Analysis of Long Term

Business Growth:
In FY11, The bank has set a target of opening 100 branches and
taking the total number of ATMs to 750. As against this, the bank has
opened only 51 new branches and 47 new ATMs taking the total
number of ATMs to 543. In FY12, the bank has again set a target of
opening 100 new branches in the areas where its presence is almost
negligible like Jharkhand, Bihar, West Bengal, Sikkim, etc. The bank
has identified places in these areas which are mostly under banked
and minority dominated district.

Financial Inclusion Program (FIP):

The bank was allotted 3538 villages by Government of India and 728
villages by State Level Bankers committee for implementing
Financial Inclusion Program. The 2 RRBs sponsored by the bank
have implemented FIP in 271 villages. The bank has opened 2.74 L

no frills account in FY12, taking the total number of

no frills account to 12.60 L. It has also opened financial literacy and
credit counselling centres in districts of Gujarat, Daman and Dadra
Nagar Haveli. The government has initiated FIP with a view of
banking Indias unbanked poor. Though the banks get an opportunity
to expand its business in the rural areas, the impact of FIP on
profitability of the banks is mild.

Advances:
The advances of the bank surged by 26% to reach Rs.56, 693 Cr.
Loans to the corporate sector forms 60% of the total lending.
Infrastructure lending constitutes of 34% of the banks corporate
advances

and

18%

of

the

banks

total

advances.

Under

Infrastructure, maximum amount is lent to the power sector. Other

than Infrastructure, the bank has a high exposure to NBFCs & trading
Companies and to Metals industry.

Asset Quality:
NPA of the bank has been on a higher side from the last 10 years.
FY12, the NPA remains high at 1.01%.The lowest NPA that the bank
has managed to achieve is 0.94% in 2008 which is still above the
desired level. The top 4 sectors contributing to NPA are: Services,
SME, Agriculture & personal loans.

Basel III
Come 2013 and the banks will have to move towards BASEL III
norms from the current BASEL II norms. In India, BASEL III
implementation has to be completed by the year 2019.BASEL III has
higher and more stringent capital adequacy requirements. 2 new
buffers to be maintained over and above the tier I capital will be
introduced. The immediate challenge for the banks is to provide for
this extra capital required for BASEL III.
As seen in the table below, The FY12 CAR of Dena Bank is low. This
year capital amounting to Rs. 151 Cr was raised by the bank from
LIC. This has diluted the government stake in the bank from 58% to
55%.

As the bank is a public sector bank, the extra capital

will be provided by the government for meeting BASEL III
requirement and expansion. The government has already announced
capital infusion amounting to Rs.15, 188 Cr in Budget 2012. However,
this might increase the number of shares and have an impact on the
already strained ROA & ROE.

Major Challenges for Growth:

Under the Budget 2012, public sector bank have been asked to
increase exposure towards agricultural sector. NPA in the agriculture
sector is high having an effect on overall NPA. Thus, increasing
exposure to agriculture may affect its asset quality. Dena Bank also
has a lot of exposure to Infrastructure Sector. Given the nature of the
infrastructure industry, there is a possibility that there may be
slippages into NPA in the short term.
The downturn in the Indian Economy will have an impact on the
growth of the banks and affect its profitability. FYQ4 has grown at
which is the slowest in 9 years. Investments have already slowed
down which may affect the credit and there is also possibility of NPAs

increasing. The country is already grappling with

problems of Inflation, rupee depreciation and low industrial
production. RBI will revise its monetary policy from time to time to
contain these economic problems which the bank will have to adhere
to.
High Competition prevalent in the banking sector has already led to a
rise in the cost of funds. Thus in such times, it will be a real challenge
for Dena Bank lowering of NPA will and carrying on with its expansion
plans.

Questionnaire (Tick relevant box)

Appearance of frontage of Branch premises & visibility of Sign Board
Excellent Very Good

Good

Average

Poor

General Layout and arrangement of counters

Excellent Very Good

Good

Average

Poor

Good

Average

Poor

Cleanliness and tidiness

Excellent Very Good

Adequacy of waiting space, sitting arrangement, writing materials,

loose slips, etc.
Excellent Very Good

Good

Average

Poor

Behaviour of the staff with customers (i.e. politeness, courtesy,

cooperation, personal attention, etc.)
Excellent Very Good

Good

Average

Poor

Punctuality & presence of the staff on the counter during the working
hours
Excellent Very Good

Good

Average

Poor

 Efforts of the staff to minimise waiting period of the

customers at the counter(i.e. payment of cash, cheque, purchase of
draft, handling of queue at cash counter
Excellent Very Good

Good

Average

Poor

Readyness of the staff to listen to your problems/ difficulties patiently

& willingly
Excellent Very Good

Good

Average

Poor

Efforts made by the staff to solve your problems / difficulties

Excellent Very Good

Good

Average

Poor

Correctness, legibility & promptness in delivery of Pass Books/

Statement of Accounts
Excellent Very Good

Good

Average

Poor

Speed of collection of upcountry cheques/ bills

Excellent Very Good

Good

Average

Poor

Quickness in intimating fate of cheque

Excellent Very Good

Good

Average

Poor

Guidance to customers on various deposit schemes of the bank,

there advantages and tax benefits etc.

Excellent Very Good

Good

Average

Poor

Services related to Term Deposit(i.e. prompt issue of receipt,

sanctioning of loans against FDR if required, giving intimation of
maturity of deposit etc.)
Excellent Very Good

Good

Average

Poor

Good

Average

Poor

Good

Average

Poor

Timely sanction of loan

Excellent Very Good

Timely disbursal of loans

Excellent Very Good

Availability of any service at any counter on computer

Excellent Very Good

Good

Average

Poor

Delivery of printed Pass Book/ statements on computers

Excellent Very Good

Good

Average

Poor

Average

Poor

Efficiency of remittance service

Excellent Very Good

Good

 Expertise in handling of Import/ Export Business

Excellent Very Good

Good

Average

Poor