Today, the Reserve Bank released the results of 2023-24 round of its survey on international trade in banking services (ITBS). This annual survey focuses on cross-border fund-based banking services (e.g., deposits, credit) as well as financial auxiliary services with explicit/implicit fees/commissions charged by foreign branches/ subsidiaries (including joint ventures) of Indian banks as well as foreign banks operating in India (details of the services are given in the Annex). The latest round of the survey covers 14 Indian banks having overseas branches/subsidiaries and 45 foreign banks having branches/subsidiaries in India.
Highlights
Indian banks increased their overseas presence during 2023-24 both in terms of balance sheet size as well as in terms of number of branches and employees. Their employee strength increased by 8.2 per cent in overseas branches and 1.7 per cent in subsidiaries. During the year, the number of branches and employees of foreign banks in India also expanded by 0.6 per cent and 1.4 per cent, respectively. (Table 1)
Consolidated balance sheets of overseas branches and subsidiaries of Indian banks grew by 4.3 per cent and 0.4 per cent, respectively, during the year whereas that of foreign banks in India recorded higher increase of 7.2 per cent, in US dollar terms. (Table 2)
In US dollar terms, overseas branches of Indian banks recorded 8.8 per cent growth in deposits while their lending declined marginally by 0.8 per cent during the year; these changes, inter alia, also reflected cross-currency movements. (Table 2)
Continued tightening of the global monetary policy cycle resulted in a substantial increase in interest income and expenses across all the three cohorts during the year; interest income and interest expenses of overseas branches of Indian banks grew by 72.0 per cent and 87.5 per cent, respectively, whereas the corresponding growth for foreign banks in India were 27.1 per cent and 47.7 per cent, respectively. (Table 3)
Total income to assets ratio of overseas branches of Indian banks increased to 6.2 per cent in 2023-24 (3.9 per cent in 2022-23) but it remained lower than that of Indian banks’ subsidiaries (7.3 per cent) and foreign banks’ operating in India (7.6 per cent). (Table 3)
High rise in interest rates resulted in acceleration in total income during 2023-24; fee income of overseas branches of Indian banks and the foreign banks operating in India also increased during the year but it declined for the relatively minor segment of overseas subsidiaries of Indian banks. (Table 3 and 4)
A major share of fee income for overseas branches of Indian banks was generated by rendering (a) credit related services; (b) derivative, stock, securities, and foreign exchange trading services; and (c) trade finance related services. In the case of the foreign bank branches operating in India, a significant portion of fee income accrued from (a) derivative, stock, securities, foreign exchange trading services; (b) payment and money transmission services; and (c) trade finance related services. (Table 4)
Branches of Indian banks in the United Kingdom (UK) generated highest fee income, followed by those in the United Arab Emirates (UAE), Singapore and Hong Kong. (Table 5)
Ajit Prasad
Deputy General Manager
(Communications)
Press Release: 2024-2025/1375
Table 1: Employment Distribution – Bank-groups (end-March) Indian Banks’ Branches Operating Abroad Indian Banks’ Subsidiaries Operating Abroad* Foreign Banks’ Branches# in India 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 Total number of branches 114 116 417 422 774 779 Number of Employees 3,051 3,302 5,170 5,258 27,030 27,410 of which: Local 1,890 1,874 4,641 4,705 26,857 27,213 Indians 1,144 1,323 488 532 Others 17 105 41 21 173 197 *including Joint ventures of Indian banks
# foreign banks’ branches include their subsidiaries in India.
Notes:
1. Data are provisional.
2. Due to rounding off of figures, the constituent items may not add up to the totals.
3. Financial Year-end FBIL rates were used for Rupee-US Dollar conversion.
4. The above notes are applicable for all tables.
Table 2: Consolidated Balance Sheet Items – Bank-groups (end-March) Items Amount in ₹ crore Amount in US$ billion 2022-23 2023-24 2022-23 2023-24 Indian Banks’ Branches Operating Abroad Credit extended 9,74,657 9,79,749 118.5 117.5 Deposits mobilised 6,16,733 6,80,514 75.0 81.6 Total Assets/Liabilities 15,50,836 16,40,988 188.6 196.8 Indian Banks’ Subsidiaries Operating Abroad Credit extended 1,19,511 1,24,900 14.5 15.0 Deposits mobilised 1,34,891 1,38,857 16.4 16.7 Total Assets/Liabilities 1,93,410 1,96,803 23.5 23.6 Foreign Banks’ Branches in India Credit extended 4,95,878 5,43,745 60.3 65.2 Deposits mobilised 8,55,825 10,10,089 104.1 121.2 Total Assets/Liabilities 15,64,506 17,00,902 190.3 204.0
Table 3: Consolidated Income and Expenditure – Bank-groups (Amount in ₹ crore)
Indian Banks’ Branches Operating Abroad Indian Banks Subsidiaries Operating Abroad Foreign Banks’ Branches# Operating in India 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 Total Income 60,596 1,01,385 11,502 14,382 1,08,075 1,29,593 (i) Interest Income 54,298 93,400 10,097 13,200 83,222 1,05,756 (ii) Non-Interest Income 6,297 7,985 1,404 1,182 24,853 23,837 Total Expenditure 51,479 89,121 8,700 10,726 77,627 1,02,290 (i) Interest expenses 41,548 77,911 4,540 6,576 31,713 46,830 (ii) other expenses 9,931 11,210 4,160 4,149 45,914 55,460 Ratio (per cent) Total income to total assets 3.9 6.2 5.9 7.3 6.9 7.6 Interest Income to total assets 3.5 5.7 5.2 6.7 5.3 6.2 Fee income to total income 7.0 4.9 11.6 7.1 11.5 10.1 Total expenses to total liabilities 3.3 5.4 4.5 5.4 5.0 6.0 Interest expenses to total liabilities 2.7 4.7 2.3 3.3 2.0 2.8 # Figures also includes data of foreign banks’ subsidiaries in India.
Table 4: Activity-wise Composition of Fee Income from Banking Services – Bank-groups (Amount in ₹ crore) Banking Service Indian Banks’ Branches Operating Abroad Indian Banks Subsidiaries Operating Abroad Foreign Banks’ Branches# Operating in India 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 Credit Related Services (CRS) 2,129 2,117 302 230 1,358 1,406 Deposit Account Management Services (DAM) 74 90 101 163 241 276 Payment and Money Transmission Services (PMT) 376 345 182 247 1,825 2,149 Financial Leasing Services (FLS) 0 0 0 0 0 0 Trade Finance Related Services (TFR) 759 769 156 118 1,641 1,575 Fund Management Services (FMS) 0 0 193 0 600 534 Financial Consultancy and Advisory Services (FCA) 9 10 25 0 1,201 1,035 Underwriting Services (US) 0 0 0 0 97 11 Clearing and Settlement Services (CCS) 112 140 13 14 37 48 Derivative, Stock, Securities, Foreign Exchange Trading Services (DER) 350 1,061 101 156 3,387 3,160 Other Financial Services (OFS) 436 462 261 94 2,022 2,847 Total 4,245 4,995 1,335 1,021 12,409 13,040 # Figures also includes data of foreign banks’ subsidiaries in India.
Note: Other financial services include sundry interest income, commission and miscellaneous income, etc.
Table 5: Country-wise and Activity-wise Banking Services – Bank groups (Amount in ₹ crore) Indian Banks’ Branches Operating Abroad Country United Kingdom United Arab Emirates Singapore Hong Kong United States Other countries Total CRS 2022-23 512 540 140 424 153 361 2,129 2023-24 561 536 134 209 202 474 2,117 DAM 2022-23 0 39 3 7 4 21 74 2023-24 0 46 3 14 4 24 90 DER 2022-23 85 112 33 17 2 101 350 2023-24 404 125 329 22 1 179 1,061 PMT 2022-23 0 25 15 18 184 134 376 2023-24 0 5 16 19 190 115 345 TFR 2022-23 30 109 232 115 79 193 759 2023-24 25 122 179 117 84 242 769 Other Services 2022-23 147 155 40 117 5 93 557 2023-24 124 180 39 147 4 118 613 All Services 2022-23 774 981 463 697 427 903 4,245 2023-24 1,115 1,014 700 529 485 1,152 4,995 Indian Banks Subsidiaries Operating Abroad Country Nepal Canada United Kingdom Mauritius Uganda Other countries Total CRS 2022-23 37 66 52 82 34 31 302 2023-24 44 43 56 14 38 35 230 DAM 2022-23 21 47 4 0 1 27 101 2023-24 11 124 5 0 1 23 163 DER 2022-23 33 7 14 21 2 25 101 2023-24 38 4 42 24 2 47 156 PMT 2022-23 30 10 57 5 4 77 182 2023-24 50 8 105 5 4 75 247 TFR 2022-23 66 14 12 2 11 51 156 2023-24 41 28 10 3 11 25 118 Other Services 2022-23 23 29 139 40 0 262 492 2023-24 59 26 0 10 0 13 108 All Services 2022-23 209 172 278 149 52 474 1,335 2023-24 244 232 218 56 55 217 1,021
Banking Services Covered in the Survey
Banking services include, acceptance of deposits and lending (core banking services), and the other financial services (para-banking services) like payment services, securities trading, asset management, financial advice, settlement and clearing service, etc. With the improvements in economic integration of financial markets and activities, the international trade in banking services has significantly increased.
The General Agreement on Trade in Services (GATS) of World Trade Organisation (WTO) framework envisages that the delivery of any commercial services can be through four different modes, viz., Mode 1 – Cross Border Service, Mode 2 – Consumption abroad, Mode 3 – Commercial presence, and Mode 4 – movement of natural persons. In Mode 3, the bank has a commercial presence in the territory of the service importing country and the service is delivered therein. The commercial presence can be through various investment vehicles like representative offices, branches, subsidiaries, associates and correspondents.
A Technical Group on Statistics for International Trade in Banking Services (TG-SITBS) was set up by the Reserve Bank of India including members from Ministry of Finance, Ministry of Commerce and various departments of the Bank.
The TG-SITBS, after examining the different data sources available in the Reserve Bank, recommended collection of activity-wise international trade in banking services through annual surveys and suggested that initially the data may be collected on banking services from foreign banks operating in India and Indian banks having operations abroad. The TG-SITBS also recommended that a suitable questionnaire with explanatory notes should be prepared / framed in consultation with the banks and suggested conducting annual survey from the financial year 2006-07. Accordingly, a survey schedule was prepared after detailed discussions with the major Indian banks with overseas presence and foreign banks operating in India.
Banking services covered in this survey include financial auxiliary services such as (i) deposit account management services, (ii) credit related services, (iii) financial leasing services, (iv) trade finance related services, (v) payment and money transmission services, (vi) fund management services, (vii) financial consultancy and advisory services, (viii) underwriting services, (ix) clearing and settlement services, (x) derivative, stock, securities and foreign exchange trading services, and (xi) other financial services. While carrying out the banking business, banks cater to the financial services needs of the residents of the country of operation as well as non-residents of that country. Keeping this in view, the survey also collected the information with bifurcation of financial services rendered to residents and non-residents separately.
Services Covered
Deposit Account Management Services (DAM) include fees and commissions charged to or received from the deposit account holders, for maintaining deposit accounts such as fee for cheque book, fee for internet banking, commission on draft and other instrument provided, penalty for not maintaining minimum balance, etc. and any other fees charged to deposit account holders. Any fees charged to NRE / FCNR (B) account should be reported as fees charged to Non-residents. Credit Related Services (CRS) include fees received for credit-related or lending related services like credit processing fees, late payment or default charges and early redemption charges. Charges for facility and management fees, fees for renegotiating debt terms, mortgage fees, etc. also to be reported here. Financial Leasing Services (FLS) include fees or commission received for arranging or entering into financial lease contracts. This also includes fees received directly or deducted from the proceedings. Trade Finance Related Services (TFR) include commission or fees charged for arranging trade finance like buyers’ and suppliers’ credit, fees for establishing/originating, maintaining or arranging standby letters of credit, letter of indemnity, lines of credit, fees for factoring services, bankers’ acceptance, issuing financial guaranty, commitment fees, handling charges for trade bills. Payment and Money Transmission Services (PMT) include fees or charges for electronic fund transfer services like SWIFT, TT, wire transfer, etc. ATM network services, annual credit / debit card fees, Interchange charges, fees for point of services, etc. also have to be reported here. Further, charges on the customer for making remittances abroad or receiving remittances from abroad should be reported here. Fund Management Services (FMS) include fee or income received for managing or administering financial portfolios, all forms of collective investment management, pension fund management, custodial, depository and trust services. Commission or fees for safe custody of shares / equities, transaction fee for custodian account, communication cost or any other fees / charges related to custodian account should also be reported. Financial Consultancy and Advisory Services (FCA) include fees for advisory, intermediation and other auxiliary financial services including credit reference and analysis, portfolio research and advice, advice on mergers and acquisitions and on corporate restructuring and strategy. Arrangement / management fees for Private placement of share / equities are also to be included. Underwriting Services (US) include underwriting fees, earning from buying and reselling an entire or substantial portion of newly issued securities. Clearing and Settlement Services (CCS) include settlement and clearance services for financial assets, including securities, derivative products, and other negotiable instruments. Derivative, Stock, Securities, Foreign Exchange Trading Services (DER) include commissions, margin fees, etc. received for carrying out financial derivative transactions, placement services, and redemption fees. Earnings received on banks’ own account as well as on behalf of customers for carrying out foreign exchange trading are reported under this item. Explicit brokerage fees and commissions for foreign exchange brokerage services are also included. However, earnings received on banks’ own account for carrying out trading in derivative, stock, securities etc are not included under this item.