HDFC Bank Targets Singapore Market: The Journey Begins with a Banking License Application

HDFC Bank, India’s largest private sector lender, has applied for a banking license in Singapore, signaling its overseas ambitions after a landmark merger with Housing Development Finance Corp. last year. The bank is awaiting approval from the Monetary Authority of Singapore (MAS), the country’s central bank and financial regulator.

Why Singapore?

Singapore is one of the world’s leading financial hubs, with a stable economy, a strong legal system, and a large Indian diaspora. According to Indian government data, about 650,000 non-resident and persons of Indian origin live in the city-state. HDFC Bank aims to tap into this market for savings and term deposits, as well as to cross-sell products like mortgages. The bank already has a presence in London, Hong Kong, and Bahrain.

What Kind of License?

It is not clear what kind of banking license HDFC Bank is seeking in Singapore, as the information is confidential. The MAS offers different categories of banking licenses, ranging from full banks to wholesale banks, which impose varying levels of restrictions on the lenders’ activities. For example, qualifying full banks can have additional branches and/or off-premise ATMs, as well as share ATMs among themselves. State Bank of India and ICICI Bank Ltd. hold qualifying full banking licenses in Singapore, alongside eight other banks like Bank of China Ltd. and BNP Paribas SA.

What are the Challenges?

HDFC Bank may face some challenges in entering the Singapore market, such as competition from existing players, regulatory compliance, and customer acquisition. The MAS regulates and supervises more than 150 deposit-taking institutions in Singapore, including local and foreign banks. HDFC Bank will have to meet the MAS’s standards for capital adequacy, liquidity, risk management, corporate governance, and consumer protection. HDFC Bank will also have to attract and retain customers in a highly competitive and mature market, where customers have access to a wide range of financial products and services from various providers.

What are the Opportunities?

HDFC Bank may also find some opportunities in expanding its presence in Singapore, such as diversification, growth, and innovation. HDFC Bank can diversify its revenue streams and reduce its dependence on the Indian market, which may face economic and political uncertainties. HDFC Bank can also leverage its expertise in retail banking and digital transformation to capture new segments and markets in Singapore and beyond. HDFC Bank can also benefit from the innovation ecosystem in Singapore, which supports fintech development and collaboration among stakeholders.