Mumbai, March 30: DBS Bank today sold its 37.48 per cent stake in Cholamandalam DBS Finance to the Murugappa Group for Rs 376.49 crore.

The Singapore bank, which now has 10 branches in India, is planning to focus on companies, high net-worth individuals and the emergent affluent segment in India as it seeks to become the “Asian bank of choice” in the country.

Piyush Gupta, CEO of DBS Group, told reporters that they had decided to sell the stake in the non-banking finance company (NBFC) in order to focus on corporate banking, small and medium enterprises apart from the affluent sector.

He added that since Cholamandalam DBS Finance was concentrated more on the mass market side, the investment did not fit into its India strategy.

The NBFC largely focuses on asset financing, including vehicle and home equity loans.

The Murugappa Group bought the DBS stake at Rs 91 per share, representing a premium of 1.2 per cent to its closing price on the BSE on Monday. The transaction is expected to be completed on or before April 12 and is not expected to have any material impact on the financial performance of DBS.

Gupta said DBS chose to not focus on the mass market as the regulatory environment in India relating to branches or a distribution network was more “challenging” than some Asian countries.

He added that in order to focus on the mass market, a foreign bank must have a good branch network. Since it had only a few distribution points, it had decided to target affluent individuals and the corporate segment.

DBS Bank has received regulatory approvals for two more branches in Kolhapur (Maharashtra) and Cuddalore (Tamil Nadu) which will be opened shortly.

The DBS Group CEO said the bank has had a presence in India since 1982 but its first branch was set up in 2005.

Since then, revenues in India have grown as the bank introduced new product lines apart from its corporate and institutional banking offerings, not to mention wealth management and SME banking.

For the year ended March 31, 2009, DBS India posted revenues of Rs 617 crore and net profit of Rs 259 crore.

“Over the last five years, India has been our fastest growing business. We will continue to grow here. We expect the growth rate in India to be between 20 and 25 per cent next year,” he added.