Development Credit Bank, the small private sector banking group, has planned to cut the share of personal loans in its credit portfolio to diverge risks.
Instead it will, get into the commercial and construction equipment business, which is a secured portfolio in the retail segment.
The bank will be raising the share of retail assets comprising commercial vehicles and construction equipment in total advances from 45 per cent to 55 per cent. The large and mid corporates currently is having 55 per cent share in total loan base. The total advances at the end of September 2007 stood at Rs 3,195 crore.
There are more chances of more number of defaulters in case of personal loans. The bank saw a minor rise in net non performing assets in the first quarter, earning out of personal loan segment.
The managing director and chief executive Gautam Vir said, “We plan to bring down the share of personal advances in total retail loans from 47 per cent to 35 per cent over the next financial year.”
As of September 2007 the personal loans stood at Rs 713 crore, while commercial loans were Rs 279 crore. The bank has already stopped the low ticket loan below Rs 50,000, as it have higher delinquencies space.
It has tied up with HDFC for steady growth and market its home loan products.
“This (home loans) is not our area of expertise (which is volumes business). The bank will focus on origination and servicing customers,” Vir said. This will help in boosting banks other income.
It has applied to Reserve Bank of India for permission to open 50 branches to expand its network. Currently DCB is having 74 branches, predominantly in the western region of the country.
The western region comprises Maharashtra, Gujarat, Goa, Andhra Pradesh, National Capital Region and Rajasthan.
“We will continue to expand the region (western), where the growth is high and our brand is known. We will also open branches at SME clusters outside the western region”, he said.
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