DBS Bank India is looking to increase its small and medium-sized enterprises (SME) mix to 30% of the overall loan portfolio in next five years from 10% currently, said the lender’s executive director 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 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.
Also read: IRCTC posts profit jump of 30.4% for Q4FY23 at Rs 278.80 crore, announces 100% final dividend
On the liability front, the bank is leveraging on 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, 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 bottomline 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 bottomline,” 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 to the profitability. But on a long-term basis, they will all correct and move on. Overall, I do not see a challenge in terms of the performance of SMEs.”
Also read: Warburg Pincus acquires 90% stake in MSME-lender Vistaar Finance for $250 million
DBS Bank 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 we figured out that the awareness among SMEs with regard to sustainable practices is quite high. The only challenge that SMEs face is that they would have to do some financial investments. Technological ability and financial ability are the two stumbling blocks,” he said.
