Mumbai: Singapore-based DBS Bank Ltd, which last year got licences from India’s banking regulator to open eight branches at one go, is planning to mobilize deposits in a big way here.
In an interview, his first since he took over as general manager and chief executive officer of DBS Bank in India, Sanjiv Bhasin, said: “We are yet to decide the manner in which we would like to grow the assets. Raising deposits is a challenge. You have to mobilize the right liability base to originate assets to maintain the right asset-liability match.”
Well capitalized: DBS Bank’s India head Sanjiv Bhasin says the lender does not have the constraints on capital several big banks face. Ashesh Shah / Mint
Till recently, all banks operating in India were offering high rates to mobilize deposits and match the growing demand for loans from corporations and individuals. The rates have come down to some extent after the Reserve Bank of India (RBI) aggressively cut policy rates and banks’ cash reserve ratio, or the portion of deposits that commercial banks need to keep with it, releasing money in the system.
Among the 31-odd foreign banks operating in India, DBS enjoys a unique position, following the Comprehensive Economic Cooperation Agreement (CECA), signed by India and Singapore in August 2005, promising to open up the financial sector of both the countries.
Under CECA, RBI was to allow three Singapore banks to open 15 branches in India and the Monetary Authority of Singapore (MAS) was to give three Indian banks qualified full bank licence (QFB) status in Singapore. A QFB can raise retail deposits and operate at 25 centres in Singapore, including both brick-and-mortar branches and automated teller machines (ATMs).
After a three-year stand-off between the two regulators, in August 2008, RBI and MAS opened up the financial turf of their respective countries. DBS Bank, the largest bank in Singapore by assets, has got the Indian central bank’s nod to open eight branches across the country.
RBI has also issued a licence to Singapore’s United Overseas Bank Ltd to open a branch in India, making it the second bank from the city-state to have a presence here.
MAS, on its part, has offered the QFB status to State Bank of India. India’s largest lender will now be able to raise retail deposits and open 25 centres in Singapore, including ATMs and point-of-sales operations.
“We will be in eight locations by the end of the first quarter,” said UBS’ Bhasin. Till last year, the lender had only two branches in Mumbai and New Delhi.
Recently, DBS Bank has set up offices in Bangalore, Chennai, Pune and Kolkata. Four more branches will be opened in Nashik (Maharashtra), Surat (Gujarat), Moradabad (Uttar Pradesh) and Salem (Tamil Nadu) by June 2009.
“We would like to get more branches, but we have to first use the licences in hand. We need a sizeable presence to grow our wholesale and personal banking business,” Bhasin said.
With a net worth of Rs1,136 crore and a balance sheet of Rs9,086 crore, DBS Bank’s operations in India are well capitalized with an 18.15% capital adequacy ratio, as of March 2008. “We do not have any constraint on capital like many of the big banks are facing,” said Bhasin.
He also made it clear that even though the current emphasis is on raising retail deposits, the bank will not stop giving loans. “Being a small bank, we have not been impacted by the recent economic meltdown. We have had no occasion to withdraw from the credit market,” he said.
“In the space we operate, there is no indication of lack of demand (for loans). While we grow the business on a smaller base, we see opportunity in all business segments, including corporate banking, small and medium enterprises, consumer banking and treasury space,” Bhasin added.