Singapore’s DBS Eyes Lending to India’s SMEs Thanks to Private Credit

DBS Group Holdings Ltd.’s takeover of a local bank in 2020 will help it tap opportunities in offering private credit to India’s cash-hungry small- and medium-sized firms, according to an official at the Southeast Asian lender.

(Bloomberg) — DBS Group Holdings Ltd.’s takeover of a local bank in 2020 will help it tap opportunities in offering private credit to India’s cash-hungry small- and medium-sized firms, according to an official at the Southeast Asian lender. 

A broad network, particularly after buying Lakshmi Vilas Bank Ltd., “makes us an ideal partner to efficiently provide access to smaller companies,” Clifford Lee, DBS’ global head of fixed income said in written remarks to Bloomberg News. Lee was referring to the Singapore bank’s acquisition of Lakshmi Vilas Bank Ltd., the first such foreign bailout orchestrated by India’s central bank.

Banks dominate India’s loans market, but restrictions on lending, such as to fund mergers and acquisitions, create an avenue for private credit. 

Direct lending, where institutions and funds make loans directly to companies, has recorded rapid growth in recent years as investors hunted for returns in the era of low interest rates and is now a $1.4 trillion global industry. 

India’s small- and medium-enterprise sector, which has traditionally had more difficulties accessing borrowings, can benefit from private credit, DBS’s Lee said. Private debt investors are also keen to access this market but lack the infrastructure to cover so many companies, he added.  

India is “an important component” of DBS’ initiative to use private credit as a deal engine.  

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