CAR-hit Dena to churn retail portfolio

Dena Bank has decided to churn its retail loans portfolio to continue taking up fresh business as its capital adequacy ratio (CAR) is just above the regulatory minimum and it has hardly any leeway to raise fresh capital.

The public sector bank plans to securitise a part of its retail loan portfolio to release capital for being able to create newer loan accounts, said chairman M V Nair.

The idea of securitising part of the retail loan book emerged as one of the options to find room for supporting the 25 per cent credit growth that has been budgeted.

The bank's capital adequacy is 9.52 per cent against the minimum requirement of 9 per cent and the government's holding is just above the floor of 51 per cent.

Dena Bank needs to raise equity capital but cannot do so as it would lead to government stake falling below the floor.

"We are looking at rating a Rs 50 crore retail loan pool including home loans by end of this current financial year for the purpose of securitising them", Nair said.