Rajat Verma, the new chief executive officer of DBS Bank India, said the Singapore-headquartered lender wants to invest in India and that he has inherited a solid base to grow the business here. In an interview with Joel Rebello, Verma also spoke about the opportunities and challenges before the bank in the country. Edited Excerpts:
You have taken over recently as CEO. What are your plans for DBS in India?
DBS Bank has been here for a while; we completed our 30th year in India this year. We derive our strategy from our parent in Singapore, which is in a strong position and wants to invest in the country. Between April and December last fiscal, ₹1,229 crore of capital was infused by the group in the form of AT1 to support our growth aspirations. We want DBS in India to be a growth story, following the universal banking model.
In certain areas we can take leadership positions, for example, in our SME business, which we run though specialised branches. That business is led by financing of SMEs.
With the benefits from transaction banking, cash management, etc., we think it's an area we can add value to. There are large and competent Indian banks, with a much larger footprint. But there can be pockets of excellence in SME, which is our goal. In corporate banking, we feel we can make a difference. Many of these companies are looking at international markets. They're looking at loan syndication, where we think that we are very well connected, all over the world, and certainly in Asia. We cannot do everything, but we think there are enough opportunities for DBS, with its footprint and balance sheet in the corporate space.
But corporate banking in India is crowded and has thin margins. What difference can DBS bring to the table?
There's a need for product specialisation. Some banks may be good at loan syndication, which is helpful for companies in India to raise debt and then support that loan syndication. We are strong in supply-chain financing. We believe in sector knowledge and work through sector teams in the region in India. We think that we can add value in being able to understand the company's business a little better and, therefore, work with them a little closer. Yes, corporate banking is crowded, but companies are growing so much, their needs are getting bigger, and their supply chains are getting bigger. The number of countries that they're going to is becoming bigger. So, there are different things to do with the same corporation.
What is the outlook on growth?
We are surely growing faster than the market. We are also growing our deposits. We are very thoughtful about credit, sort of concentration, credit distribution, and we tend to balance and rebalance our portfolio quite quickly and redirect, depending on what the market is like. We want to be reasonably sure of our approach in the long term. We continue to invest in growing our retail and SME business. For instance, our SME asset book has crossed ₹10,000 crore, growing at 45% YoY. The ratio of SME loans in our book has increased. All segments have grown, but SME has grown faster. If you look at the India macros, I think this is probably, on a consolidated level, the most benign credit period in the last 10 years. I feel that the credit situation is actually on a structural low. It creates the ability for people to build stronger balance sheets, and therefore to look at the growth more.
You are now the largest foreign bank in India in terms of branches, post the acquisition of Lakshmi Vilas Bank. What is the strategy with regards to branches?
The strategy on branches and how we utilise it is sort of in flight. I cannot elaborate much because we are still thinking on the evolving strategies. The integration has taken a lot of effort and time. We are still working on how we want to go about it. We are largely only relocating branches and not opening new ones. But we are free to open new branches in line with the rural urban ratio.
On the consumer banking side, DBS was the first bank to launch a Digibank. Where does that sit in the consumer banking play?
Retail is the more difficult thing to do, because it has a much longer investment period and many more locally entrenched high-quality players, certainly in India. It is an investment story for us. We have invested a lot in the network and look at both assets and liabilities.
You have taken over recently as CEO. What are your plans for DBS in India?
DBS Bank has been here for a while; we completed our 30th year in India this year. We derive our strategy from our parent in Singapore, which is in a strong position and wants to invest in the country. Between April and December last fiscal, ₹1,229 crore of capital was infused by the group in the form of AT1 to support our growth aspirations. We want DBS in India to be a growth story, following the universal banking model.
In certain areas we can take leadership positions, for example, in our SME business, which we run though specialised branches. That business is led by financing of SMEs.
With the benefits from transaction banking, cash management, etc., we think it's an area we can add value to. There are large and competent Indian banks, with a much larger footprint. But there can be pockets of excellence in SME, which is our goal. In corporate banking, we feel we can make a difference. Many of these companies are looking at international markets. They're looking at loan syndication, where we think that we are very well connected, all over the world, and certainly in Asia. We cannot do everything, but we think there are enough opportunities for DBS, with its footprint and balance sheet in the corporate space.
But corporate banking in India is crowded and has thin margins. What difference can DBS bring to the table?
There's a need for product specialisation. Some banks may be good at loan syndication, which is helpful for companies in India to raise debt and then support that loan syndication. We are strong in supply-chain financing. We believe in sector knowledge and work through sector teams in the region in India. We think that we can add value in being able to understand the company's business a little better and, therefore, work with them a little closer. Yes, corporate banking is crowded, but companies are growing so much, their needs are getting bigger, and their supply chains are getting bigger. The number of countries that they're going to is becoming bigger. So, there are different things to do with the same corporation.
What is the outlook on growth?
We are surely growing faster than the market. We are also growing our deposits. We are very thoughtful about credit, sort of concentration, credit distribution, and we tend to balance and rebalance our portfolio quite quickly and redirect, depending on what the market is like. We want to be reasonably sure of our approach in the long term. We continue to invest in growing our retail and SME business. For instance, our SME asset book has crossed ₹10,000 crore, growing at 45% YoY. The ratio of SME loans in our book has increased. All segments have grown, but SME has grown faster. If you look at the India macros, I think this is probably, on a consolidated level, the most benign credit period in the last 10 years. I feel that the credit situation is actually on a structural low. It creates the ability for people to build stronger balance sheets, and therefore to look at the growth more.
You are now the largest foreign bank in India in terms of branches, post the acquisition of Lakshmi Vilas Bank. What is the strategy with regards to branches?
The strategy on branches and how we utilise it is sort of in flight. I cannot elaborate much because we are still thinking on the evolving strategies. The integration has taken a lot of effort and time. We are still working on how we want to go about it. We are largely only relocating branches and not opening new ones. But we are free to open new branches in line with the rural urban ratio.
On the consumer banking side, DBS was the first bank to launch a Digibank. Where does that sit in the consumer banking play?
Retail is the more difficult thing to do, because it has a much longer investment period and many more locally entrenched high-quality players, certainly in India. It is an investment story for us. We have invested a lot in the network and look at both assets and liabilities.
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