DBS Bank India targets $1 bn SME loan portfolio by 2025

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DBS Bank India targets $1 bn SME loan portfolio by 2025

DBS Bank India targets $1 bn SME loan portfolio by 2025

Industry News
Sep 12,23

DBS India's SME portfolio stands at around Rs 5,000 crore, exhibiting a robust Compound Annual Growth Rate (CAGR) of 40% over the past three years.

DBS Bank India targets $1 bn SME loan portfolio by 2025

DBS Bank India, the Indian branch of the global DBS bank, has set its sights on achieving a $1 billion SME loan portfolio by the end of December 2025, as revealed by Divyesh Dalal, the Managing Director and Head of Global Transaction Services.

Currently, DBS India's SME portfolio, primarily established through digital means, stands at around Rs 5,000 crore, exhibiting a robust Compound Annual Growth Rate (CAGR) of 40% over the past three years.

Dalal explained, "Our SME loan portfolio's substantial growth has occurred only within the last three years, coinciding with the onset of the Covid-19 pandemic," during an interview.

Highlighting the significance of the SME sector to their growth strategy in India, Dalal emphasised, "SMEs play a pivotal role in our expansion. Our acquisition of Lakshmi Vilas Bank in November 2020, continuous technology investments, and integration of ERPs like Tally are clear indications of our belief in the significant potential of the SME segment."

Dalal expressed confidence in sustaining the 40% growth rate in the SME portfolio in the foreseeable future, saying, "While achieving a 40% growth rate on a larger portfolio would be remarkable, we are confident that we can maintain this rate. It would be a significant stretch to aim for 50-60%."

Supply chain financing is identified as the primary catalyst for SME portfolio growth, with Dalal stating, "Our supply chain finance portfolio will enable us to penetrate deeper into the SME segment. Currently, 4,000-5,000 SME customers benefit from our supply chain financing solutions."

DBS India intends to harness data more effectively to cater to the unmet needs of SME customers. Dalal also mentioned plans to introduce the "Instant Loan" product, already available in Singapore, to the Indian market to aid local SMEs.

Currently, DBS Bank India collaborates with NBFCs for co-lending initiatives, aiming not only to expand their customer base but also to offer banking products beyond the capabilities of NBFCs, such as Letter of Credit (LC), bank guarantees, and cross-border forex solutions, as explained by Dalal.

Regarding the future focus areas for DBS Bank India, Dalal emphasized continued investment in digital technologies, expanding partnerships to acquire customers and gather data for informed lending decisions. He also mentioned leveraging the bank's supply chain database to provide pre-shipment financing for trade transactions.

Dalal highlighted the importance of the ongoing partnership with ONDC, seeing it as a critical move to acquire customers and build a detailed portfolio on both the liability and asset sides of the business.

Source: Business Line