Foreign Banks India

8/3/2019 Foreign Banks India

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y Credit Suisse Groupy Industrial and Commercial Bank of Chinay Merrill Lynch (in association with DSP)y Goldman Sachs (with Kotak Mahindra)

Foreign banks in India have significantly improved the Indianforeign exchange market. During 2005-06 foreign banksregistered a turnover of 41 % where as in 2007-08 their share

raised to 52 %.

Foreign banks in India have brought competition among publicsector banks in terms or efficiency and customer service. They

completed change the way banks worked in India. Today nearlyall domestic banks streamlined their operation by introducing

technology and best banking practices.

Foreign Banks inIndia

Foreign banks have brought latest technology and latest banking practices in India. They havehelped made Indian Banking system more competitive and efficient. Government has come up

with a road map for expansion of foreign banks in India

The road map has two phases. During the first phase between March 2005 and March 2009,foreign banks may establish a presence by way of setting up a wholly owned subsidiary (WOS)

or conversion of existing branches into a WOS. The second phase will commence in April 2009after a review of the experience gained after due consultation with all the stake holders in the

banking sector. The review would examine issues concerning extension of national treatment toWOS, dilution of stake and permitting mergers/acquisitions of any private sector banks in India

by a foreign bank.

Major foreign banks in India are:

ABN-AMRO BankThe history of ABN Amro Bank dates back to the year 1924, when King Williem I issued a

Royal Decree declaring the establishment of the Nederlandsche Handel-Maatschappij(Netherlands Trading Society, NTS). The NTS had been established with an aim to promote the

trade between the Netherlands and the Dutch East Indies.

Abu Dhabi Commercial Bank Ltd.Abu Dhabi Commercial Bank (ADCB) is one of the most prominent nationalized banks of the

United Arab Emirates (UAE). Three different banks viz. the Khalij Commercial Bank, theEmirates Commercial Bank and the Federal Commercial Bank merged in the month of July

1985, leading to the incorporation of the Abu Dhabi Commercial Bank.


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American Express Bank Ltd

With its headquarters located in New York, U.S., American Express company is a globalfinancial services provider, also known as "AmEx" in short. American Express had been

established in the year 1850, and is well known all around the world for its dedicated Credit

Card, Traveller's Cheque and Charge Card services.

BNP Paribas

BNP Paribas is one of the oldest banks in the continent of Europe, and the largest bank in theEurozone (consortium of countries having adopted Euro as their primary currency), as reported

by The Banker magazine. The bank is present in 87 countries with a 162,700-strong workforceoffering its services to the bank.

Citibank

Citibank is one of the largest banks in the U.S., and is a part of the financial services companyCitigroup. Citibank had been founded in the year 1812. Initially its name was City Bank of New

York, which was later changed to First National City Bank of New York.

DBS Bank LtdDBS Bank is a Singapore-based bank, and is known to be one of the largest banks to exist in

South East Asian region by asset value. The government of Singapore established the DBS Bankin the year 1968, and it was primarily aimed at providing development oriented financial

services.

Deutsche BankDeutsche Bank, headquartered at Frankfurt in Germany, ranks among the global leaders in

corporate banking and securities, transaction banking, asset management, and private wealthmanagement. It is one the world's leading international financial service providers with roughly

EURO 2.2 trillion in assets and approximately 80,000 employees.

HSBC LtdHSBC Bank is a subsidiary of HSBC Holdings plc, a London based banking giant which,

according to the Forbes magazine, is the largest banking group in the world, and the 6th largestcompany in the world as of April 2009.

Standard Chartered Bank

Standard Chartered Bank is a London based bank, currently operational within over 70 nationswith more than 1,700 branches and 73,000 strong workforce as of April 2009. Although the bank

is located in Britain, still a huge chunk of its revenues originate from the continents of Asia,Africa and Middle East.

Barclays Bank

Barclays GRCB India is led by Samir Bhatia as its Managing Director. In a short period of justtwo and a half years, Barclays GRCB India has placed itself amongst the most respected foreign

banks in the country that is serving more than 830,000 clients.


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Antwerp Diamond Bank, IndiaThe Antwerp Diamond Bank is a small bank that specializes solely in delivering excellent

services in the diamond and the diamond jewelry sector. The bank is ranked the second largestdiamond bank worldwide, first being the ABN AMRO's International

Arab Bangladesh Bank, IndiaArab Bangladesh Bank Limited is one of the leading private sector banks based in Bangladesh. Itwas instituted on December 31, 1981 and served as the very first private sector bank of the

country. The bank commenced its functions from April 12, 1882.

Bank of America, IndiaBank of America is one of the largest financial service companies in the world. It is the second

largest bank in terms of market capitalization. Furthermore, it is the fifth largest company in theUnited States by total revenue, as well as the second largest non-oil company

Bank of Bahrain & Kuwait BSC, India

Bank of Bahrain and Kuwait (BBK) was established in Bahrain in March 1971 and provides arange of efficient and personalized banking facilities. The bank established its first overseas

branch in Kuwait in 1978. In the span of few years, branches were

Bank of Ceylon, IndiaBank of Ceylon, popularly abbreviated as BOC, is a government-owned, major commercial bank

in Sri Lanka. It was established in 1939 with its head office located in iconic cylindrical buildingin the capital Colombo, the commercial capital of the island.

Bank of Nova Scotia

The Bank of Nova Scotia, famously known as Scotiabank, is counted amongst North America'sleading financial establishments and also the most international of all the Canadian banks. It

stands at the third position in the list of Canada's largest banks in terms

Bank of Tokyo Mitsubishi UFJ Ltd, IndiaJapan's largest bank, the Bank of Tokyo-Mitsubishi UFJ, Ltd was founded on January 1, 2006 as

a result of a merger between Bank of Tokyo-Mitsubishi, Ltd. and UFJ Bank Ltd. Separately, theBank of Tokyo-Mitsubishi was established as Mitsubishi Bank, Ltd.

Chinatrust Commercial Bank Ltd

Chinatrust Commercial Bank Limited (CTCB) is amongst the biggest private banks in Taiwan,managed by the family of Koo Chen-Fu. It was founded in the year 1966, initially by the name of

China Securities and Investment Corporation. Then in 1971,

Credit Agricole Corporate and Investment Bank, IndiaCredit Agricole Corporate and Investment Bank (Credit Agricole CIB formerly known as

Calyon) is the entity of Credit Agricole's corporate and investment banking and was establishedin May 2004 by the transmit of assets and services from Credit Lyonnais'

J P Morgan Chase Bank, India


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An American multinational banking corporation, J P Morgan Chase Bank has been a majorprovider of financial services and is one of the largest banks in the world. It is the largest bank in

United States by sales, profits, assets and market value.

Mashreq Bank PSC, India

Mashreq is one of the leading financial institutions in UAE. It was founded in 1967 and has itsheadquarters situated in Dubai, United Arab Emirates. Mashreq provides banking and financialservices to millions of customers and businesses across the

Mizuho Corporate Bank Ltd, India

Mizuho Corporate Bank Ltd is one of the most trusted corporate and investment bankingsubsidiary of Mizuho Financial Group, which is the second largest Japanese financial service

group. The bank was established in April 2002 as a result of the merger

Oman International Bank, IndiaOman International Bank was established on January 1, 1984 as the first Sultanate's entirely-

owned Omani commercial bank. Over the years, it has become one of the largest banks of Omanwith a wide network of a large number of countries. Since the year

PT. Bank Internasional Indonesia Tbk, India

Pt. Bank Internasional Indonesia Tbk (BII) was founded on May 15, 1959. The bank post gaininga foreign exchange bank status in the year 1988 enrolled its shares on the Jakarta Stock

Exchange and Indonesia Stock Exchange

Societe GeneraleOne of the oldest banks of France, Societe Generale is a prime European financial services

company having a considerable international existence. Tours Societe Generale in the businessdistrict of La Defense, Nanterre, west of Paris, serves as its head office.

State Bank of Mauritius Ltd, India

State Bank of Mauritius (SBM) was established in 1973 and is the second largest bank inMauritius. The bank has a market share of about 25% of domestic banking assets. State Bank of

Mauritius has 42 domestic branches, and three branches

The Royal Bank of Scotland, IndiaThe Royal Bank of Scotland was founded in 1727 and has a history of over three hundred years.

With its rich history, it has become one of the largest financial service groups in the world. Itprovides banking services for individuals, corporate houses

UBS Bank, India

UBS AG is one of the leading Swiss international financial institutes having headquarters inBasel and Zurich, Switzerland. It was founded in 1854 and therefore, holds a 150 years old

heritage. In the year 1998, it got merged with Swiss Bank

VTB Bank, IndiaVTB Bank, formerly known as Vneshtorgbank, is amongst the leading banks of Russia and the


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largest in terms of authorized capital. It is the government-owned international bank with apresence in 13 countries. VTB is the second largest bank in Russia

Sonali Bank, India

The largest bank of Bangladesh, Sonali Bank is a state-owned prime and leading commercial

bank of the country with its corporate head quarter situated at Motijheel, Dhaka, Bangladesh.Shortly post Bangladesh got independence, Sonali Bank emanated

INTRODUCTION

A large number of foreign banks are now keen on opening shop in India to gain a criticalmass by April 2009, when private banking space is expected to open up for foreign players.

Foreign Banks in India always brought an explanation about the prompt services tocustomers. After the set up foreign banks in India, the banking sector in India also becomecompetitive and accurative. The share of foreign banks in the business done in the country(deposits and advances) has been hovering between 5 and 7 per cent during the pastdecade.

A new rule announced by the Reserve Bank of India for the foreign banks in India in thisbudget has put up great hopes among foreign banks which allow them to grow unfettered.Now foreign banks in India are permitted to set up local subsidiaries. The policy conveysthat foreign banks in India may not acquire Indian ones (except for weak banks identifiedby the RBI, on its terms) and their Indian subsidiaries will not be able to open branchesfreely.

There are twenty-nine foreign banks are present in India through 273 branches and 871offsite ATMs. Besides, there are 34 foreign banks operating through representative offices.Four have set up shop in the past one year. They are Banco Bilbao Vizcaya Argentaria,Spain's second largest bank; Italy's Banca di Roma; the Dublin-based Depfa Bank Plc.; andNational Australia Bank Ltd. Given a chance, all banks would like to convert theirrepresentative offices into branches.

Standard Chartered Bank, the oldest foreign bank that came to India 150 years ago, nowoperates the maximum number of branches, 83. It is followed by HSBC, which entered Indiain 1867, with 47 branches. Citibank has 39 branches and ABN Amro, 28 branches. The onlyother bank that has a double digit branch presence is Deutsche, 11.

List of major Foreign Banksin India

ABN-AMRO Bank Abu Dhabi Commercial Bank Bank of Ceylon BNP Paribas Bank Citi Bank China Trust Commercial Bank Deutsche Bank


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HSBC JPMorgan Chase Bank Standard Chartered Bank Scotia Bank Taib Bank

By the year 2009, the list of foreign banks in India is going to become more quantitative asnumbers of foreign banks are still waiting with baggage to start business in India

Upcoming Foreign Banksin India

By 2009 few more names is going to be added in the list of foreign banks in India. This is asan aftermath of the sudden interest shown by Reserve Bank of India paving roadmap forforeign banks in India greater freedom in India.

The following are the list of foreign banksgoingto set up businessin India

y Royal Bank of Scotlandy Switzerland's UBSy US-based GE Capitaly Credit Suisse Groupy Industrial and Commercial Bank of China

Reasons for foreign bank enter in India

* India's GDP is seen growing at a robust pace of around 7% over the next few years,throwing up opportunities for the banking sector to profit from.

* The credit of banks has risen by over 25% in 2004-05 and the growth momentum isexpected to continue over the next four to five years.

* Participation in the growth curve of the Indian economy in the next four years will provideforeign banks a launch pad for greater business expansion when they get more freedomafter April 2009.

* RBI is following a liberal branch licensing policy for those foreign banks who want to go tothe unbanked pockets. They have started sensing enormous business opportunities infinancing trade and small and medium sectors in small towns in the world's second fastestgrowing economy.

WTO and India about foreign banks operations

India had committed to the World Trade Organzation (WTO) in 1997 to give 12 new branchlicenses to foreign banks every year, including those given to new entrants and the existingplayers. However, the Indian regulator has all along been allowing foreign banks to openmore branches, going beyond its commitment to WTO. In fact, in the last four years tillOctober 2007, it has given its nod to 75 new foreign bank branches and many more ATMs(which do not come under WTO norms).

Standard Chartered Bank, the oldest foreign bank that came to India 150 years ago, nowoperates the maximum number of branches, 83. It is followed by HSBC, which entered India


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in 1867, with 47 branches. Citibank has 39 branches and ABN Amro, 28 branches. The onlyother bank that has a double digit branch presence is Deutsche, 11.

Despite their growing presence, foreign banks still have a very small market share in theIndian banking industry6.11% of total deposits and 6.83% of total loan advances. Buttheir returns from Indian operations are far higher than those of their local counterparts.

For instance, the average net profit per branch for foreign banks in India was Rs11.99 crorelast year against Rs33 lakh for the public sector banks that account for close to 70% of theindustry. The return on assets for foreign banks last year was 1.65% and return on equity,14.02%. The comparable figures for public sector banks were 0.82% and 13.62%. Now youknow why foreign banks are ready to walk the extra mile to do business anywhere in India

The Reserve Bank of India would like foreign banks to get a flavour of semi-urban India andthe rural hinterland. Going by the statistics provided in the RBI's annual report, it appearsthat foreign banks are being gently nudged away from metros, when they apply forpermission to open a new branch.

The branches of foreign banks that have been approved between July 2006 and June 2007

are mostly in smaller towns and tier-2 and tier-3 cities. Of the 13 branches for whichpermission was given, only one branch belonging to Shinhan Bank has been allowed in NewDelhi.

Smaller cities

Hong Kong and Shanghai Banking Corporation (HSBC) received approvals for threebranches in Raipur, Jodhpur and Lucknow. ABN Amro got approvals for branches inKolhapur, Salem, Udaipur and Ahmedabad. Barclays Bank received approval for branches inKanchipuram and Bangalore.

Most foreign banks follow a strategy of first setting up base in metros Mumbai, New Delhi,

Kolkata and Chennai. Then, in the next stage, they move to the mini-metros such asBangalore, Hyderabad, Pune and Ahmedabad. Over the last few years, some banks havetalked about expanding their reach beyond the conventional circuits of these eight places.

Foreign banks in India have got approval from the Reserve Bank of India to open 10branches and seven representative offices during the July 2006- June 2007 period. In thecalendar year 2006, the RBI issued approvals for opening 13 branches of foreign banks inIndia. Under the WTO agreements, India is required to allow the opening of 12 foreignbranches every year.

More foreign banks rush to India

A large number of foreign banks are now keen on opening shop in India to gain a criticalmass by April 2009, when private banking space is expected to open up for foreign players.

The latest addition to the list of foreign banks wishing to set foot in India is the Royal Bankof Scotland, which has total assets of over $806 billion.

The sudden interest in India follows the Reserve Bank of India's roadmap for accordingforeign banks greater freedom in India.


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Switzerland's UBS, ranked the world's best private bank by EuroMoney magazine, has beenpreparing itself for India launch. Merrill Lynch and Goldman Sachs too are believed to beshowing interest.

It is not known whether they will go alone or partner with an Indian entity in the newventure. Some of the new players are targeting the derivatives market to grow in India. The

huge retail space is also an enticing factor.

Merrill Lynch has a joint venture in Indian investment banking space -- DSP Merrill Lynch.Goldman Sachs holds stakes in Kotak Mahindra arms.

US-based GE Capital last week announced its intention to set up a bank last week soon afterthe banking sector roadmap was unveiled. It already has wide presence in consumer financethrough GE Capital India.

The RBI roadmap said the removal of limitations on the operations of wholly-ownedsubsidiaries of foreign banks and treating them on a par with domestic banks to the extentappropriate will be designed and implemented after reviewing the experience till April 2009.

A total of 33 foreign banks are present in India and had total assets of Rs 1,36,315 crore(Rs 1363.15 billion) as at end-March 2004. Roughly they account for about 7 per cent of thetotal banking space.

The list of foreign players includes banks like Citibank, Bank of America, Bank of NovaScotia, ABN-AMRO Bank, Deutsche Bank and JPMorgan Chase Bank, which figure in the top25 global banks ranked by The Banker magazine.

The other top banks like Credit Suisse Group, Industrial and Commercial Bank of China, arestill to start banking business in India.

India is expected to find a place in the strategy of these banks given the country's growthprospects. There have been cases of foreign banks closing shops in India too. DresdnerBank and Commerzbank fall in this category.

India's GDP is seen growing at a robust pace of around 7 per cent over the next few years,throwing up opportunities for the banking sector to profit from.

The credit of banks in India has risen by over 25 per cent in 2004-05 and the growthmomentum is expected to continue over the next few years.

Participation in the growth curve of the Indian economy in the next four years will provideforeign banks a launch pad for greater business expansion when they get more freedom

after April 2009

TABLE 1

FINANCIAL PERFORMANCE OF FOREIGN BANKS IN INDIA

Item 2005-06 2006-07 variation

Absolute percentage


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A.INCOME (i + ii) 17,662.07 24,959.06 7293.99 41.03i)Interest Income

of which : Interest on AdvanceIncome on Investment

ii) Other Incomeof which : Commission &Brokerage

12,290.827379.753,950.575,371.252,872.39

18,018.9210,941.495,432.046,937.143,789.29

5728.093,561.741,481.461,565.90916.89

46.6048.2637.5029.1531.92

B.EXPENDITURE (i+ii+iii) 14,593.47 20,370.90 5,777.43 39.59i)Interest Expended

of which :Interest on Depositsii) Provisions and Contingencies

of which : Provision for NPAsiii) Operating Expenses

of which : Wage Bill

5,149.503,161.173,589.84

96.435,854.132,005.17

7,615.024,758.245,014.65332.48

7,741.223,081.11

2,465.531,597.071,424.81236.06

1,887.091,075.94

47.8850.5239.69244.8132.2453.66

C.PROFIT

i) Operating Profitii) Net Profit

6,658.443,068.60

9,599.814,585.16

2,941.371,516.56

44.1849.42

D.NET INTEREST INCOME/MARGIN 7,141.33 10,403.89 3,262.57 45.69E.TOTAL ASSETS 1,99,358.032,78,016.4978,658.46 39.46

SOURCE: RBI & BALANCESHEETS OF RESPECTIVE BANKS

The table 1 which implies that income of foreign bank increased of 41.03 per cent ,while the expenditure of the foreign banks has increased nearly by 11 per cent. Theoperating profit amounting Rs. 2941.37 i.e. 44.18 per cent and there is an increase in netprofit amounting to Rs 1516.56 i.e. 49.42 per cent. There also increase in total asset. Itmay be concluded that there is a sufficient progress in the foreign banks and the overallprofitability of foreign banks is good

LIST OF FOREIGN BANKSHAVING REPRESENTATIVE OFFICES IN INDIA AS ONNOVEMBER 3D, 2007

S. No Name and address oftherepresentative office

Country ofincorporation

Centre Date ofopening

1. Commonwealth Bank Australia Bangalore 7.11.20052. National Bank Australia Ltd Australia Mumbai 3.11.20063 Raiffeisen Zentral Bank Osterreich

AGAustria Mumbai 1.11.1992

4 Fortis Bank Belgium Mumbai 6.10.19875 KB.C. Bank N.V. Belgium Mumbai 1.02.20036 Emirates Bank International Dubai Mumbai 16.06.20007 Credit Industriel et Commercial France New Delhi 1.04.1997

8 Natixis France Mumbai 4.01.19999 Bayerische Hypo - und

VereinsbankGermany Mumbai 12.07.1995

10 DZ Bank AG Deutsche Zentral Germany Mumbai 22.02.199611 Landesbank Baden -

WurtlembergGermany Mumbai 1.11.1999

12 Presdner Bank AG Germany Mumbai 6.09.200213 Commerzbank Germany Mumbai 23.12.2002


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14 DEPFABank Ireland Mumbai 9.2.200715 Intesa San paolo Spa Intesa Sanpaolo

SpaIntesa Sanpaolo Spa

20.01.1991

16 Uni Credito Italiano Italy Mumbai 1.08.199817 Banca Populare Di Verona E Novara Italy Mumbai 18.06.200118 BPU Banca -Banche Popolari Unite Italy Mumbai 16.01.2006

19 Banca Popolare di Vicenza ItaIv Mumbai 29.04.200620 Monte Dei Paschi Di Sienna Italy Mumbai 07.04.200621 Banca di Roma Italv Mumbai 17.01.200722 Everest Bank Ltd Nepal New Delhi 24.03.200423 Caixa Geral de Depositos Portugal Mumbai Goa

(EC)8.11.1999

24 Vnesheconombank (Bank for ForeignEconomic Affairs)

Russia New Delhi 1.3.1983

25 VTB India(Bank for Foreign Trade) Russia New Delhi May 200526 Promsvvazbank Russia New Delhi 25.04.200627 Banco de Sabadell SA Spain New Delhi 2.08.2004

28 Banca Bilbao Vizcava Aroontaria,BBVA

Spain Mumbai 2.4.2007

29 Hatton National Bank Sri Lanka Chennai 1.01.1999

30 UBSAG Switzerland Mumbai 24.11.199431 Zurcher Kantonalbank Switzerland Mumbai 27.06.200632 The Bank of New York USA Mumbai 27.10.198333 Wachovia Bank NA USA Mumbai 1.11.199634 Svenksa Handelsbanken Sweden Mumbai 1.8.200635 Westpac Australia Mumbai 1.10.2007

SOURCE:rbidocs.rbi.org.in/rdocs/Content/pdfs/71207.pdf

CONCLUSION:

Foreign Banks in India always brought an explanation about the prompt services tocustomers. After the set up foreign banks in India, the banking sector in India also becomecompetitive and accurative. India is expected to find a place in the strategy of these banksgiven the country's growth prospects. There have been cases of foreign banks closing shopsin India too. India's GDP is seen growing at a robust pace of around 7 per cent over thenext few years, throwing up opportunities for the banking sector. Participation in the growthcurve of the Indian economy in the next four years will provide foreign banks a launch padfor greater business expansion when they get more freedom after few years

REFERENCE

Euro Money magazine, Switzerland's UBS.

BS Banking Bureau in Mumbai

http://www.thehindubusinessline.com/2007/09/08/stories/2007090852210100.htm

http://www.indiastat.com/india/ShowData.asp?secid=104&ptid=3&level=2


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http://in.rediff.com/money/2005/mar/08bank.htm

http://www.livemint.com/Articles/keywords.aspx?kw=Foreign%20bank

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Foreign Banks India