Photographer: Nicky Loh/Bloomberg  

DBS Bank Establishes Wholly Owned Indian Subsidiary 

DBS Bank today officially launched its locally incorporated DBS Bank India Ltd. as it becomes the second foreign lender to follow the wholly owned subsidiary model in India that removes restrictions on expansion.

The local subsidiary will enable the bank to deepen penetration and help foster a relationship with customers and create differentiated offerings, Surojit Shome, chief executive officer of DBS Bank India, said in a press conference. The bank allocated Rs 1,800 crore for branding and to establish over 100 physical touch points, including new branches and e-kiosks over the next one year.

The subsidiary will help the Singapore-based financial services group build scale as it looks to tap large corporates, small and medium enterprises and individual customers. The wholly owned model, also followed by the State Bank of Mauritius, allows foreign lenders to be treated as a local bank, removing certain restrictions that they face such as those on opening new branches.

For improving its local presence, the bank couldn’t rely on entirely digital strategies, according to Shome. Some degree of physical presence will help affirm the bank’s brand, build trust and last-mile connectivity, he said.

Though the licence to establish a subsidiary has taken longer than anticipated, the bank has been able to clean up its non-performing loans issue and learn from launching mobile-only Digibank, said Piyush Gupta, group CEO of DBS Bank.

The bank has been bullish on India given the underlying fundamentals. “As an Asian bank, it is imperative that we take a long-term view of the region and we believe it is important to continue investing in Asia’s two biggest markets – China and India,” said Gupta. The tailwinds of a growing market and shifting market share in favour of private banks, along with the reversion to banking after the liquidity crisis in the non-banks, will work in the bank’s favour in India, he said.