Private sector lender DCB Bank aims to double its balance sheet in the next three to four years, MD and CEO Praveen Kutty said. business line. Kutty shares asset quality guidance, the impact of the draft expected credit loss guidance and opportunities where the bank uses Artificial Intelligence and Machine Learning (AI, ML). Edited excerpts:
What are your guidance for business growth and asset quality for the current fiscal?
We plan to double our balance sheet within 3 to 3.5 years. We have grown 19-22 percent for the past five quarters in a row. So we are on track to achieve the goal.
Furthermore, we were cautious in the first quarter and made higher provisions for micro loans and unsecured bonds. And because we have made these provisions, our credit costs for the full year will be in the lower end of 45-55 basis points (bps). A small capital infusion of ₹83 crore by the promoter is also expected, which should happen soon.
Have you estimated the facilities required under the draft ECL standards?
Expected credit loss (ECL) standards require banks to make provisions for future losses. We feel very comfortable, we don’t see many changes happening to us.
In which segments does the bank use AI and ML?
Using speech haptics and AI, we can find out the resolution quality of customer questions. The quality of the interaction with AI is so good that you cannot determine whether there is a person behind it. There is also a self-correcting mechanism present.
I think the possibilities in this area are endless. We currently use AI and ML for customer experience, product creation, risk mitigation (identifying mule accounts), and across multiple areas.
You also have to be careful not to run ecochambers. There is a self-fulfilling prophecy about it. You get what you ask for and so you ask for what you want (from AI). I’m not saying AI is a cure-all, but there are some areas where it is definitely better than humans.
Every day that passes is a learning experience. There are reactions that can be avoided, but you can correct mistakes.
How much does the technological transformation amount to your operating costs?
We have two pillars that are absolutely crucial to us. One is partnership and the other is technology. We believe that strong alliances are very important for our growth, and that technology is a leveller. We invest very heavily on the technical side; a large part of our operating costs goes to technology.
We look at four specific themes where technology spending delivers our returns.
One is to be ready for the future, the second is to ensure safety and reduce risk, the third is to ensure a superior customer experience and the fourth is to reduce actual costs.
Although technology costs may increase, the final cost may decrease. These can include transaction costs, combined costs of people, technology, rework, and errors. We spend more than 10-12 percent of operational spend on technology-related work.
But it gives us a good return. For example, our cost-to-income ratio declined by 700 basis points year-over-year in the first quarter of 2026. I’m not saying it’s all because of technology, but a significant portion is led by technology.
Are you looking to collaborate with fintechs for co-lending?
Even before fintech became a buzzword, we had partnerships like this. Co-loans are very important to us. 15 percent of our book comes from co-lending. Co-lending started in 2021 and our market share in co-lending is currently many times higher than comparable companies.
Now that new rules are in place, co-lending will increase further. We plan to keep co-loans at 15 percent of our advances. Currently, we have partnerships in home loans, gold loans, school loans and unsecured loans.
#double #balance #sheet #years #DCB #Bank