 "Su Shan Tan")
DBS started retail banking operations in India as early as in 1994. Yet, it became active in this business only in 2009. Why the initial reluctance and what prompted you to shift focus?
Our group chief executive officer, Piyush Gupta, is from India and knows this market very well. The new leadership that came on board with Piyush in 2009 seized the moment. Also, Sanjeev (Bhasin, the India CEO) joined the bank five years ago and under his leadership, we really looked at the market with vigour. The Indian market might see some volatility in the short term but in the longer term, we remain very bullish. DBS has an edge, as the India-Singapore business corridor is very strong. A lot of Indians have made Singapore their second home. On that basis, DBS can play a very strong role.
Most foreign banks find it difficult to conduct a retail banking business in India. How do you plan to run this business profitably here?
What is important is staying power and strategy. India is a very big market. We are never going to be like a local bank in terms of branch presence. The idea is to do what you are good at. We are going to focus on customers on the India-Singapore corridor. Despite weakening of the rupee, every year there are thousands of Indian visitors to Singapore.
What will be DBS’ retail banking strategy in India?
We want to play to our strengths and are not going to fight with local banks. We want to supplement for our lack of physical presence with digital presence. We have a good online platform, which we are further refining. Our strength is that we give really good deposit rates. Interest rates are high here. It is not a big deal for local depositors but offshore ones find it very attractive. We are not in the credit card game but we give a very good rebate on debit cards. We have products offering eight per cent post-tax IRR (internal rate of return). Some of our top-range products can be offered to local high net worth individuals and NRIs.
When will DBS India break even? Have you set any growth target?
I am hoping in the next year or so. If we get our productivity targets next year, I think we have a high chance. It is up to the management team to achieve it. We have set a high double-digit growth target and I think it is easily achievable.
Will you choose to set up a subsidiary in India?
We would be interested (in setting up a subsidiary). We will focus on corporate banking and building our SME capabilities. We will focus on the emerging affluent segment. The demographics are very encouraging. With the recent guidelines FCNR (B) deposits, I think the direction is that India is welcoming a lot more overseas deposit flows. The world is moving towards free trade. We cannot afford to stay close.
How do you plan to attract the Indian affluent segment?
You have to be part of the client's wealth creation process. We find our clients' businesses and their personal wealth are inextricably linked, mostly for the privately held companies. Therefore, we are offering a package of financial solutions along with wealth management solutions. In Asia, wealth (creation) is still very new. They have made a lot of money only in the last 10 years. They are very rich in assets but are cash poor. So, in Asia, part of the solution is financing and offering liquidity. In India, if you need to raise liquidity, the rates are too high. You have to look at the most optimal rate. We have done debt issuances in Singapore dollars for big Indian companies.
Similarly, we have done Indian REITs. We plan to roll-out a mortgage programme soon. DBS is the Asian bank for Asians. We are very excited with the (opportunities in the) Asian middle class segment.
