Tatas to pick up stake in Development Credit Bank

Tata Capital and Tata Investments would jointly pick up a 4.5 per cent stake in Development Credit Bank (DCB) for around Rs 85 crore, a bank official said.

The bank would make a preferential allotment of shares to five specific group of investors, including the Tatas, for Rs 300 crore, DCB Managing Director and CEO Gautam Vir said.

Other investors who would be allotted shares are Al Bateen of Abu Dhabi (4.5 per cent), Lehman Brothers arm, Marc Faber and SVG. Vir said the issue is being made to increase the capital base of the bank and is awaiting approval of the Reserve Bank of India (RBI) for the allotment. Following the issue, the bank's capital adequacy ratio (CAR) would increase from 10.5 per cent to 17.7 per cent.

Vir said after the preferential allotment, DCB would be able to sustain business for 18 month to 24 months. The bank's networth would also increase from Rs 315 crore to Rs 600 crore, he added.

The bank had earned a net profit of Rs 5.74 crore in the first quarter this year.