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Foreign banks made more money in India than what Indian lenders earned overseas

Foreign Banks earned a better return on their assets in FY’22 compared to what overseas businesses of Indian banks did in FY’22 a survey by the Reserve bank showed.

Return on assets for foreign banks in India at 5.8 per cent in 2021-22, though lower than previous year’s 6.6 per cent, it was higher than that for overseas branches of Indian banks at 1.6 per cent in 2021-22, according to the results of 2021-22 round of the survey on International Trade in Banking Services.

Consolidated balance sheets of overseas branches and subsidiaries of Indian banks recorded marginal increase during 2021-22 in Rupee terms but contracted by (-)1.4 per cent and (-)1.8 per cent, respectively, when valued in dollar terms due to cross-currency movements, the survey noted.

On the other hand, the foreign banks in India have expanded their consolidated balance sheet by 10.3 per cent in Rupee terms and by 7.0 per cent in dollar terms

The RBI’s survey on International Trade in Banking Services (ITBS) focuses on crossborder fund-based banking services (e.g., deposits, credit) as well as financial auxiliary services with explicit / implicit fees / commissions charged to customers for foreign branches and overseas subsidiaries (including joint ventures) of Indian banks as well as foreign banks operating in India.

Deposits, which constituted less than a third of total liabilities of overseas branches of Indian banks, increased by 9.2 per cent in US dollar terms during the year. Foreign banks in India have also been recording steady growth in deposits and their reliance on deposit mobilisation is higher (over 60 per cent of total liabilities).

Easy monetary conditions in the global markets during 2021-22 led to a decline in interest income and expenses of overseas branches of Indian banks. Their total income and expenses also came down. Total income of foreign banks in India also declined due to 25 per cent decline in non-interest income

The latest round of the survey covers fourteen Indian banks having overseas branches/subsidiaries and 45 foreign banks having branches/subsidiaries in India.

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