Dena Bank receives nod to raise funds via stake sale

State-run lender Dena Bank has received Board approval to raise funds by diluting government stake to 52 per cent from the current 65 per cent.

Last year, the government allowed public sector banks to reduce their stake to 52 per cent in order to meet capital requirements.

The law requires that government holding in public sector banks at any point cannot fall below 51 per cent in order to maintain its public sector character.

Besides the stake dilution, the bank also plans to raise capital through additional tier-I bonds of up to ₹1,500 crore in one or more tranches in one or more instruments, Dena Bank said in a filing to both the stock exchanges.

Additionally, it will also raise capital through tier-II bonds of up to ₹1,000 crore,

The lender’s capital adequacy ratio was 11.22 per cent as on September 30 with tier-I ratio at 8.19 per cent under Basel-III norms. Basel norms, tailored for Indian banks, mandate a minimum capital adequacy ratio of 9 per cent.

The bank’s gross non-performing assets (NPAs) as a percentage of loans have been substantially high at 6.84 per cent.

Net NPAs stood at 4.65 per cent.

Provisioning towards bad loans hit the bank’s profit that fell 25 per cent to ₹39 crore in July-September quarter compared with ₹52 crore in the year-ago period.

Shares of Dena Bank closed down 0.80 per cent at ₹43.45.