DBS to ramp up retail deposit base

Singapore-based DBS Bank hopes its proposed entry into the home loan business will have a spin-off, with instalments routed through the savings bank accounts held by its customers.

The bank wants to ramp up its retail deposit base which currently accounts for just three per cent (₹250 crore) of the total deposit base of about ₹8,300 crore.

A chunk of the deposits are wholesale or corporate deposits. The bank intends to scale up the retail deposit base to ₹1,000 crore by FY 2015-16.

Most banks, including DBS, offer just 4 per cent on retail savings bank deposits, thereby reducing their overall cost of borrowing. Other deposits, including wholesale deposits, are typically priced higher.

Rahul Johri, Head, Consumer Banking, DBS Bank, said, “To expand retail business, the bank plans to get into the retail assets side. We are going to launch mortgages in Delhi and Mumbai by May this year. Subsequently, we will launch mortgages in Bangalore and Pune by September.”

He said once the bank launches the mortgage business, instalments will likely get routed through the savings bank account.

“That will give us a fillip. We are looking to increase the saving bank accounts contribution in total liabilities (deposit base) to 10 per cent by 2015,” he added.

The bank will lend to customers in the affluent segment to begin with. So, customers looking to buy a house of ₹75 lakh or more will be financed by DBS.

Outlining the strategy behind the move to only finance the affluent segment, Johri said, “this is because of the limited branch presence we have in the country. Once we increase the number of branches, we will look at financing other (lower value houses) segments as well.”

DBS has 12 branches in India. After the RBI outlined the guidelines for foreign banks to convert their domestic operations into wholly-owned subsidiary (WoS) of the foreign parentlate last year, DBS was the only foreign bank that made it clear that it would like to go the WoS way.

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