Role of foreign banks in emerging economies (India)

Foreign banks in India

Introduction

29 foreign banks are present in India through 273 branches

There are 871 offsite ATM’S

Besides there are 34 foreign banks operating through representative

offices

FACTS OF SOME FOREIGN BANKS IN INDIA

Standard Chartered bank is the oldest foreign bank that came to India i.e. 150 years ago, now operates the maximum number of branches i.e.

83

Follows HSBC which entered in India in the year 1867, with 47 branches

CITIBANK has the 3rd largest branches in India i.e.39

Follows ABN AMRO with 28 branches

FOREIGN BANKS IN INDIAForeign Banks operating in India are banks of other

countries having their branches in India. At present, there are about 50 foreign banks having a total of more than 250 branches in most of the big cities of the country.

These foreign banks have a flourishing business and earn large profits.

Some economists are of the view that foreign banks should not be allowed to operate in the country. But

permission to such banks to operate in the country is unavoidable on the basis of reciprocity. This is certainly

the view of the Reserve Bank of India, and it is justified by the success of Indian banks operating in foreign countries.

List of foreign banks having representative offices in India

S. No Name and address of the representative office

Country of   incorporation

Centre Date of opening

1. The Bank of New York USA Mumbai 27.10.1983

2. National Bank Australia Ltd        

Australia Mumbai 3.11.2006

3 Raiffeisen Zentral Bank Osterreich AG       

Austria Mumbai 1.11.1992

4 Fortis Bank         Belgium Mumbai 6.10.1987

5 Bayerische Hypo - und     Vereinsbank

Germany Mumbai 12.07.1995

6 Emirates Bank International        

Dubai Mumbai 16.06.2000

7 Credit Industriel et Commercial     

France New Delhi 1.04.1997

Importance of foreign banks Latest

technology Latest

ranking Made Indian

banking system more competitive and efficient.

Major foreign banks in India

ABN-AMRO BANK ABU DHABI COMMERCIAL BANK

Major foreign banks in India

AMERICAN EXPRESS BANK BNP PARIBAS

Major foreign banks in India

CITIBANK HSBC LTD

Major foreign banks in India

BARCLAYS BANK DEUTSCHE BANK

ROLE OF FOREIGN BANKS IN INDIAForeign banks tend to increase the efficiency of the local

banking system, bring in more sophisticated financial services

The main contention—that foreign banks account for just 5% of India’s loan market—is misleading. Local banks have been

on a borrowing spree abroad. They raised more than $12 billion between 2003 and 2006, which is one reason that India

could support credit growth of 28.1% despite the fact that deposits grew at only 18.5%.

Do we need foreign banks in India????

FOREIGN BANKS AND CREDIT MARKETS

IMPACT OF FOREIGN BANK ON FINANCIAL AND ECONOMIC STABILITY

Foreign bank entry may enhance financial stability by permitting greater diversification of exposures

and by improving risk management. It could also contribute to making more capital or liquidity

available when needed.A foreign bank presence could be particularly valuable during periods of banking stress,

to diversifyagainst country-specific (systemic) risks that can severely impair the capital of the

banking system.The fact that foreign banks are diversified across different countries could well change

the cyclicalbehaviour of the host country financial system since foreign banks are less sensitive to

host countrycycles. How valuable this proves to be in practice depends on how closely the domestic

economiccycle is correlated with the global economy. Counter cyclical changes in foreign bank

lending couldalso help to amplify the effectiveness of monetary policy. Foreign banks could also be

more resilientduring currency crises. Not only do they tend to be more aware of currency

mismatches, they can alsocall on their parent organisations to provide foreign currency liquidity.

FINANCIAL PERFORMANCE OF FOREIGN BANKS IN

INDIA

Item 2005-06 2006-07 variation  

      Absolute percentage

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

i)Interest Income       of which : Interest on Advance                       Income on Investment    ii) Other Income        of 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 39.59

i)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

47.8850.5239.69

244.8132.2453.66

C.PROFIT        i) Operating Profit

ii) 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 45.69

E.TOTAL ASSETS 1,99,358.03 2,78,016.49 78,658.46 39.46

INCLUSIVE GROWTH IN INDIA

RECENT STRATEGIES IN INCLUSIVE BANKING

CASE STUDY

Article 13 criteria for selectionBUSINESS INSIGHTS

1)Turnover 2)Core Service

3)Employees 4)Vision

TRANSFORMATION 1)Overarching values

2) Community investment in emerging markets

3)Micro-finance 4)Partnerships

5)Measuring performance

Conclusion

THE END