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108299024

Survey on International Trade in Banking Services, 2022-23

Today, the Reserve Bank released the results of 2022-23 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 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 14 Indian banks having overseas branches/subsidiaries and 44 foreign banks having branches/subsidiaries in India.

Highlights

  • Indian banks increased their overseas presence through the subsidiaries route and their employee strength rose by 0.5 per cent and 6.2 per cent for foreign branches and subsidiaries, respectively, during 2022-23; on the other hand, the number of branches and employees of foreign banks in India contracted during the year (Table 1).
  • Overseas business of Indian banks expanded as both mobilisation of deposits as well as lending activities increased during the year.
  • Shifting of retail business of a major foreign bank in India to a domestic private sector bank led to decline in aggregate deposits and credit of foreign banks whereas their capital and investments increased during 2022-23; the consolidated balance sheet of foreign banks in India increased by 5.7 per cent in US dollar terms (Table 2).
  • The tightening global monetary policy cycle during the year led to a substantial rise in interest income and expenses across bank groups (Table 3).
  • Total Income to assets ratio of overseas branches of Indian banks increased to 3.9 per cent in 2022-23 (1.6 per cent in 2021-22), but it remained lower vis-à-vis that of 6.9 per cent for foreign banks in India (Table 3).
  • As higher interest rates led to rise in total income, the share of fee income in total income came down during 2022-23; at 11.5 per cent, the share of fee income in total income of foreign banks in India exceeded the corresponding share of 7.0 per cent for overseas branches of Indian banks, whose major chunk of fee income emanated from credit related and trade finance related services (Table 3 and 4).
  • Branches of Indian banks in the United Arab Emirates (UAE) generated highest fee income, followed by those in the United Kingdom (UK), Hong Kong and Singapore (Table 5).

(Yogesh Dayal)      
Chief General Manager

    Press Release: 2023-2024/1472

Table 1: Employment Distribution – Bank-groups (end-March)

 

Indian Banks’ Branches Operating Abroad

Indian Banks' Subsidiaries Operating Abroad*

Foreign Banks’ Branches# in India

2021-22

2022-23

2021-22

2022-23

2021-22

2022-23

Total number of branches

117

114

399

417

858

774

Number of Employees

 3,035

 3,051

4,868

 5,170

 28,087

27,030

of which:

 

Local

 1,801

 1,890

4,353

 4,641

27,935

26,857

Indians

 1,207

 1,144

 467

 488

Others

 27

 17

  48

 41

 152

 173

*including Joint ventures of Indian banks

# foreign banks’ branches include their subsidiaries in India.

 Notes:

  1. Data are provisional.
  2. The results include data updation by few banks for 2021-22.
  3. Due to rounding off of figures, the constituent items may not add up to the totals.
  4. Financial Year-end FBIL rates were used for Rupee-US Dollar conversion.
  5. 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

2021-22

2022-23

2021-22

2022-23

Indian Banks’ Branches Operating Abroad

Credit extended

 774,663

 974,657

102.2

118.5

Deposits mobilised

 449,428

 616,733

59.3

75.0

Total Assets/Liabilities

 1,402,205

 1,550,836

185.0

188.6

Indian Banks' Subsidiaries Operating Abroad

Credit extended

 109,165

 119,511

14.4

14.5

Deposits mobilised

 111,104

 134,891

14.7

16.4

Total Assets/Liabilities

 166,562

 193,410

22.0

23.5

Foreign Banks' Branches in India

Credit extended

 471,673

 495,878

62.2

60.3

Deposits mobilised

 845,481

 855,825

111.5

104.1

Total Assets/Liabilities

 1,364,416

 1,564,506

180.0

190.3

 

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

 

2021-22

2022-23

2021-22

2022-23

2021-22

2022-23

Total Income

22,947

60,596

7,512

11,502

79,288

108,075

    (i) Interest Income

18,912

54,298

6,175

10,097

65,717

83,222

    (ii) Non-Interest Income        

4,035

6,297

1,337

1,405

13,571

24,853

Total Expenditure

19,709

51,479

5,784

8,700

60,637

77,627

    (i) Interest expenses

9,854

41,548

2,760

4,540

21,438

31,713

    (ii) other expenses

9,855

9,931

3,024

4,160

39,199

45,914

 

Ratio (per cent)

Total income to total assets

 1.6

 3.9

 4.5

 5.9

 5.8

 6.9

Interest Income to total assets

 1.3

 3.5

 3.7

 5.2

 4.8

 5.3

Fee income to total income

14.5

7.0

16.5

11.6

14.0

11.5

Total expenses to total liabilities

 1.4

3.3

 3.5

 4.4

 4.4

 5.0

Interest expenses to total liabilities

 0.7

 2.7

 1.7

 2.3

 1.6

 2.0

# 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

 
 

 

2021-22

2022-23

2021-22

2022-23

2021-22

2022-23

 

Credit Related Services (CRS)

1,479

2,129

272

302

1,260

1,358

 

Deposit Account Management Services (DAM)

77

74

63

101

270

241

 

Payment and Money Transmission Services (PMT)

333

376

125

182

1,557

1,825

 

Financial Leasing Services (FLS)

0

0

0

0

0

0

 

Trade Finance Related Services (TFR)

712

759

133

156

1,635

1,641

 

Fund Management Services (FMS)

0

0

213

193

435

600

 

Financial Consultancy and Advisory Services (FCA)

13

9

43

25

1,112

1,201

 

Underwriting Services (US)

10

0

0

0

150

97

 

Clearing and Settlement Services (CCS)

84

112

9

13

44

37

 

Derivative, Stock, Securities, Foreign Exchange Trading Services (DER)

198

350

79

101

3,278

3,387

 

Other Financial Services (OFS)

428

436

300

261

1,350

2,022

 

Total

3,335

4,245

1,237

1,335

11,091

12,409

#        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 Arab Emirates

United Kingdom

Hong Kong

Singapore

United States

Other countries

Total

CRS

2021-22

322

335

88

207

216

312

1,479

2022-23

540

512

424

140

153

361

2,129

DAM

2021-22

42

0

10

2

4

19

77

2022-23

39

0

7

3

4

21

74

DER

2021-22

85

11

3

40

1

59

198

2022-23

112

85

17

33

2

101

350

PMT

2021-22

19

0

12

15

163

125

333

2022-23

25

0

18

15

184

134

376

TFR

2021-22

80

51

107

204

88

183

712

2022-23

109

30

115

232

79

193

759

Other Services

2021-22

131

120

88

84

2

110

535

2022-23

155

147

117

40

5

93

557

All Services

2021-22

678

517

307

551

474

808

3,335

2022-23

981

774

697

463

427

903

4,245

Indian Banks Subsidiaries Operating Abroad

 

 

United Kingdom

Nepal

Singapore

Canada

Mauritius

Other countries

Total

CRS

2021-22

99

37

0

79

7

50

272

2022-23

52

37

0

66

82

66

302

DAM

2021-22

5

8

0

38

0

12

63

2022-23

4

21

0

47

0

28

101

DER

2021-22

12

38

0

5

10

15

79

2022-23

14

33

0

7

21

27

101

PMT

2021-22

36

35

0

8

5

40

125

2022-23

57

30

0

10

5

81

182

TFR

2021-22

12

58

0

34

2

27

133

2022-23

12

66

0

14

2

63

156

Other Services

2021-22

137

16

189

22

109

92

565

2022-23

139

23

190

29

40

72

492

All Services

2021-22

301

192

189

188

132

237

1,237

2022-23

278

209

190

172

149

336

1,335

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 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 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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