DBS bets on 'poisoned chalice' of retail banking in India

DBS chief executive Piyush Gupta officiating the opening of a new DBS branch in Mumbai. The Singapore lender is the first major foreign bank to set up a local unit in India, the world's second-most populous nation.
DBS chief executive Piyush Gupta officiating the opening of a new DBS branch in Mumbai. The Singapore lender is the first major foreign bank to set up a local unit in India, the world's second-most populous nation.PHOTO: DBS

It targets consumers, SMEs in bid to reduce its reliance on S'pore

MUMBAI • DBS Group, South-east Asia's biggest bank, is aiming to bolster loans to Indian consumers and small businesses as part of a plan to reduce its reliance on Singapore.

The lender will push credit through its newly formed, wholly owned unit in India, chief executive Piyush Gupta said in an interview in Mumbai.

The bank is beefing up both its brick-and-mortar branches in India, as well as its digital presence, to tap the world's second-most populous nation.

Retail currently accounts for about a tenth of DBS loans in India.

"The reality is that for most foreign banks, trying to build retail and small and medium businesses outside their home market has been a poisoned chalice," Mr Gupta said on Monday.

"We are making this bet on India as we believe discontinuity caused by digital channels offers a once-in-a-lifetime opportunity of skinning this cat differently."

DBS' push into large, developing markets such as India is necessary as the bank seeks to reduce its reliance on Singapore, from which it derived 62 per cent of revenue last year.

The timing might be favourable, given that several Indian homegrown banks are hobbled by the world's worst bad-loan ratio, while some foreign rivals like Standard Chartered consider cutting their presence in the country.

DBS is the only sizeable foreign bank to take steps to set up a local unit after India announced rules covering their presence in 2013.

  • 13

  • Number of DBS branches in India. The bank plans to scale up its presence to about 100 touch points - branches and manned kiosks - over the next 18 months.

The three largest foreign banks in India - Citigroup, Standard Chartered and HSBC Holdings - are yet to announce plans on ring-fenced units in the country.

Mr Gupta said: "While other foreign banks in India are sticking to the top end of the market, we want to go deeper. With the market growing so quickly in India, even if we manage to grow with it, we will do quite well."

DBS started its India business as a representative office in 1994 and now has about 13 branches there.

It plans to scale up its presence to about 100 touch points - branches and manned kiosks - over the next 18 months.

The bank will also triple its balance sheet to 1.5 trillion rupees (S$28.69 billion) by 2023, its India unit's CEO Surojit Shome told reporters in Mumbai.

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A version of this article appeared in the print edition of The Straits Times on March 06, 2019, with the headline 'DBS bets on 'poisoned chalice' of retail banking in India'. Print Edition | Subscribe