30.9 per cent in the year-ago period.
After returning to the profit-path, which the bank aims to by Q3 this fiscal, it will approach the Reserve Bank for permission to open more branches. Presently, it has 80 branches.
"Our aim is to have a 150 strong branch network in the next three to five years," Natrajan said.