DCB to raise about Rs 300 cr

Development Credit Bank (DCB) is planning to raise around Rs 300 crore through an initial public offering (IPO) in the current fiscal. As a part of its restructuring package, the bank had conducted a voluntary retirement scheme (VRS) in April 2005.

The bank's CEO and managing director H V Seshadri had stepped down in March as the Reserve Bank of India (RBI) refused to extend his term.

"The new managing director and chief executive officer (CEO) is likely to join the bank over the next one month," an industry source said.

"The new CEO will announce the bank's capital raising plans one month down the line," the source added.

A DCB spokesperson said the bank is in the process of putting together a capital raising plan to meet business forecasts for this financial year. However, he refused to specify the route and timing of the capital-raising plan.

In April 2005, a voluntary retirement scheme resulted in the exit of 258 staff - or a 17 per cent reduction in headcount.

At present, the staff strength of the bank stood at around 1,250 employees as against 1,500 employees in March.

Meanwhile, DCB has also rationalised its middle and senior management job positions. A thorough review of all costs is in the process, and is expected to yield significant savings, said the spokesperson.

Recently, the bank had terminated the appointment rof around 40 management students. "The bank is in a phase of restructuring and it was not possible for DCB to pay such fat salaries," said banking sources. DCB is trying to place these MBA students at other financial institutions, said the source.

The Aga Khan Fund for Economic Development, which holds about 69 per cent stake in the bank, had infused around $32 million in March 2005. The money was used to clean up the bank's non-performing assets (NPAs).

DCB's NPAs to net advances as on March 2004, stood at around 5 per cent. Its capital adequacy ratio stood at 14.14 per cent.