Reserve Bank of India – Press Releases

Today, the Reserve Bank launched the outcomes of 2021-22 spherical of the survey on International Trade in Banking Services (ITBS). This annual survey focuses on cross-border fund-based mostly banking providers (e.g., deposits, credit score) in addition to monetary auxiliary providers with specific / implicit charges / commissions charged to clients for overseas branches and abroad subsidiaries (together with joint ventures) of Indian banks in addition to overseas banks working in India (particulars of the providers are given within the Annex).

The newest spherical of the survey covers fourteen Indian banks having abroad branches/subsidiaries and 45 overseas banks having branches/subsidiaries in India. Due to merger/closure of some branches throughout the yr, Indian banks have reported 117 abroad branches (121 branches reported within the earlier survey spherical), whereas choose Indian banks elevated their abroad presence by way of subsidiaries (Table 1).

Highlights

• Consolidated stability sheets of abroad branches and subsidiaries of Indian banks recorded marginal improve throughout 2021-22 in Rupee phrases however contracted by (-)1.4 per cent and (-)1.8 per cent, respectively, when valued in US greenback phrases as a consequence of cross-forex actions. On the opposite hand, the overseas banks in India have expanded their consolidated stability sheet by 10.3 per cent in Rupee phrases and by 7.0 per cent in US greenback phrases (Table 2).

• Lending by all three classes of banks elevated throughout 2021-22.

• Deposits, which constituted lower than a 3rd of complete liabilities of abroad branches of Indian banks, elevated by 9.2 per cent in US greenback phrases throughout the yr. Foreign banks in India have additionally been recording regular development in deposits and their reliance on deposit mobilisation is increased (over 60 per cent of complete liabilities).

• In synchrony with straightforward financial circumstances throughout 2021-22, curiosity revenue and bills of abroad branches of Indian banks recorded a decline; their complete revenue and bills additionally got here down. Total revenue of overseas banks in India additionally declined as a consequence of 25 per cent decline in non-curiosity revenue (Table 3).

• Return on belongings for overseas banks in India declined to five.8 per cent in 2021-22 (6.6 per cent within the earlier yr) however remained increased than that for abroad branches of Indian banks (1.6 per cent in 2021-22) (Table 3).

• During 2021-22, payment revenue of overseas banks in India rose by 19 per cent, whereas it declined by almost 10 per cent for abroad branches of Indian banks. Over two-third of complete payment revenue emanated from credit score associated providers, overseas trade buying and selling providers, fee and cash transmission providers and commerce finance associated providers (Table 4).

• Branches of Indian banks within the United Kingdom (UK) generated highest payment revenue, adopted by these in United Arab Emirates (UAE), Singapore and Hong Kong (Table 5).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2022-2023/1032

Annex

Banking Services Covered within the Survey

Banking providers embrace, acceptance of deposits and lending (core banking providers), and the opposite monetary providers (para-banking providers) like fee providers, securities buying and selling, asset administration, monetary recommendation, settlement and clearing service, and so on. With the enhancements in financial integration of monetary markets and actions, the worldwide commerce in banking providers has considerably elevated.

The General Agreement on Trade in Services (GATS) of World Trade Organisation (WTO) framework envisages that the supply of any business providers will be by way of 4 totally different modes, viz., Mode 1 – Cross Border Service, Mode 2 – Consumption overseas, Mode 3 – Commercial presence and Mode 4 – motion of pure individuals. In Mode 3, the financial institution has a business presence within the territory of the service importing nation and the service is delivered therein. The business presence will be by way of numerous funding autos like consultant places of work, branches, subsidiaries, associates and correspondents.

A Technical Group on Statistics for International Trade in Banking Services (TG-SITBS) was arrange by the Reserve Bank of India together with members from Ministry of Finance, Ministry of Commerce and numerous departments of the Bank.

The TG-SITBS, after analyzing the totally different knowledge sources obtainable within the Reserve Bank, really useful assortment of exercise-sensible worldwide commerce in banking providers by way of annual surveys and urged that originally the information could also be collected on banking providers from overseas banks working in India and Indian banks having operations overseas. The TG-SITBS additionally really useful {that a} appropriate questionnaire with explanatory notes ought to be ready / framed in session with the banks and urged conducting annual survey from the monetary yr 2006-07. Accordingly, a survey schedule was ready after detailed discussions with the key Indian banks with abroad presence and overseas banks working in India.

Banking providers coated on this survey embrace monetary auxiliary providers equivalent to (i) deposit account administration providers, (ii) credit score associated providers, (iii) monetary leasing providers, (iv) commerce finance associated providers, (v) fee and cash transmission providers, (vi) fund administration providers, (vii) monetary consultancy and advisory providers, (viii) underwriting providers, (ix) clearing and settlement providers, (x) by-product, inventory, securities and overseas trade buying and selling providers, and (xi) different monetary providers. While finishing up the banking business, banks cater to the monetary providers wants of the residents of the nation of operation in addition to non-residents of that nation. Keeping this in view, the survey additionally collected the knowledge with bifurcation of monetary providers rendered to residents and non-residents individually.

Services Covered

• Deposit Account Management Services (DAM) embrace charges and commissions charged to or obtained from the deposit account holders, for sustaining deposit accounts equivalent to payment for cheque guide, payment for web banking, fee on draft and different instrument offered, penalty for not sustaining minimal stability, and so on. and every other charges charged to deposit account holders. Any charges charged to NRE / FCNR (B) account must be reported as charges charged to Non-residents.

• Credit Related Services (CRS) embrace charges obtained for credit score-associated or lending associated providers like credit score processing charges, late fee or default fees and early redemption fees. Charges for facility and administration charges, charges for renegotiating debt phrases, mortgage charges, and so on. additionally to be reported right here.

• Financial Leasing Services (FLS) embrace charges or fee obtained for arranging or coming into into monetary lease contracts. This additionally consists of charges obtained instantly or deducted from the proceedings.

• Trade Finance Related Services (TFR) embrace fee or charges charged for arranging commerce finance like patrons’ and suppliers’ credit score, charges for establishing/originating, sustaining or arranging standby letters of credit score, letter of indemnity, strains of credit score, charges for factoring providers, bankers’ acceptance, issuing monetary warranty, dedication charges, dealing with fees for commerce payments.

• Payment and Money Transmission Services (PMT) embrace charges or fees for digital fund switch providers like SWIFT, TT, wire switch, and so on. ATM community providers, annual credit score / debit card charges, Interchange fees, charges for level of providers, and so on. additionally must be reported right here. Further, fees on the shopper for making remittances overseas or receiving remittances from overseas must be reported right here.

• Fund Management Services (FMS) embrace payment or revenue obtained for managing or administering monetary portfolios, all varieties of collective funding administration, pension fund administration, custodial, depository and belief providers. Commission or charges for protected custody of shares / equities, transaction payment for custodian account, communication price or every other charges / fees associated to custodian account also needs to be reported.

• Financial Consultancy and Advisory Services (FCA) embrace charges for advisory, intermediation and different auxiliary monetary providers together with credit score reference and evaluation, portfolio analysis and recommendation, recommendation on mergers and acquisitions and on company restructuring and technique. Arrangement / administration charges for Private placement of share / equities are additionally to be included.

• Underwriting Services (US) embrace underwriting charges, incomes from shopping for and reselling a whole or substantial portion of newly issued securities.

• Clearing and Settlement Services (CCS) embrace settlement and clearance providers for monetary belongings, together with securities, by-product merchandise, and different negotiable devices.

• Derivative, Stock, Securities, Foreign Exchange Trading Services (DER) embrace commissions, margin charges, and so on. obtained for finishing up monetary by-product transactions, placement providers, and redemption charges. Earnings obtained on banks’ personal account in addition to on behalf of clients for finishing up overseas trade buying and selling must be reported beneath this merchandise. Explicit brokerage charges and commissions for overseas trade brokerage providers are additionally to be reported. Earnings obtained on banks’ personal account for finishing up buying and selling in by-product, inventory, securities and so on.