DBS Bank Ltd has been in India for 14 years. Its representative office, set up in Mumbai in 1994, was converted into a branch in 1995, but it had to wait for 10 years to get its second branch in New Delhi. Last week, it got the Reserve Bank of India nod for opening eight more branches at one go. In an exclusive interview with Mint, Pranam Wahi, general manager and chief executive officer of DBS in India, lays down the bank’s India strategy. Edited excerpts:
You have got eight branch licences at one go. How do you plan to use these outlets?
We expect to scale up our wholesale banking business fast as we already offer a full suite of products to our corporate and SME (small and medium enterprises) customers in Mumbai and New Delhi.
The new branches will allow us to reach out to a larger group of customers. With specific products, for example, cash management and trade finance, location is critical to being able to extend a worthwhile proposition to our customers.
What’s your India strategy?
Our wholesale banking products connect with the rest of our Asian banking network. Since 2007, this product suite has been in place and our new branches will allow us to take this product suite to a larger base of customers.
For the retail banking customers, we will extend our well-regarded “treasures wealth management” proposition and follow it up with other exciting products. We will consider new additions to our network such as ATMs and Internet banking, and new products such as debit and credit cards.
How much capital will DBS invest in India? When do you anticipate to break even?
DBS’ operations in India are amply capitalized with 29.2% capital adequacy ratio as in March 2007. We will seek additional capital as required by our growth plans. Our Indian operations are already profitable.
Most of your new branches are in relatively smaller cities. Isn’t that a handicap?
We see worthwhile business in all the locations where we will open our new branches. We see specific opportunities to participate in the growth of tradeand industry in the smaller locations.
DBS has got eight branch licences in India and State Bank of India the qualifying full bank status in Singapore. There seems to be a quid pro quo between the two regulators…
We cannot comment on this.
What are the key challenges for DBS in India? Which foreign banks do you compete with in India?
We are still in the very high-growth phase of DBS’ plans in India and see many exciting opportunities.
The profile of competition depends on specific business segments. There are obviously some very well-established global banks operating in India but we also have very healthy respect for the local banks as well. We believe DBS’ capacity to offer an Asia-specific focus is a unique proposition at a time when trade and investment flows between India and the rest of Asia are on the rise.
We also believe that our home base of Singapore is becoming an increasingly important hub for Indian companies looking to establish regional and/or holding companies to access equity markets through their offshore subsidiaries and debt markets through products such as foreign currency convertible bonds and real estate investment trusts.
There is a talent crunch in Indian financial sector. How do you plan to tackle this?
We have not encountered this problem as yet. DBS has set itself some exciting targets for growth in India and the region, and we have been able to recruit talented individuals.
We have also been able to offer opportunities to our Indian recruits to undertake interesting work elsewhere in our global network and view this as a particularly rewarding aspect of operating in India.
How does Cholamandalam DBS Finance Ltd fit into your strategy?
We see our investment in CholaDBS as an integral part of our strategy in India. CholaDBS operates over 200 locations in India and undertakes commercial vehicle financing, personal loans and a number of other lending products, as well as stock broking, distribution and asset management.
DBS Bank completed the acquisition of a 37.5% stake in CholaDBS in 2006, with the stated aim with our JV partners of developing a leading retail financial services company in India.
Won’t you be competing with CholaDBS now that you operate more branches in India?
We are a bank with a fairly specific target segment in terms of wholesale and retail customers, whereas CholaDBS is a finance company which has its own target segments.
Will you look for acquisitions if the Reserve Bank of India opens up the sector in 2009?
At this stage, it’s a bit too premature to comment.