SBI confident of growth prospects in the UAE

SBI confident about growth in UAE

Dubai State Bank of India (SBI), India's largest commercial bank, is confident about prospects in the UAE and is targeting corporate finance as its key growth area.

The lender, which has been operating in the country since 2007 under a category 4 licence from the Dubai Financial Services Authority, has recently upped its activities after receiving an upgrade of its licence to Category 1, which has vastly increased its scope of operations.

"We are focusing mainly on corporate business, where there are ample opportunities for growth," SBI UAE chief executive officer A.J. Vidyasagar told Gulf News in an interview.

Apart from finance, the lender is also accepting deposits in US dollars. Under the new conditions, the bank now has a licence to "Arrange Deals in Investment" which enables it to offer investment products to customers.

"We have a retail endorsement to this licence which enables us to offer these products to any individual irrespective of net worth. We can offer various investment products of our subsidiary SBI Mutual Fund, or other fund houses with whom we may enter into agreement, to any investor under this licence," Vidyasagar said.

Performance

The bank, which posted a profit of approximately $2 billion (Dh7.35 billion) in the 2008-2009 financial year, was recently awarded the title of ‘Best Bank in India' for the second year in a row by The Banker magazine. As of September 30, 2009, SBI's total advances were about $123 billion, and its total deposits were about $165 billion.

SBI expects to sign up a number of Indian companies here to their customer base.

"There are a number of subsidiaries or branches of Indian companies that are operational here whose parent firms bank with us in India. So they would naturally prefer banking with us. But we are not closed to doing business with other customers, and these numbers are growing," Vidyasagar said.

The bank is mainly focusing its activities on trade, infrastructure and manufacturing sectors. Recently, SBI entered into an agreement with Export Development Corporation of Dubai to offer preferential pricing to their members with regard to their loan requirements. "This is an important development and shows our commitment to the export promotional activities of Dubai Government," Vidyasagar said.

While financial data about actual business in the UAE are not yet available, Vidyasagar estimates the numbers to be running into ‘several hundred millions' of dollars. "We have catered not only to Indian customers but a number of local companies as well," Vidyasagar said.

The recent debt restructuring being undertaken by Dubai World has not affected SBI's Dubai operations.

"Our exposure to the companies being restructured is zero. However, our Bahrain and London branches have some exposure," Vidyasagar said.

He admitted a major challenge in the UAE for the bank is that it is a new player in the market.

"It is true that there are several established and entrenched players here. But it has been our experience that most big names come to us rather than the other way around," he said.

Vidyasagar brushed aside the global outcry currently surrounding the debt restructuring issue.

"If you look at the events till now, default has not happened, even for the bond payments. At the most there will be some restructuring. This is a normal phenomenon. It was more a question of perception that fundamentals being involved," he said.

The veteran banker does not expect Dubai at large being too affected by the current Dubai World debt restructuring process. "The companies being restructured are mostly involved in real estate. But there is so much to Dubai than just real estate. Look at the amount of investments in infrastructure and manufacturing, apart from the immense amount of trading activity. So there are still ample opportunities to grow," Vidyasagar said.