A small private bank, a new CEO and plans to stay conservative
Subscribe to enjoy similar stories. Mumbai: DCB Bank, one of India’s smallest private sector lenders, wants to play it safe. It is keeping a distance from unsecured loans, and banking on small businesses and individuals to improve its fledgling deposit ratios.
The focus will be on current and savings account (Casa) deposits and on overdraft products, Praveen Kutty, who took over as chief executive in April, said in an interview with Mint. Casa is the portion of low-cost deposits in banks. Savings accounts earn lower interest than term deposits or fixed deposits, while current accounts earn no interest. In banking parlance, overdraft facility is when lenders allow customers to withdraw money from their accounts even where they have little or no balance but levies an interest on it.
At present, over 55% of its loan book consists of mortgages, largely involving self-occupied residential properties. Its loan book grew 19.3% y-o-y in Q2 to ₹44,465 crore. “For most customers, this self-occupied home is their single most significant possession, often mortgaged to the bank.
However, when customers have surplus funds, these often remain in savings or current accounts at other banks, not DCB Bank," said Kutty, adding that to address this gap, the bank would now focus on getting such low-cost current and savings deposits. As of 30 September, 25.61% of its deposits were in current and savings accounts (Casa), 57 basis points (bps) higher than the same period of last year. To be sure, the bank saw its total deposits grow nearly 20% year-on-year (y-o-y) in Q2 of the current financial year to ₹54,532 crore.
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