Banking

Reserve Bank of India – Press Releases

Read more at www.rbi.org.in

Today, the Reserve Bank released the results of the survey on International Trade in Banking Services (ITBS), 2019-20 on its website. This annual survey, inter-alia, collects information on core banking services (e.g., deposits, credit) and financial auxiliary services rendered by banks with cross-border presence, based on explicit / implicit fees / commissions charged to customers (details of these services are given in the Annex). The survey provides responses on the functioning of overseas branches and branches associated with subsidiaries / joint ventures of Indian banks as well as the branches of foreign banks operating in India. The number of employees posted in foreign locations by these banks were also reported.

Highlights

  • Indian banks did not increase their overseas branch network though they added some foreign subsidiaries; their overseas staff strength also declined during 2019-20 (Table 1).

  • Overseas subsidiaries of Indian banks and foreign banks in India expanded their consolidated balance sheet during 2019-20, whereas the business of overseas branches of Indian banks contracted in US dollar terms which also resulted in their lower income and expenditure during the year (Table 2).

  • Foreign bank branches in India recorded 13.8 per cent growth in their income which was largely driven by interest income (Table 3).

  • Overseas branches of Indian banks’ generated a major share of fee income by rendering credit related services, foreign exchange trading services and trade finance related services. Foreign banks operating in India continued to generate fee income from payment & money transmission services, foreign exchange trading services and trade finance related services (Table 4).

  • Indian banks’ branches in the UK generated the highest fee income, followed by their branches in the Hong Kong, UAE and Singapore (Table 5).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1151


Table 1: Employment Distribution – Bank-groups (end-March)
Items Indian Banks’ Branches Operating Abroad Indian Banks’ Subsidiaries Operating Abroad Foreign Banks’ Branches in India
2018-19 2019-20 2018-19 2019-20 2018-19 2019-20
Total number of branches 137 137 369 381 294 306
Total number of employees 3,540 3,329 5,517 5,762 23,248 23,548
of which:            
Local 2,142 1,928 4,996 5,215 23,079 23,370
Indians 1,287 1,334 490 520
Others 111 67 31 27 169 178
Notes:
1. Data are provisional.
2. Due to rounding off of figures, the constituent items may not add up to the totals.
3. Figures in the parentheses indicate annual growth for the item.
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
2018-19 2019-20 2018-19 2019-20
Indian Banks’ Branches Operating Abroad
Credit extended 6,80,164 7,34,663 98.3 97.5
Deposits mobilised 4,21,358 4,25,994 60.9 56.5
Total Assets/Liabilities 12,87,236 12,89,244 186.1 171.0
Indian Banks’ Subsidiaries Operating Abroad
Credit extended 1,09,595 1,11,183 15.8 14.7
Deposits mobilised 1,05,582 1,12,117 15.3 14.9
Total Assets/Liabilities 1,63,523 1,70,890 23.6 22.7
Foreign Banks’ Branches in India
Credit extended 4,09,620 4,32,611 59.2 57.4
Deposits mobilised 5,81,558 6,84,289 84.1 90.8
Total Assets/Liabilities 10,53,386 12,53,656 152.3 166.3

Table 3: Consolidate Income and Expenditure – Bank-groups
(Amount in ₹ Crore)
Items Indian Banks’ Branches Operating Abroad Indian Banks’ Subsidiaries Operating Abroad Foreign Banks’ Branches in India
  2018-19 2019-20 2018-19 2019-20 2018-19 2019-20
1. Income 51,831
(10.9)
48,891
(-5.7)
8,707
(9.3)
8,975
(3.1)
72,862
(14.8)
82,946
(13.8)
Of which: Interest Income 45,580
(10.3)
43,368
(-4.9)
7,942
(18.7)
8,124
(2.3)
58,282
(15.9)
66,317
(13.8)
2. Expenditure 56,967
(6.4)
49,533
(-13.0)
7,413
(10.7)
7,713
(4.1)
56,397
(12.7)
63,324
(12.3)
Of which: Interest Expenses 35,507
(12.4)
34,325
(-3.3)
3,758
(27.2)
3,953
(5.2)
26,569
(24.4)
28,701
(8.0)

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
2018-19 2019-20 2018-19 2019-20
Deposit Account Management Services (DAM) 111 94 172 188
Credit Related Services (CRS) 4,023 3,370 827 867
Financial Leasing Services (FLS) 0 0 0 0
Trade Finance Related Services (TFR) 1,080 1,258 1,309 1,253
Payment and Money Transmission Services (PMT) 332 342 2,217 2,441
Fund Management Services (FMS) 0 3 430 364
Financial Consultancy and Advisory Services (FCA) 23 12 770 1,013
Underwriting Services (US) 9 7 45 8
Clearing and Settlement Services (CCS) 54 67 36 36
Derivative, Stock, Securities, Foreign Exchange Trading Services (DER) 1,960 2,080 2,240 2,052
Other Financial Services (OFS) 1,649 1,983 966 1,110
Total 9,242 9,216 9,013 9,333
(2.1) (-0.3) (7.4) (3.5)
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
Banking Service Financial Year UK Hong Kong UAE Singapore USA Bahrain Other Countries Total
CRS 2018-19 2,044 135 1,064 272 266 86 157 4,023
2019-20 2,030 285 288 123 235 162 247 3,370
DER 2018-19 1,695 0 111 66 1 26 63 1,960
2019-20 1,709 90 102 103 1 32 43 2,080
OFS 2018-19 1,375 15 56 63 11 100 30 1,649
2019-20 1,747 -3 57 91 3 62 25 1,983
TFR 2018-19 243 184 163 183 125 33 150 1,080
2019-20 329 233 118 234 154 26 164 1,258
PMT 2018-19 3 26 17 13 156 3 114 332
2019-20 3 17 21 19 159 4 119 342
Other Services 2018-19 3 63 68 13 7 15 29 197
2019-20 1 77 50 10 4 9 32 183
All Services 2018-19 5,362 423 1,478 609 566 262 542 9,242
2019-20 5,818 700 637 580 557 295 630 9,216
Indian Banks’ Subsidiaries Operating Abroad
Banking Service Financial Year UK Canada Indonesia Other Countries Total
CRS 2018-19 46 61 29 161 296
2019-20 46 66 23 98 234
DER 2018-19 42 6 2 106 156
2019-20 51 6 2 65 124
PMT 2018-19 24 6 2 289 321
2019-20 33 7 1 63 103
TFR 2018-19 24 11 4 60 98
2019-20 19 18 5 62 104
DAM 2018-19 5 34 0 41 80
2019-20 10 37 0 9 56
Other Services 2018-19 2 3 18 29 52
2019-20 4 11 16 64 96
All Services 2018-19 142 122 55 686 1,005
2019-20 163 145 47 361 717

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 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 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.

  • Trade Finance Related Services 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 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 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 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.

  • Clearing and Settlement Services include settlement and clearance services for financial assets, including securities, derivative products, and other negotiable instruments.

  • Derivative, Stock, Securities, Foreign Exchange Trading Services 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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