DCB awaiting RBI nod for Rs 308.5 cr pref allotment

New Delhi, July 12: Development Credit Bank Ltd (DCB) today saidit is still awaiting RBI approval towards its preferential allotmentamounting to Rs 308.5 crore, subject to which the bank's shareholderswould vote in a AGM to be held on August 9.

The board of DCB has approved raising of Rs 308.5 crore by issuingpreferential shares to five investors, namely Tata Capital, Aga KhanFund for Economic Development (Akfed), GRA Finance Corp, DCBInvestments, and India Capital Opportunities at Rs 105 per share.

''Once the approval of RBI comes through the allotment of shareswill be done between August 24 and September 10,'' bank's ManagingDirector and Chief Executive Officer Gautam Vir said.

The bank's capital adequacy ratio, which is currently at 10.5 percent, will improve to 18.5 per cent after the capital infusion and thebank's net worth will increase to Rs 635 crore after the issue. Thepromoter's stake in DCB will fall to 24.8 per cent from 29 per centafter the preferential allotment.

The fresh capital will meet the bank's requirement for the next 15 months.

Stating that the bank would look for tier-II headroom, Mr Vir saidit would open eight new branches in Rajasthan, Gujrat and outskirts ofBangalore. ''We have applied to the RBI to open seven more branches andby 2009 we plan to have 115-120 branches across the country from thepresent 72,'' Mr Vir added.

The banks net interest margin (NIM) for FY07 is at 2.7 per centbut Mr Vir expects it to fall to 2.3 per cent in the Q1 results. ''Wehowever, expect it to be around three per cent for this financialyear,'' Mr Vir said.

Allaying any fears of RBI hiking interest rates, Mr Vir said hedid not expect a hike since it would have an adverse impact on thegrowth of the country. He said the banks focus will be on retail andcorporate sector loans.

UNI