DCB to float Rs 275 cr ADR

Development Credit Bank, promoted by The Aga Khan Fund for Economic Development (Akfed), is exploring the option of ADR/GDR along with other plans to raise Rs 275 crore capital to skirt the recent diktat by the Securities and Exchange Board of India (Sebi).

Earlier, the bank had planned to raise around Rs 225 crore through qualified institutional placement (QIP). "With the Sebi tightening the norms for QIP, we had to explore other routes of raising capital. We have kept our options open and the bank could raise funds through an overseas or a private placement, preferential issue, rights issue, ADR/GDR issue or any other financial instruments,'' said Gautam Vir, managing director and chief executive officer, Development Credit Bank.

According to the Sebi guidelines, a company planning to raise funds through the QIP route should have listing for at least a year. However, it has permitted companies with less than six months of listing to raise funds through the preferential route.

The fresh capital infusion will dilute the promoter holding to 25 per cent from 30 per cent. "The capital will support the bank's growth plans and also lead to dilution in promoter holding,'' said Vir.

The bank board that met in Mumbai today also announced its results. It has recorded a loss of Rs 41 lakh in the quarter ended March 31, 2007, against a loss of Rs 48.65 crore. It has posted a profit of Rs 7.37 crore for the year ended March 31, 2007, compared with Rs 85.26 crore last year.

"The increase in standard asset provisioning norms by the Reserve Bank of India had an impact on the profit. Provisioning for the financial year stood at Rs 32 crore,'' added Vir.

Net interest income increased to Rs 38.45 crore for the quarter ended March 31, 2007, against Rs 19.84 crore in the previous quarter.

The bank's capital adequacy ratio for the quarter stood at 11.34 per cent.