DBS Bank eyes Indian SME sector

Singapore-based DBS Bank hopes to increase its SME customer base by 30-40% in the current year with its new product offerings. 

"In FY16, we have had a good growth in the SME segment including addition of a number of new clients availing our SME solutions. We grew our lending books by about 30% in the last financial year. We are set to increase SME contribution in the overall DBS India books to over 10% in the current financial year. We want to become a subsidiary in India so that we can grow and focus on the small and medium enterprise (SME) business, a very small portion (for it) in India till now," said Amitabh Verma, Head, SME Banking, DBS Bank. 

Globally, DBS' SME banking contributes 17-18%, 20% is corporate and the rest is retail. At present, the bank has 12 branches. The Indian operations account for about 5% of the total book. So far, the lender has invested Rs 6,500 crore into India. It infused Rs 1,700 crore of tier-2 capital in the past two years and Rs 670 crore of tier-1 capital in FY16. DBS is also aggressive in SME lending in other markets such as Singapore and Hong Kong. 

DBS has recently launched Tab Banking with an initiative called AweSME Accounts' will replicate the physical account opening form for SME accounts on the tablet. The initiative comes with in-built checks and balances that reviews the past data and ensures that the most frequent reasons for rejection are avoided, thus giving customers a smoother on-boarding experience. 

Explaining DBS' offerings for SME customers Verma said: "We are offering to SMEs a full range of products on the assets (including trade products) and liabilities products to enable operational efficiency. We are the first bank in India to launch the Mobile Account Opening System (MAOS) in India using a fully integrated iPAD which helps accounts opening within four hours."

Foreign lenders including DBS are not very active in the lower end of the segment within the SME business. Typically, this segment has been dominated by public sector lenders but now several mid-sized private banks have also been increasing their focus in the sub-Rs 5 crore segment.

The bank is now focusing the entire SME ecosystem for lending, especially sectors like chemical, auto and auto ancillary and pharmaceuticals depending upon the various locations in India. 

According to Verma, SME financing is now getting influenced by technology. The new trends are - analytics based lending, peer to peer lending and various other variants. Even the traditional modes of funding are getting better enabled through the use of technology. 

The bank awaits clearance from the Reserve Bank of India to convert into a wholly-owned subsidiary (WOS) in the country. The application was filed in April last year. Once the bank gets approval for WoS, they are looking at scaling up the branch network to 60-70 in the next four years.