Development Credit Bank mulls hike in FDI to 49 pc

Business Line - India; Jul 29, 2002
By Sarbajeet K. Sen

NEW DELHI, July 28. AS part of its plan to reorient its business, Development Credit Bank Ltd (DCB) is considering hiking the foreign direct investment (FDI) in the bank to 49 per cent from the present 37.5 per cent held by the Aga Khan Fund for Economic Development (AKFED). The Aga Khan Foundation of France, supports economic development in developing countries.

"With the FDI norms having been relaxed we are considering a possible hike in the overseas holding to 49 per cent," Mr Sandeep Mookerjee, Head, Personal Finance Services, DCB, told Business Line. DCB has a paid-up capital of Rs 23 crore and reserves and surpluses of Rs 301 crore at the end of March 31, 2002.

Mr Mookerjee said that the bank which has been operating on the fringes primarily relying on community banking has now decided to transform itself into a "mainstream, modern private sector bank." In the past the bank has been catering mainly to the Ismaili community, which considers Aga Khan as their spiritual leader.

He said that among the major initiatives that the bank plans to undertake soon is to launch new branded savings and current account with value added services, expand the branch network considerably from the present 58 branches, quickly expand the ATM network, enter into distribution of insurance products and upgrade technology.

The bank has also launched a Business Process Reengineering project, being implemented by Zensar Technologies, to improve efficiency of operations and to provide better customer service.

"We would like to position ourselves as one of the best medium-sized banks in the country. We would overcome any disadvantage of size by offering the best quality product and services," Mr Mookerjee said.

DCB plans to raise its branch network to 80 from the present 58 in about 15 months time while the ATM network is expected to go up to 200 from the present 23.

"There are some obvious gaps where we need to establish our presence or increase our presence soon. Moreover, besides having our own ATMs we are also planning to enter into alliance for sharing of ATMs of other banks," Mr Mookerjee said.

In the near future, the bank plans to enter cities such as Bangalore, Chennai and Kolkata, while it would add two more branches in Delhi.

He said that the bank is holding negotiations with insurance companies to market their products and that the tie-ups should be announced within a month.

"We plan to tie up with one private sector insurance company each in the life and general insurance sector. We hope that the tie-ups would help us to leverage new customer base," Mr Mookerjee said.

Mr Mookerjee did not rule out having a strategic alliance with another private sector bank in future. "We are open to co-operation along with competition. But before that we have to build competencies of our own," he said.