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Approval for wholly-owned subsidiary still pending with FinMin, says DBS

As a WOS, DBS wants to primarily target the small businesses for its growth in the country

Approval for wholly-owned subsidiary still pending with FinMin, says DBS

DBS Bank Ltd is a Singaporean multinational banking and financial services company

Press Trust of India Mumbai
Singaporean lender DBS, the first to apply for operating as a wholly-owned subsidiary two years ago, has said its request is pending with the Ministry of Finance and the lack of a precedent is causing delays.

"A new category of banks have to be created...100 per cent owned foreign banks do not exist. With the first bank (license), a new category of banks will get created. It is still a new thing," DBS chief executive for India, Surojit Shome told PTI when asked about the delay in getting the nod.

At the time of making the application, the bank had expected approvals to come by March 2016.
 
Shome hinted that their application has been approved by the Reserve Bank of India and is pending in the Ministry of Finance at present, which has to take a call on it after consulting other ministries, including Ministry of Commerce and Ministry of External Affairs.

When asked if issues faced by Indian banks while operating in its home market of Singapore are impeding progress, Shome replied in the negative.

"We don't think so. If it was, those issues were discussed between RBI and Monetary Authority of Singapore (MAS) and there are no issues that we are aware of," he said.

Shome said DBS, which operates 12 branches in the country at present with over a million customers, is very keen on getting a clearance on the same at the earliest.

The bank has drawn up plans of expanding presence in the country in a staggered way which is included in the application submitted, he said.

The RBI has been wanting foreign banks to operate as wholly owned subsidiary (WOS) in the country, which will insulate the local operations from any difficulties which the parent may face.

The present branch model exposes the banks to risks if an event like the 2008 financial meltdown happens, it is felt.

The RBI adopted a 'carrot and stick' approach and has made all the new foreign lenders and existing ones having certain size to operate as a WOS.

The guidelines were issued in late 2014 and DBS was the first to apply, followed by at least two others.

"We are ready to convert, we have made the application and done all the work. It's really for the country and the regulators to make up their mind," Shome said.

As a WOS, DBS wants to primarily target the small businesses for its growth in the country.

It is targeting to ramp up presence to up to 75 branches in five years from the present 12.

"Our ambitions in India are to scale up from being a large corporate bank to being a universal bank, particularly to build out SME franchise," Shome said.

For a bank like this one which is focused on Asia, it is necessary to have a presence in India and China, he added.

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First Published: May 21 2017 | 11:53 AM IST

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