Singapore’s DBS Bank has received provisional approval from the Reserve Bank of India (RBI) to operate as a wholly owned subsidiary in India, effectively becoming a local bank rather than an overseas bank with local branches.
The bank, formerly the Development Bank of Singapore, is Singapore’s largest lender, with US$355bn in assets, and the Indian subsidiary is DBS India, now the fifth largest foreign-owned bank in India.
DBS Group chief executive Piyush Gupta (pictured left) told reporters that he was hopeful of receiving final approval within nine months at the outside, and that the plan was to increase the number of branches in India from the present 12 to around 75 within the next couple of years.
Medium-term, added Gupta, the plan was to ensure that DBS India will have branches in 90 “clusters” that it had identified as being rich in terms of SME business, and that so far the bank had invested around US$1bn into India.
“Physical points of presence will help us get into new businesses like supply chain financing, SME lending, transaction banking and consumer finance which require points of presence across the country,” he added.
‘Running foreign subsidiaries in DBS’s DNA’
The deal is being presented as a symbiotic one that offers benefits both for the bank and for the Indian economy, with DBS having to lend 40 per cent of its net bank credit to borrowers in sectors such as agriculture or to small enterprises within five years of opening a local subsidiary as part of the deal.
Being a foreign bank operating as a local one was not a problem for DBS, added Gupta, saying: “We have domestic franchises in China, Taiwan, Hong Kong and Indonesia, so in that sense a local subsidiary is in the bank’s DNA.”