Dena Bank not to use hybrid instruments for now

We do not require additional capital now: M V Nair.

Dena Bank is not planning to use any of the new instruments allowed by the Reserve Bank of India (RBI) to raise capital in the current financial year, chairman and managing director M V Nair said.

The bank's capital adequacy ratio (CAR) will be above the minimum level of 9 per cent after meeting its credit growth in the last quarter, he said.

"We don't need additional capital now," Nair said.

The state-owned bank's CAR is 9.82 per cent and the government holding in the bank has reached the threshold limit of 51 per cent.

The bank was waiting for the RBI to announce the details on hybrid capital instruments to improve its CAR.

The central bank, on Wednesday last, announced the hybrid capital norms that will allow banks to raise capital without diluting additional stake.

Earlier, Nair said the bank was looking at selling non-performing assets to increase its capital.

The bank has tied up with Small and Medium Enterprises Rating Agency of India (SMERA) to improve the quality of credit in the SME portfolio and increase credit flow in the sector.

The bank's incremental default rate in the SME sector is below 5 per cent, though historically the NPA is 17 per cent.

"The incremental delinquency rate is quite low," Nair said, adding "we will offer loans to the highly rated companies at around 10 per cent."

SMERA is the credit rating agency for the small and medium enterprises sector, formed by Small Industries Development Bank of India along with Dun & Bradstreet and Credit Information Bureau of India.