Dena Bank executive director M. V. Nair in Calcutta on Tuesday. Picture by Kishor Roy Chowdhury

Calcutta, Jan. 18: Dena Bank expects to set its books in order in the current financial year.

Executive director M. V. Nair said, ?The profitability of the bank may be affected in the current year as it plans to make all the adjustments in this fiscal. However, from the next fiscal, we expect a turnaround in our profitability.?

?We have adjusted and written off accumulated losses of Rs 217.29 crore against revenue reserves in the current fiscal,? said Nair.

The bank has also made Rs 65-crore adjustments for wage revision. According to the Reserve Bank of India (RBI) stipulations, the bank has made 100 per cent provision for doubtful debts irrespective of any collateral security.

?We have also amortised VRS expenditure of Rs 75 crore. However, since the amortisation and various adjustments end this year, we expect a turnaround in profitability from the next fiscal,? added Nair.

Loss from treasury operations can also put pressure on profitability in the current fiscal, he said.

Banks are required to create investment fluctuation reserves (IFR) of a minimum of 5 per cent of the total investment portfolio over five years from 2001-02, according to RBI guidelines.

Dena Bank could not create such a reserve up to March 31, 2004 because of accumulated losses. However, as these have been adjusted and written off against revenue reserves on September 30, 2004, the bank will start creating IFR from March 31, 2005.

The bank also hopes to attain a net non-performing asset (NPA) of below 5 per cent by the end of this fiscal on the back of aggressive loan recovery strategies and consistent monitoring, said Nair.

Recoveries of Rs 250 crore last fiscal played a major role in bringing down the bank?s net NPA levels, which is at 7.85 per cent on September 30 against 9.4 per cent on March 31, 2004.

The bank is entering the capital market with its second public issue of 8 crore shares of Rs 10 each, priced at Rs 27 apiece, aggregating Rs 216 crore. The issue opens on January 24 and closes on January 29.

After the issue, the government holding in the bank will come down by 19.80 per cent to 51.19 per cent.

Nair said the issue would augment the capital base to meet future capital adequacy requirements and also the long-term resources of the bank. After the issue, the capital adequacy ratio would increase to about 12 per cent from the current 10.28 per cent, he added.