Calcutta, Sept. 6: Foreign institutional investors seem to have lost their appetite for the Development Credit Bank (DCB) stock. During the 12 months ended June 30, 2008, they have almost halved their shareholding in the bank to 17.65 per cent from 30.84 per cent.

“This shows the kind of outflow of foreign institutional investment from the country in the wake of credit crisis in the US,” said Gautam Vir, managing director and chief executive officer of DCB.

The Aga Khan Foundation-promoted DCB is the only co-operative bank that had been converted into a commercial bank. But saddled with huge bad assets and depleted net worth, DCB needed money and it came out with a public issue in October 2006.

The flotation attracted both domestic and foreign institutional investors. At the end of the quarter ended December 31, 2006, FII holding in the bank was 28.20 per cent and it continued to grow to 30.84 per cent by June 2007.

After DCB brought about a change in the management and operations in 2005, the bank saw a marked improvement in its financials and profitability.

While the net NPA came down to below 1 per cent, gross NPA dipped to 4.5 per cent by March 2008. From the beginning of the current financial year, the bank, however, is finding it hard to keep its net interest margin above 3 per cent

DCB has decided to reduce its personal loan portfolio to 12 per cent by the next financial year from 17 per cent at the end of 2007-08.

Personal loans comprised more than 19 per cent of DCB’s total retail loan portfolio in 2006-07.

“We are planning to offer mobile banking and payment solutions by the end of this year,” Vir said.

The bank’s capital adequacy ratio, however, stood healthy at 13.4 per cent with equity capital and reserves accounting for 11.8 per cent.