The RBI’s 2022-23 survey on international trade in banking services has revealed a significant surge in the overseas presence of Indian banks, marking a notable shift in the landscape of international banking.
Indian banks increased their overseas presence through the subsidiaries route and their employee strength rose by 0.5% and 6.2% 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, suggesting a shift in the dynamics of the banking sector.
Overseas business of Indian banks expanded as both mobilisation of deposits as well as lending activities increased during the year. Shifting 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% 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% in 2022-23 (1.6%), but it remained lower vis-à-vis that of 6.9% for foreign banks in India.
Branches of Indian banks in the United Arab Emirates generated the highest fee income, followed by those in the United Kingdom, Hong Kong and Singapore.