Dena Bank hopes for a bid reduction in sticky assets

Dena Bank hopes to bring down its net non-performing asset (NAP) to five per cent this year from a level of 9.4 per cent in 2003-04.

The bank hopes to bring the figure under three per cent in the next couple of years.

The targeted net NPA level would however bar Dena Bank from automatically declaring dividend without taking Reserve Bank's permission. The bank would however be barred to declare dividend on almost all grounds.

On the capital adequacy ratio (CAR) front which stands at 10.28 per cent as on September 2004 and was 9.48 per cent in 2003-04, the bank would fail because the rule stipulates that CAR has to be 11 per cent in the last three consecutive years.

With regards to Investment Fluctuation Reserves (IFR) the stipulated limit being three per cent, the bank was yet to form any, and had received RBI's permission to set up one from next fiscal.

Asked to comment on the issue, M V Nair "Dena Bank was one of the fastest turnaround stories in the banking sector and we are taking up the issues one by one. We started with wiping off accumulated losses and have now concentrated on lowering our NPA levels. All this way however we would continue strengthening our balancesheet."

Nevertheless, fresh accretion of NPA at the bank in the first half was Rs 102 crore against Rs 57 crore in the previous corresponding year, while the bank managed a cash recovery of Rs 102 crore in the first half of 2003-04 against Rs 227 crore for whole of 2003-04.

The bank has also firmed up plans of closing down around 40 branches this year and has already closed down 12 branches along with two regional offices.

Nair also said that given the fluctuating treasury operations scenario, Dena Bank was likely to register a reduced operating profit this year.