Dena Bank eyes healthcare business to boost retail book

Dena Bank eyes healthcare business to boost retail book

Last Updated: Sun, Mar 03, 2013 05:54 hrs
A cashier checks Indian currency notes inside a bank in Agartala

Mumbai-based public sector lender Dena Bank is planning to expand its medical equipment finance business aggressively as lending to the healthcare sector is relatively less risky, a top official said on Tuesday. The bank targets to boost the size of its medical equipment loan portfolio from Rs 11 crore now to Rs 500 crore by the end of the year.

"We are focusing on financing to doctors. Health is an area of growth. There are costly equipment which doctors use," said Ashwani Kumar, chairman and managing director of Dena Bank. "Chances of default in this sector are very low and it can be built in a profitable way."

At a time when corporate funding pipelines are very negligible, banks are excessively focusing on retail credit. Banks are going after home loans and auto loans with attractive rates of interest. Most public sector banks are giving home loans on their base rate, or the minimum lending rate, and have brought down the spread on auto loans.

According to Kumar, doctors occupy a respectable position in the society and therefore, there are hardly any chance of defaults. With the continuous growth of the healthcare sector, there is a good business opportunity also, he added.

Currently, the bank charges an interest rate of 12.85 per cent on such loans. The current limit of the loan is Rs 2 crore. Of which 10 per cent can be sanctioned as working capital with the rest being the term loan. Repayment period is between five and seven years.

Several specialist doctors, including radiologists, pathologists, dentists, ophthalmologists and specialist surgeons, use equipment whose costs range from a few lakhs to some crore rupees. Radiologists use the costliest equipment of all.

According to the Medical Council of India's annual report for 2010-11-the latest available report on its website-there are 239 medical colleges in the country and about 35,500 doctors pass out from these colleges every year. The total number of doctors in the country is about 850,000.

This data, however, excludes dentists. The Dental Council of India is the regulatory body of dentists in the country.

According to an executive with a multinational medical equipment manufacturing company, the market for medical equipment in the country at the end of 2011 was $2.2 billion (Rs 11,850 crore today) and is expected to touch $4.6 billion by December 2016

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