Singapore-based DBS Bank has received approval from the Reserve Bank of India (RBI) to operate as a wholly-owned subsidiary (WOS) in India. This is only the second time a foreign bank has been given license to operate as a WOS in India. The first foreign bank to get this approval in India was the State Bank of Mauritius.
Based on its guidelines released in November 2013, RBI has mentioned that foreign banks can operate in India either in branch mode or WOS mode. It is not mandatory for foreign banks to operate under the WOS mode. However, RBI promises near national treatment for banks adopting this mode. Moreover, foreign banks are allowed to acquire private lenders when they operate in this mode. When foreign banks operate as wholly-owned subsidiaries, they are insulated from any crisis faced by parent companies.
With the WOS model, DBS hopes to leverage its resources to build a stronger business through multi-channel strategy. Moreover, DBS will use its technology-led delivery model from Asia to improve its business in the Indian market. Following the implementation of the subsidiary model, DBS will use both digital and physical formats to serve its customers and expand its operations in the Indian market.
DBS Bank India CEO Surjit Shome said that DBS is pleased to receive this approval from RBI. According to him, this move would accelerate the bank’s growth plans and expand its business operations in India. He also added that the WOS model would help DBS better serve its customers, especially in the small and medium-sized enterprises segment.
DBS currently has 12 branches in India. Following this move, DBS will expand to 75 branches over the next few years. Since DBS operates through the subsidiary model in various markets across the world, it is not likely to have any problems implementing this strategy in India.