DBS Bank India aims to scale its SME Business

DBS Bank India is looking to increase its small and medium-sized enterprises (SME) mix to 30% of the overall loan portfolio in the next five years from 10% currently, said the lender’s Executive Director and Head, SME Banking - Sudarshan Chari.

“SME is a focus area. It is one of the key pillars of growth in the background of the wholly owned subsidiary set-up,” he said.

The bank aims to grow its SME book at a compound annual growth rate of over 35% in the next three-to-four years. In recent years, the bank has launched various products for SMEs, like bank statement-based digital loans, GST-based SME loans and alternate lending through trade.

On the liability front, the bank is leveraging its branches, relationship managers and partnerships to acquire more customers. Currently, it has a network of around 530 branches across 350 locations. Out of these, 300 branches are strategically located in 100 SME hubs and clusters.

“We have access to markets, a strategy, and product offerings which we have put in place over the last four years, we have digital loans and partnerships on the ground. Both our liabilities strategy and asset strategy would play out both through our network and partner support,” Chari said.

While various Indian banks and non-bank lenders have been vying for a bigger chunk of the SME pie, Chari believes that “Asia connectivity” and “hunger to grow” sets the Singapore-based bank apart. However, the impact of higher interest rates on SMEs is a key monitorable.

“The spike in interest rates will impact the bottom line of SMEs. Working capital cycles have also got a bit stretched after covid. The cost of borrowing has also gone up. Those will have an impact on the bottom line,” he said.

“The price transfer that SME manages always happens with a bit of a lag. This means that there will be a short-term impact on profitability. But in the long run, they will all correct and move on. Overall, I do not see a challenge in terms of the performance of SMEs.”

DBS Foundation provides a grant of up to 250,000 Singapore dollars or Rs 1.5 crore for social enterprises and SMEs that are developing innovative solutions to address key social and environmental issues.

“We did a survey last year and figured out that the awareness among SMEs regarding sustainable practices is quite high. The only challenge that SMEs face is having to make some financial investments. Technological ability and financial ability are the two stumbling blocks,” he said.

As featured in the Financial Express