RBI releases highlights of 2022-23 ITBS survey

The Reserve Bank recently (RBI) has released the results of the 2022-23 round of its survey on international trade in banking services (ITBS). The 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. The latest round of the survey covers 14 Indian banks having overseas branches/subsidiaries and 44 foreign banks having branches/subsidiaries in India. The highlights of the survey are given below.

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.

• Overseas business of Indian banks expanded as both mobilization 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.

• The tightening global monetary policy cycle during the year led to a substantial rise in interest income and expenses across bank groups.

• 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.

• 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

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