Dena Bank eyes rural market to push growth

 Mumbai-headquartered public sector lender Dena Bank aims to garner growth by foraying into semi-urban and rural areas, a top executive said on Thursday.

Speaking to Deccan Herald, Dena Bank Chairman and Managing Director Ashwani Kumar said, “We are getting good business from semi-urban and rural areas across India. Our focus is to expand in tier-4, 5 and tier-6 towns. We have seen saturations in tier-1 and tier-2 cities.”

Kumar explains, “Recently, we inaugurated a new branch in Akhol Moti in Gujarat, and the first day business was around Rs 10 crore.” The bank has 1,750 branches and 1,450 ATMs.

On expansion, Kumar said, “We are opening 115 branches this financial year. Out of which, 50 per cent would be in semi-urban and rural areas. We are trying to expand pan-India but thrust is being given to Gujarat as we get 30 per cent of business from there.”

Dena Bank has 63 branches in Karnataka, out of which 25 are in semi-urban and rural areas. The bank has opened seven branches in this financial year. “We actually planned for 10 branches, but due to sluggish growth in the banking industry, we thought to curtail it to seven.”

The bank has 16 branches in Bengaluru with 40 ATMs and four eSmart lobbies. Business in Bengaluru is estimated at Rs 4,000 crore and CD ratio around 82 per cent.
“We are ordering 1,200 ATMs pan-India and 10,000 point of sales terminals in the next two years,” Kumar said.

Kumar was in the city at EXCON-2015 to meet construction equipment manufacturers. “We are planning to have a separate financing scheme for the construction equipment (CE) industry. We are in talks with JCB India for a partnership,” he said.
DH News Service

In the second quarter, Dena Bank reported a fall of 24.85 per cent in net profit at Rs 38.76 crore, during July-September quarter of 2015-16. Bank’s gross non-performing assets slipped further to 6.84 per cent of gross advances as of September 2015, from 5.12 per cent a year ago.

Net NPAs were at 4.65 per cent of net advances, as against 3.59 per cent during the same quarter last fiscal.

Provisioning for bad loans and contingencies were at Rs 283.52 crore for the quarter under review, down from Rs 315.22 crore parked by the bank during the year-ago period.
On recovery, Kumar said, “Because of NPAs, provisioning has gone up and we have set up recovery teams on a daily basis. We are planning to sell some asset reconstruction companies (ARCs) to some companies that are mainly from steel infrastructure for Rs 1,200 crore. The process is on and we may complete it by December.”

Kumar is optimistic about the last quarter. He says, “During the fourth quarter, we will see some improvement owing to discoms being cleared, road infrastructure picking up and mining in few states. Collectively, I think fourth quarter would be a game changer. The whole banking industry is suffering on account of NPAs. Moreover, return on asset or cost to income ratio and lack of profitability provisioning are being affected.”

Taking a cue from non-banking financial companies who reach borrowers on a daily basis, Kumar said, “The number of defaulters are increasing as we are unable to contact our borrowers on a daily basis. So, we have to take steps to reach the defaulters and make them pay.”

The bank is seeing a year-on-year growth of 28 per cent (agriculture), 25 per cent (SME), 25 per cent (total PSL) and 11 per cent (retail).

Expansion mode

Dena Bank to open 115 branches by the end of this financial year
The bank gets 30 per cent of business from Gujarat
The public sector lender has 63 branches in Karnataka and 16 branches in Bengaluru
It plans for a separate financing scheme for construction equipment industry and is in talks with JCB India