Public sector entity Dena Bank will sell 5 per cent stake to Life Insurance Company (LIC) through a preferential allotment to raise up to Rs 150 crore of capital to fuel its growth. With the stake sale, government holding in the bank will go down to 53 per cent and LIC’s stake in the bank will go up to 11 per cent from 6 per cent, at present.

Resolution for the stake sale was passed by the bank’s board on Monday.

Dena Bank chairman and managing director, Nupur Mitra ,said at a press conference that the stake sale to LIC will help the bank fund its growth. “The board approval is to sell 5 per cent stake in bank which will bring in about Rs 100 crore to Rs 150 crore. Government holding in the bank will come down but we have also asked the government for some additional capital so they may be able to maintain it at the present level of 58.01 per cent.”

The bank has also placed a request with the government to recapitalise about Rs 500 crore which will help the bank in its expansion plans over the next three years.

Net profit of the bank for the third quarter ended-December 31, 2011 was up 20.28 per cent to Rs 186.68 crore. The total income of the bank was up 27.75 per cent to Rs 1810.21 per cent. Net interest margins were up 6 basis points at 3.30 per cent. Gross credit of the bank was up by 15.70 per cent to Rs 47,928.38 crore.

The incremental credit growth during the quarter was over Rs 4,000 crore led by lending to companies.

The total restructured assets of the bank during the quarter was Rs 341 crore, taking its total restructured book to Rs 1,737 crore. The bank restructured its advances to Uttar Haryana which was about Rs 127 crore. The total restructured book of the bank is about Rs 1,737 crore. The gross non-performing assets (NPAs) of the bank was about Rs 885.32crore at the end of the third quarter ended-December 31, 2011 increasing marginally by about Rs 54.83 crore. The upgradation during the quarter was Rs 31 crore and cash recovery was Rs 40 crore.