DCB defers Rs 150 cr QIP plan to June

Sloppy market conditions have forced Development Credit Bank (DCB) to defer its QIP issue to next fiscal and the small private lender is now hoping to raise up to Rs 120 crore in the first quarter of FY 13.

“We should do a QIP (qualified institutional placement) of up to Rs 120 crore by June... the market conditions have not been so good,” DCB Managing Director and Chief Executive, Mr Murali Natrajan said.

In January, last year, the bank had announced plans to raise up to Rs 150 crore through a QIP issue by August.

Mr Natrajan said the exact timing of the issue depends on the market condition and added it is unlikely that the issue will happen this fiscal.

The bank’s capital adequacy stood at a healthy 13 per cent as of the December quarter with the core tier—I at 11.15 per cent. Post—fund infusion, tier—I will go up to 14 per cent, he said.

Apart from raising its already healthy capital adequacy, it will also help dilute the promoter Aga Khan Foundation’s holding in the city—headquartered bank in compliance with the Reserve Bank’s requirement.

The central bank rules do not allow more than 10 per cent holding in a private sector by any single individual or the promoter group entity. The QIP issue will ensure the promoter holding will come down by up to 3 per cent from the present 23.07 per cent, Mr Natrajan said.

The promoters of DCB Bank, which changed into a private sector lender from being a cooperative one, has been asked by the Reserve Bank of India (RBI) to bring down its stake to under 10 per cent by March 2014.

Post—infusion, the bank will not be requiring any fresh capital for up to two years, he said.

The bank’s net profit had almost doubled to Rs 15.6 crore for the December quarter against Rs 8.2 crore in the year—ago period.

The bank, which has 82 branches, has charted a roadmap to increase this number to 150 in three years and is on its way to add 10 more before the end of the current fiscal, he said.