LVB in fold, we are now betting on gold loan, MSME businesses: Prashant Joshi, MD & head, consumer banking group, DBS Bank India

In general, we have been fairly conservative and, therefore, we have not seen any major credit losses and increased provisions.

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Post the amalgamation of Lakshmi Vilas Bank (LVB) into its fold, DBS Bank India has grown its retail banking presence. The lender has chalked out big plans for the gold loan and MSME businesses, Prashant Joshi, MD & head, consumer banking group, DBS Bank India, told Sajan C Kumar. Excerpts:

How has the bank been doing since the amalgamation?
Despite the pandemic, we have been growing the balance sheet. Advances and deposits have grown, and so have the CASA deposits, thanks to the base of LVB. Equally, we have worked on our new credit card platform. We have also, both organically and with partnership with others, started our unsecured loans business, which is yielding good results. In general, we have been fairly conservative and, therefore, we have not seen any major credit losses and increased provisions.

What are the three major benefits from the LVB acquisition?
One is clearly the high-quality retail deposit franchise; it is very difficult to build a deposit franchise with 2 million customers. Good CASA and term deposits are valuable assets of LVB. The second is the very successful and well-managed gold loan business. We want to grow the business by three to five times over three to five years, and are planning to hire more people. The bank’s gold loan portfolio currently stands at Rs 3,500 crore.
Also, the 563 branches, largely in the five states that contribute 40-45% of India’s GDP, are an asset. The largely South-centric distribution augers well for us, as the landscape is amenable for digital transaction growth, with its IT and ITeS population. We are working to resolve the stress. We have planned to recruit 1,000 people, of which 600 are already on board and the remaining 400 will be joining in another three months.

What are the major measures taken by the bank for the smooth amalgamation of LVB?
We have worked to protect the deposit franchise, CASA and term deposits, as this was important. It was critical to give comfort to all the depositors, ensuring them that the bank is now in safe hands. We started to see the results after 35-40 days. We have seen CASA deposits continuously rising over the last 15 months. It was important to re-start and continue the gold loan business. Equally, we have started looking at all the renewals in the MSME loan accounts and giving them enhancements.

How is the integration coming along?
We have been integrating LVB into DBS, in terms of various functions and businesses, to boost business. We started re-training the existing people in the branches. While we were doing this, we were also preparing for our technology integration, as there were two different platforms.

Was there any issue on the workforce front during the process of amalgamation?
We have not had any issues. We need good people to grow this franchise and far from retrenching, we actually require more people. However, in any amalgamation, people do have the option to leave the organisation in the first 30 days, if they wish to do so. Only 4% chose to exercise that option. As we complete our integration, we would be requiring many more employees to undertake sales of our existing products and the ones in the offing, through our 600-odd branches.

What is the nature of the credit portfolio of the bank?
Largely in the past, DBS has been a corporate banking-led bank. It was no surprise that despite being a fully-owned subsidiary, we had just 30-odd branches. One needs to have a phygital presence to be able to successful in the retail and consumer business, and with the amalgamation of LVB, we have got ample physical presence. In the overall credit book, corporate loans account for 65-70%, while 25-30% is occupied by MSME and retail. We have been largely focussed on large corporates and in the last two years or so, the quality of the corporate balance sheet has improved, as have the ratings by rating agencies, which is reflective of our asset quality. We have actually not seen any major slippage in credit quality and any deterioration that bothers us.

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