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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, according to Reserve Bank of India’s 2023-24 round of its survey on international trade in banking services.
Banks’ 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.
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.
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.
Global monetary policy
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.
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).
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.
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.
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.
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