DBS Group, South-east Asia's top bank, expects its small Indian operations to grow at a sharply slower 25 to 30 per cent pace in 2009/10 as excess cash opens up more avenues for customers, a top official said yesterday.

A sharper-than-expected slowdown and a revival in equity markets in Asia's third-largest economy have hurt foreign lenders, who rely largely on corporate lending.

'Today, customers have many avenues for tapping funds as the system is flush with liquidity and we are seeing a softening of credit spreads in general,' Mr Sanjiv Bhasin, chief executive of DBS Bank India, said in an interview.

'Besides, our base is also rising. That could temper the sharp pace of growth,' he added.

State-run lenders control 55 per cent of loans in India, where foreign banks get just a handful of branch licences every year from the central bank.

DBS, which opened its first branch in the country in 1995, has 10 branches. It has applied for licences to open up to eight more and plans to raise retail deposits, but will not enter the high-risk retail-lending market for the next 18 months, Mr Bhasin said.

DBS generates about 90 per cent of its earnings from Singapore and Hong Kong.

Earnings of its Indian unit had quadrupled to 2.6 billion rupees (S$77.7 million) in the past year ended March, from 650 million rupees a year earlier.

Indian companies have raised more than US$3 billion (S$4.4 billion) by selling shares this year - mostly since April - as a sharp stock-market rally ended a 15-month drought in equity sales.

Standard Chartered and Citigroup, the largest foreign lenders in the country, have already seen the profit growth of their Indian units slowing.

Standard Chartered's 2008/09 net-profit growth halved to 12 per cent and Citigroup's by four fifths to 20 per cent, the two banks said.

DBS plans to focus on retail deposits to bring down costs and diversify the liability space, Mr Bhasin said.

'Over the medium term, we plan to have retail liabilities to contribute at least a quarter of our total liability portfolio, which today is largely wholesale. We have a long way to go.'