DBS makes net profit of S$2.8m in India in last fiscal year thanks to CECA

DBS Bank India Limited, the wholly owned subsidiary of DBS Bank has announced “good” financial results recently for its fiscal year ending 31 Mar 2019.
The net profit of DBS Bank India stood at INR 14.5 crore (S$2.8 million) against a loss of INR 533 crore (S$102 million) in FY2017-18.
Total deposits was reported to have increased by 15.76% to INR 33,828 crore (S$6.5 billion). Gross and net non-performing assets (NPA) ratios were moderated to 3.13% and 33% respectively (vs 5.04% and 1.09% respectively in the PY) with provision coverage ratio increasing to 92% vs 82% in FY2018.
The capital adequacy ratio was at 19.69%, compared from 16.14% last year pursuant to capital infusion of about INR 1,300 crore (S$250 million) in Dec 2018.
At the group level, DBS reported profit of S$5.63 billion during the year ended 31 December 2018 and recorded a profit of S$3.25 billion for H1 2019.
The CEO of DBS Bank India, Surojit Shome, said, “We have focused our efforts towards growing our franchise in India through the establishment of the wholly owned subsidiary with the aim to build on the momentum to achieve greater scale in India.”
DBS Bank India intends to establish over 100 customer touchpoints – a combination of branches and e-kiosks – across 25 Indian cities in the next 12-18 months, the report said. In March this year, it opened nine new branches and extended its reach to Hyderabad, Ahmedabad, Coimbatore, Vadodara, Indore and Ludhiana.
DBS expands into India thanks to CECA
Under the Comprehensive Economic Cooperation Agreement (CECA) signed between India and Singapore in 2005, India allows Singapore owned or controlled financial institutions to have greater privileges to access the Indian market.
In particular, DBS was named in the agreement as one of the Singapore banks permitted to set up a wholly owned subsidiary (WOS) in India to “enjoy treatment on par with Indian banks” in branching, places of operations and prudential requirements. It is also permitted to set up branches over and above the quota for all foreign banks.
However, CECA also permits movement of professionals between India and Singapore. For example, professionals from 1 country employed in 127 specific occupations will be allowed entry and stay for up to 1 year or the duration of contract, whichever is less, in the other country.
Intra-corporate transferees (i.e. managers, executives and specialists within organisations) will also be permitted to stay and work in India and Singapore for an initial period of up to 2 years or the period of the contract, whichever is less. The period of stay may be extended for period of up to 3 years at a time for a total term not exceeding 8 years.
Indeed, many Indian software houses do transfer their staff from India to work in their subsidiaries here in Singapore, with many operating out from Changi Business Park.
Under CECA, the movement of people between the 2 countries does not apply to immigration measures as long as these immigration measures do not nullify or impair the commitments made by either country.
“With freer movement of business persons between countries, bilateral trade and investment flows should be significantly enhanced. Hence, companies from both countries can leverage on the chapter to drive greater economic integration between India and Singapore,” CECA stated.
In any case, DBS Group CEO Piyush Gupta should be glad that CECA was signed between India and Singapore, allowing the bank to open more branches and expand into India.