Dena aims to ramp up retail lending

Dena Bank expects to increase its retail lending substantially from the nine per cent, as on September 30, 2004, in order to limit the risk that comes from corporate exposure.

Speaking on the sidelines of Dena Bank's second public issue, M V Nair, executive director, Dena Bank, said, "We are increasing our advances to the retail portfolio by limiting corporate lending which amounts to nearly 50 per cent of the total advances."

Nair said that corporates which have good credit rating borrow at below prime lending rates while the risk of asset going bad is high with corporates that do not have good record on credit worthiness.

The remaining credit portfolio will include the mandatory lending to the agricultural and allied segments.

The bank had taken a conscious decision to increase its exposure to the corporate sector a few years ago. This had led to a rise in its net non performing asset (NPAs) to 16.31 per cent in 2002-03.

Recovery of bad debts increased to Rs 102 crore for the half year ending September 30, 2004 compared to Rs 57 crore for the same period last year. The bank had recovered about Rs 227 crore and Rs 174 crore of bad debts in 2003-04 and in 2002-03 respectively.

Dena Bank plans to close 40 unviable branches in Mumbai and Gujarat. Nair points out that the closure of branches will depend on it is profitability, proximity to the next branch and the cost of rental space.

Dena Bank has 1,130 branches of which 72 per cent branches are in the western region and 13 extension counters.

The bank's rural exposure has been substantial as 492 branches are in rural areas, semi-urban areas amounting to 191 branches while urban and metropolitan areas have 236 branches and 211 branches, respectively.