Tag: DBS Bank India

DBS Bank India introduces an industry-first digital & paperless trade financing solution, BFSI News, ET BFSI

Banking & Finance

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Mumbai (Maharashtra) [India], November 30 : In the current environment, there is a need to drive digitised trade for Corporate customers to reduce processing turnaround time and drive businesses efficiently. In light of the latent need, DBS India has introduced a paperless proposition for the financing of domestic invoices by buyers and sellers. The bank now digitally validates the e-Way Bill (i.e. proof of movement of goods) for the purpose of establishing the genuineness of underlying trade transactions. The adoption of this approach has enabled DBS to process transactions quicker without the need to obtain underlying physical documents.

The bank has also executed its first paperless domestic trade financing transaction with Lincon Polymers Pvt. Ltd., marking a significant milestone in the bank’s digital transformation journey.

With this solution, the bank will eliminate the need for cumbersome documentation, making the entire financing journey paperless and seamless. Customers can share details of their transactions through IDEAL (DBS’ digital banking platform that enables companies to initiate, monitor, and secure business transactions). The data is then validated against the Government-enabled Eway bill portal via GSTN after receiving a one-time authentication from the customer. The bank has partnered with Rezofin, an online invoice financing platform for this process.

Following the amalgamation of LVB with DBS Bank India, the bank is well-positioned to offer this solution to the country’s large SME base, which has traditionally grappled with significant documentation for their financing requirements.

Divyesh Dalal, MD & Head – Global Transaction Services, DBS Bank India, said, “We have been leveraging our digital capabilities to design intelligent solutions that benefit time-strapped enterprise owners. Using the eWay bill verification, we’ve helped clients to reduce the time taken for financing an invoice. The solution is a significant step towards making the underlying trade finance process truly digital and paperless, which has historically been document-intensive.”

Commenting on the transaction, CA Anish Shah, Finance Manager from Lincon Polymers Pvt. Ltd., said, “The domestic financing using E-waybill verification is a unique proposition by the bank. By being digital and paperless, the solution enables us to raise financing requests seamlessly. It has eliminated the need to send physical documents, which needed a dedicated resource to manage transactions. We are happy to have partnered with DBS as they understand our requirements and have extended a solution that enhances efficiency.”

DBS has been proactive in identifying customer needs and creating customised banking solutions for large enterprises and small and medium businesses that meet their end-to-end requirement. Last year, DBS introduced a completely digital and innovative payments solution in partnership with Transport Corporation of India Limited (TCIL). The partnership empowered truck drivers by enabling real-time payments through the DBS RAPID solution. Recently, the bank partnered with ODeX to introduce ODeX Pay Later Solutions powered by DBS- a hassle-free credit solution for freight forwarders. DBS has also launched real-time online tracking for cross-border collections for businesses in India in partnership with SWIFT Global Payments Innovation (gpi).



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DBS Bank India grows profitability despite LVB merger impact

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LVB was amalgamated into DBIL in November 2020.

DBS Bank India (DBIL), the wholly-owned subsidiary of DBS Bank of Singapore, which has taken over the troubled Lakshmi Vilas Bank (LVB), on Thursday said it could grow profitability despite the impact from the amalgamation of LVB.

Post-amalgamation, DBIL has been focusing on unifying the LVB and DBS workforces and re-building the LVB business. While the integration of operating platforms and branches has been underway, the steady growth in LVB current and savings account balances as well as in the gold loans portfolio in 2021 was an early indicator of the success of the current strategy, it said. LVB was amalgamated into DBIL in November 2020.

Surojit Shome, MD & CEO, DBIL, said, “We have made considerable progress with the integration of Lakshmi Vilas Bank (LVB) since the amalgamation in November 2020 even with the dislocations due to the second wave of the pandemic. While, as expected, there has been an immediate impact on our financial results due to the high net NPAs and operating losses at LVB, we are confident of realising the long- term prospects of the combined franchise. In the erstwhile LVB operations, we have already been able revitalise the gold loans business and grow deposits. Our immediate priority is to integrate the operating systems and processes so that we can deliver best-in-class solutions to a wider customer franchise.”

DBIL, releasing its FY21 results which included the LVB’s performance since amalgamation, said its net revenues grew by 85% to Rs 2,673 crore (includes Rs 134 crore from LVB) from Rs 1,444 crore in FY20. Its profit before tax (PBT) rose to Rs 679 crore from Rs 170 crore, despite absorbing LVB’s pre-tax losses of Rs 341 crore from November 2020 to March 2021. DBIL’s net profit rose to Rs 312 crore from Rs 111 crore.

Total deposits of DBIL increased by 44% to Rs 51,501 crore (includes Rs 18,823 crore from LVB). Savings account balances grew by 207%, and current account balances grew by 98% y-o-y, including growth on account of the amalgamation. Overall, CASA ratio improved to 31% from 19%, said DBIL. Net advances of the bank grew to Rs 36,973 crore (includes Rs 10,685 crore from LVB).

Gross NPA remained moderate at 1.83% for DBIL excluding the LVB portfolio. While gross NPA deteriorated to 12.93% after the amalgamation of LVB, the net NPA, on a combined basis, stood at 2.83%, given 84% provision coverage. Capital adequacy ratio stood at 15.13%, with CET1 at 12.34%. During the year, DBS Bank infused Rs 2,500 crore into DBIL to support the amalgamation. The bank adopted the concessional tax regime, resulting in an additional charge of Rs 184 crore, on account of one-time adjustment.

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SBM bets on tie-ups to grow India ops; not to add branches

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SBM Bank India, the wholly-owned subsidiary of the Mauritian government’s SBM, is betting on partnerships with fintechs and non-bank entities to grow its business here and is not interested in growing its branch network like DBS Bank India did with an acquisition, a top official has said.

SBM Bank India wants to grow its business through granular liabilities collection and booking fees by aiding in various banking transactions, its Managing Director and Chief Executive Sidharth Rath told PTI.

It may be noted that DBS, the only other wholly-owned subsidiary, acquired struggling private sector lender Lakshmi Vilas Bank last year, which gave it access to 563 branches.

“DBS has their own strategy. Yes, they have gone for inorganic growth … we are also doing inorganic but through partners, let me put it this way,” Rath said.

When asked specifically if it will be interested in tie-ups or deals where equity changes hands – which are otherwise referred to as ‘inorganic’ growth – Rath said at present, it is focused to grow through technology-led and digital-led platforms.

“Going forward, one doesn’t know what it (SBM) would be, how it is going to look, but it is going to be under them (parent State Bank of Mauritius) only,” he said, not discounting the possibility of a strategic partnership, a public issue or even an acquisition like DBS.

The bank is not keen on adding to its brick and mortar branch network, which right now consists of six outlets in metro cities and two in unbanked rural areas, Rath said, adding that it may at best look at adding two more branches in FY22.

The strategy for the new fiscal year will be to scale up on the foundation of the partnership-led model by getting new customers or forging new tie-ups.

A large part of the focus is on driving retail business, which consists only 10 per cent of the ₹3,500-crore loan book as of March 31, and take it to 25 per cent by end of next fiscal, Rath said.

Neeraj Sinha, head of consumer and retail banking at SBM, explained that there are a slew of fintechs that have developed the right platform, user interface and also a customer base, which are looking at growing, and can help by tying up with a bank.

Being an upstart venture, SBM is open to tie-up with such entities so as to create win-win proposition for both the partners and also the end customer, he said, giving out details of some of the over 20 partnerships it has.

He said as part of one partnership, it has tied up with an entity which will help connect it with those having credit rejections repeatedly. Against a fixed deposit with the bank, SBM will lend the person and help build a better credit history over a period of time, he said.

Similarly, given the working capital shortage with small businesses, it has a tie-up where a non-bank gives it access to those desirous of getting the card. The customer makes a fixed deposit (FD) with the bank to get the card and enjoy a 30-day credit like the one available for any consumer, he said.

Sinha said that already, over a fourth of its current account deposits are courtesy such tie-ups and the number of customers onboarded through such pacts is 1.5 lakh.

“I am not competing with them (the partners), and hence, I am also the natural choice for the fintechs to come and work with. Lack of size becomes an advantage for me there. This is a typical challenger bank strategy,” Sinha said.

The bank’s overall balance-sheet including both advances and deposits stood at ₹6,000 crore as on March-end, the share of the low-cost Current Account Saving Account (CASA) deposits was 21 per cent and the capital buffers were at 24 per cent.

When asked if the bank will need any capital, Rath hinted that there will be no need, pointing out that one needs to deliver on the capital as well. He, however, added that whenever needed, the parent will be giving the capital.

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Singapore’s DBS Bank to focus on India and China for growth, BFSI News, ET BFSI

Banking & Finance

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By Lee Kah Whye

Singapore: Singapore’s DBS Bank, which acquired India’s Lakshmi Vilas Bank (LVB) last November, plans to accelerate its business by doubling down on growth markets of India and China.

DBS Group CEO, Piyush Gupta, said this when briefing investors, analysts, and the media at its virtual annual general meeting (AGM) last week.

In spite of the health crisis and economic chaos caused by the COVID-19 pandemic, Southeast Asia’s largest lender by total assets achieved its highest ever operating profit of SGD 8.4 billion (USD 6.3 billion). This was an increase of two per cent over the previous year. Total income held steady at SGD 14.6 billion (USD 10.9 billion) which was about the same as in 2019.

Breaking down its performance, the bank said that net interest income was impacted by lower interest rates, but this was offset by growth in loans, deposits and wealth management fees, investment gains, and strong treasury performance.

Total full year income from treasury markets rose 33 per cent to SGD 2.9 billion. This was aided by improved digital pricing capabilities, enhanced processes, and application resiliency. The bank was able to take advantage of the trading opportunities created by last year’s market volatility to increase trading income by 54 per cent.

With economic and business uncertainties weighing heavily last year, the bank tightened budget controls and managed to lower expenses by two per cent. General expenses such as travel, and advertising declined. Staff costs benefitted from government grants.

The bank experienced a low rate of delinquencies from borrowers and loan moratoriums have declined significantly from their peaks.

However, it warned that the low interest rate environment will continue to be a challenge.

Looking ahead, it says that it will continue to invest in enhancing its digital capabilities in both retail wealth management and supply chain digitalisation. It plans to launch a digital exchange leveraging blockchain to enhance efficiency of wholesale payments and grow capital solutions.

It will also double down on growth markets of India and China.

In China, DBS chief, Gupta outlined three key areas of focus, which are its upcoming securities joint venture (JV), the consumer finance market and the China Greater Bay Area.

The new JV in China which was announced last September should be ready to go to market in the next few weeks. He added, “We are convinced that China’ s opening-up in the capital account is going to present tremendous opportunities. We’ re already seeing some benefits of that, as institutional investors from China come out and international investors go into China. So that’ s hopefully a big area of growth for us.”

Known as DBS Securities (China), the JV company will provide onshore products and services for both domestic and international customers. Businesses that DBS Securities will engage in include brokerage, securities investment consulting, securities underwriting and sponsorship, as well as proprietary trading. DBS has a 51 per cent stake in the JV and has four Chinese investment and asset management firms as partners.

DBS which currently has a consumer finance JV with the Postal Savings Bank of China, is on the verge of launching a wholly owned consumer business in China.

With regards to the Greater Bay Area, DBS continues to be optimistic about the area and is looking to use its presence in Hong Kong to integrated deeper into the market. The Greater Bay Area consists of nine cities and two special administrative regions in South China, including the cities of Hong Kong, Macau and Guangzhou.

As for its plans in India, the bank plans to leverage its acquisition of Lakshmi Vilas Bank (LVB) to expand its India franchise. It is looking to overlay DBS’s digital capabilities with LVB’s customer base and network to accelerate its business. For SMEs (small medium sized enterprises), it plans to broaden asset-backed businesses.

For retail, it aims to scale up personal savings and current accounts and expand its personal loan portfolio and grow its wealth management proposition plus address the needs of niche non-resident Indians.

Amid market speculation surrounding its takeover of LVB, Gupta assured shareholders that it was not a “forced marriage”. The cash-starved LVB was amalgamated with DBS Bank India to accelerate the group’ s digital banking push in South India. “The reason we put our hands up is because we knew it will give us the opportunity to expand both organically and inorganically,” he said.

The deal significantly increased DBS India’s retail customer base from 23 per cent pre-merger to 48 per cent, by adding two million retail and 125,000 corporate customers.

Gupta said: ” This is very important because to grow in a country like India, we need a good source of retail sticky deposits and LVB is able to achieve that. When we overlay our digital capabilities on top of this base that we amalgamated, we think the prospects for us are very good.”

DBS had recorded amalgamation expenses of SGD 33 million and general allowances of SGD 87 million for LVB, with provisional goodwill of SGD 153 million.

Maha lockdown to cost Rs 40k crore: Report
For the LVB acquisition, the non-performing loan assets (NPAs) transferred to DBS stood at SGD 212 million. It is fully secured with general provisions at a conservative 9.5 per cent of performing loans or SGD 183 million. Coverage of NPAs was 76 per cent which is considered aggressive.

“At this point in time, we do not believe that we have to take on anymore incremental cost of credit on the LVB portfolio. We think we provided for anything that we might have expected to see in the course of this year,” said Gupta. DBS expects the merged entity to achieve profitability in the next 12 to 24 months. (ANI)



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