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Date : Oct 12, 2022
Survey on International Trade in Banking Services, 2021-22

Today, the Reserve Bank released the results of 2021-22 round of the 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 to customers for foreign branches and overseas 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 fourteen Indian banks having overseas branches/subsidiaries and 45 foreign banks having branches/subsidiaries in India. Due to merger/closure of some branches during the year, Indian banks have reported 117 overseas branches (121 branches reported in the previous survey round), whereas select Indian banks increased their overseas presence through subsidiaries (Table 1).

Highlights

  • Consolidated balance sheets of overseas branches and subsidiaries of Indian banks recorded marginal increase during 2021-22 in Rupee terms but contracted by (-)1.4 per cent and (-)1.8 per cent, respectively, when valued in US dollar terms due to cross-currency movements. On the other hand, the foreign banks in India have expanded their consolidated balance sheet by 10.3 per cent in Rupee terms and by 7.0 per cent in US dollar terms (Table 2).

  • Lending by all three categories of banks increased during 2021-22.

  • Deposits, which constituted less than a third of total liabilities of overseas branches of Indian banks, increased by 9.2 per cent in US dollar terms during the year. Foreign banks in India have also been recording steady growth in deposits and their reliance on deposit mobilisation is higher (over 60 per cent of total liabilities).

  • In synchrony with easy monetary conditions during 2021-22, interest income and expenses of overseas branches of Indian banks recorded a decline; their total income and expenses also came down. Total income of foreign banks in India also declined due to 25 per cent decline in non-interest income (Table 3).

  • Return on assets for foreign banks in India declined to 5.8 per cent in 2021-22 (6.6 per cent in the previous year) but remained higher than that for overseas branches of Indian banks (1.6 per cent in 2021-22) (Table 3).

  • During 2021-22, fee income of foreign banks in India rose by 19 per cent, whereas it declined by nearly 10 per cent for overseas branches of Indian banks. Over two-third of total fee income emanated from credit related services, foreign exchange trading services, payment and money transmission services and trade finance related services (Table 4).

  • Branches of Indian banks in the United Kingdom (UK) generated highest fee income, followed by those in United Arab Emirates (UAE), Singapore and Hong Kong (Table 5).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2022-2023/1032


Table 1: Employment Distribution – Bank-groups (end-March)
  Indian Banks’ Branches Operating Abroad Indian Banks' Subsidiaries Operating Abroad* Foreign Banks’ Branches# in India
2020-21 2021-22 2020-21 2021-22 2020-21 2021-22
Total number of branches 121 117 377 429 311 858**
Number of Employees 3,164 3,035 4,943 5,792 23,930 28,087**
of which:  
Local 1,917 1,801 4,452 4,668 23,747 27,935
Indians 1,222 1,207 468 474
Others 25 27 23 650 183 152
*including Joint ventures of Indian banks
**The figures are high due to the merger of Lakshmi Vilas Banks with DBS w.e.f. November 27, 2020
# 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
2020-21 2021-22 2020-21 2021-22
Indian Banks’ Branches Operating Abroad
Credit extended 684,808 774,179 93.2 102.1
Deposits mobilised 398,630 448,575 54.2 59.2
Total Assets/Liabilities 1,377,352 1,400,749 187.4 184.8
Indian Banks' Subsidiaries Operating Abroad
Credit extended 103,555 108,953 14.1 14.4
Deposits mobilised 108,969 110,539 14.8 14.5
Total Assets/Liabilities 164,176 165,669 22.3 21.9
Foreign Banks' Branches in India
Credit extended 415,312 471,673 56.5 62.2
Deposits mobilised 758,361 845,481 103.2 111.5
Total Assets/Liabilities 1,236,476 1,364,416 168.2 180.0

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
  2020-21 2021-22 2020-21 2021-22 2020-21 2021-22
Total Income
29,494 22,914 6,959 7,488 81,406 79,288
(i) Interest Income 24,577 18,883 6,274 6,157 63,304 65,717
(ii) Non-Interest Income 4,917 4,031 685 1,331 18,102 13,571
Total Expenditure 29,563 19,691 5,866 5,734 59,273 60,637
(i) Interest expenses 15,763 9,846 3,318 2,757 21,394 21,438
(ii) other expenses 13,800 9,845 2,548 2,977 37,878 39,199
  Ratio (per cent)
Total income to total assets 2.1 1.6 4.2 4.5 6.6 5.8
Interest Income to total assets 1.8 1.3 3.8 3.7 5.1 4.8
Total expenses to total liabilities 2.1 1.4 3.6 3.5 4.8 4.4
Interest expenses to total liabilities 1.1 0.7 2.0 1.7 1.7 1.6

Table 4: Activity-wise Composition of Fee Income from Banking Services – Bank-groups
(Amount in ₹ Crore)
Banking Service Indian Banks’ Branches Operating Abroad Foreign Banks' Branches Operating in India
2020-21 2021-22 2020-21 2021-22
Deposit Account Management Services (DAM) 84 76 218 218
Credit Related Services (CRS) 2,761 2,505 662 1,057
Financial Leasing Services (FLS) 0 0 0 0
Trade Finance Related Services (TFR) 764 737 1,149 1,502
Payment and Money Transmission Services (PMT) 284 331 1,266 1,459
Fund Management Services (FMS) 0 0 368 417
Financial Consultancy and Advisory Services (FCA) 16 13 760 1,044
Underwriting Services (US) 0 10 200 150
Clearing and Settlement Services (CCS) 63 84 28 44
Derivative, Stock, Securities, Foreign Exchange Trading Services (DER) 1,103 835 2,948 3,161
Other Financial Services (OFS) 1,949 1,748 1,123 1,333
Total 7,022 6,339 8,723 10,384
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   Bahrain Hong Kong Singapore United Arab Emirates United Kingdom Other countries Total
CRS 2020-21 148 244 143 215 1,595 415 2,761
2021-22 111 88 207 322 1,362 416 2,505
DER 2020-21 36 62 63 58 848 36 1,103
2021-22 14 3 40 85 648 46 835
OFS 2020-21 147 25 97 62 1,600 17 1,949
2021-22 96 4 73 124 1,440 11 1,748
TFR 2020-21 16 84 132 61 140 332 764
2021-22 18 107 204 80 75 254 737
Other Services 2020-21 9 98 22 66 3 248 446
2021-22 8 105 28 68 0 304 513
All Services 2020-21 356 512 457 463 4,186 1,048 7,022
2021-22 248 307 551 678 3,525 1,030 6,339
Indian Banks Subsidiaries Operating Abroad
    Canada Kenya Nepal United Kingdom Other countries Total
CRS 2020-21 71 0 36 41 55 203
2021-22 79 0 37 99 57 272
DAM 2020-21 22 0 0 12 7 41
2021-22 38 0 8 5 10 61
DER 2020-21 6 9 37 16 21 89
2021-22 5 7 38 27 18 95
OFS 2020-21 14 8 11 0 15 48
2021-22 17 34 15 136 98 300
PMT 2020-21 6 5 22 48 30 111
2021-22 8 5 35 36 36 120
TFR 2020-21 20 4 41 11 27 103
2021-22 34 3 58 12 26 133
Other Services 2020-21 3 0 0 0 2 5
2021-22 5 0 0 2 257 264
All Services 2020-21 143 25 146 127 158 600
2021-22 188 49 192 315 502 1,246

Annex

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 have to 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 have to 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 has to be reported under this item. Explicit brokerage fees and commissions for foreign exchange brokerage services are also to be reported. Earnings received on banks' own account for carrying out trading in derivative, stock, securities etc.


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