We are leveraging power of digital to help SMEs combat Covid-19 challenges: Sudarshan Chari, Head- Business Banking, DBS Bank India

Sudarshan Chari, Head- Business Banking, DBS Bank India

The uncertainty associated with the pandemic has brought significant changes across industries around the world. While some have identified opportunities amidst the challenges, others are still struggling to deal with and maintain continuity, Small and Medium Enterprises (SME) is one such segment. According to a report by the National Bureau of Economic Research on the COVID-19 crisis impacts on SMEs from business surveys, more than half of SMEs have faced severe losses in revenues and one third of SMEs fear to be out of business without further support within 1 month, and up to 50% within three months. To understand how SMEs are dealing with these challenging times and how financial institutions are supporting them, Rashi Aditi Ghosh of Elets News Network (ENN) spoke to Sudarshan Chari, Head- Business Banking, DBS Bank India. During the interaction, Chari said, “DBS has been at the forefront of supporting local businesses and broadening credit access to the SME segment. DBS has been offering the ‘Guaranteed Emergency Credit Line’ scheme in line with the Government’s Covid-19 relief efforts to help SMEs restart their businesses.”


What opportunities do you see amidst the pandemic scenario for the banking industry?

The Covid-19 pandemic has led to fundamental changes in the way business is conducted. This change has allowed banks to accelerate their digital initiatives to meet customers’ present and future growth requirements. Banks have the opportunity to leverage existing public digital infrastructure such as Aadhaar, Unified Payments Interface (UPI), as well as emerging paradigms like open banking, Account Aggregator, Open Credit Enablement Network (OCEN) to provide credit and transaction banking at scale to customers.

In addition, various initiatives by the Government and the Reserve Bank of India have provided banks additional avenues to provide critical support to customers in this time of need.

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SME sector is facing a lot of challenges post the Covid outbreak. How is DBS helping the segment?

DBS has been at the forefront of supporting local businesses and broadening credit access to this segment. We were able to leverage our digital capability, which proved its mettle, especially during the ongoing pandemic. Our suite of offerings for customers in this segment augmented working capital needs, met operational liabilities, and helped MSMEs navigate their businesses by disbursing loans even during the lockdown months. DBS has also been offering the ‘Guaranteed Emergency Credit Line’ scheme in line with the Government’s Covid-19 relief efforts to help SMEs restart their businesses.

We extended extensive support, including opt-out moratorium, to help customers tide the business through the pandemic, ensuring that no additional financial burden was levied on SMEs. The benefits were availed by over 40% of our customers, and the support extended aggregated to 30% of our loan book. DBS facilitated seamless transactions via digital channels by enabling fresh requests for Working Capital Demand Loan (WCDL)/ Term loan through our Loan Service portal and online current account opening.

This, coupled with our comprehensive digital transaction banking product suite covering payments and collection, forex and trade solutions, are a few examples of how DBS is helping SMEs during these challenging times.

What new products and solutions are introduced by the bank to support the SMEs?

Over the years, DBS has designed end-to-end digitised solutions to seamlessly interweave banking into customers’ everyday lives by making it a part of their ecosystem. In keeping with this ethos, we harnessed the power of technology to design solutions that make banking simpler and invisible for time-strapped business owners so that they can focus more on their business and less on banking. However, the availability of formal credit in a timely manner continues to remain a challenge for the SME segment.

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Since SMEs have been additionally impacted due to the ongoing pandemic, providing them access to adequate credit has been a key focus area for us. Last year, DBS launched ‘DBS Digital Business Loans’ – an online platform that enables seamless and hassle-free access to financing for SMEs. This segment-flagship platform from DBS improves the ease of accessing business credit for the entire spectrum of micro, small and medium-sized enterprises, offering credit up to Rs 20 Crore. Enterprises with a turnover of up to Rs 25 Crore can receive in-principle approval for loans of up to Rs 5 Crore within 24 hours, subject to completion of the loan application and fulfilment of the lending criteria. Subsequently, a final e-offer (subject to a successful verification process) for credit up to Rs 5 crore for a company with a turnover up to Rs 25 Crore can be sanctioned in just 5 working days. This solution eliminates the need for cumbersome documentation and offers a seamless and paperless banking experience. Loans over Rs 1250 Crore have already been disbursed via the platform to various businesses engaged in trading, manufacturing and services in these markets and loans over Rs 2500 crore were approved and offered to approximately 1000 SMEs.

More recently, we have partnered with ODeX, one of India’s leading platforms, to exchange shipping documents and facilitate payments, to provide hassle-free credit solutions to freight forwarders via ODeX Pay Later Solutions.

We see a tremendous opportunity in India’s SME and MSME segment as there are over 50 MN MSMEs in India, and targeting even 1% of this market can potentially benefit up to 50,000 business owners in the next 5 years.

Would you like to tell us about ODeX Pay Later Solutions powered by DBS? How is it helping the SME sector?

Through our partnership with ODeX for this solution, ODeX customers can access comprehensive payment and financing solutions for all their ocean shipping transaction needs. This partnership is expected to benefit over 8,500 freight forwarders (largely SMEs), aligning with DBS’s commitment to financing local businesses and supporting livelihoods. This segment of customers (freight forwarders) usually receive payments from their customers, comprising importers and exporters, after completing service. However, they must pay shipping lines, port terminals, container freight stations and other stakeholders up front to clear the cargo on time, which impacts their working capital. DBS recognised this gap and designed a financing solution that is digital, contextual, and seamless and removes friction from the overall payment process. By broadening access to finance and streamlining current credit workflows of ODeX customers, the ODeX Pay Later Solutions allow freight forwarders to make direct payments to ship liners.

Businesses with a turnover of up to RS 200 crore that have completed over five years in the shipping industry can avail of an unsecured loan of up to RS 50 lacs from DBS Bank. Further, they can opt for a secured credit limit of up to Rs 5 crore. DBS was recognised among the ‘Outstanding Financial Innovators in Asia Pacific’ for this trade finance solution at the annual Innovators Awards 2021 by Global Finance.

What level of growth did you witness in the SME business segment post the bank’s amalgamation with Lakshmi Vilas Bank (LVB)?

The SME business was one of erstwhile LVB’s core strengths. We have witnessed 2x growth in the SME business after the amalgamation, and on that base, we are looking at 30% Compound Annual Growth Rate (CAGR) over the next 3 years.

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We are focused on growing the MSME portfolio by leveraging the branch footprint of LVB, and the priority will be to grow the SME business digitally and phygitally.

What are your future plans for the SME banking business in 2021 and beyond?

We will expand loans to small businesses by tapping the customer base of LVB. Consumer loans and loans to SMEs make about 25% of the loan book, while large corporate loans are 50% at present. As SME loans grow, their share in the loan book can be expected to increase to about 30%.

Prior to the amalgamation, we offered SME banking services to our clients across 25 cities. We have now identified 100 hubs/clusters nationwide on LVB’s network, where we will be focusing our SME business. The plan is to further expand this to a total of 200 towns and cities in the future. We are also planning to hire people over the next two years to boost the growth of the SME business.

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