Indian Banks Boost Global Presence: Subsidiaries Soar, Foreign Branches Retreat

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Indian banks have significantly increased their global footprint through subsidiaries, while foreign banks operating in India have experienced a decline in their presence. According to data released by the Reserve Bank of India (RBI) on Wednesday, Indian banks' overseas subsidiaries grew from 399 at the end of the previous fiscal year to 417 during 2022-23.

Growth in Employee Strength

The employee strength of Indian banks' foreign branches and subsidiaries also witnessed a rise during 2022-23. Foreign branches saw a 0.5% increase, while subsidiaries experienced a more substantial 6.2% growth in their workforce.

Survey Coverage

The RBI survey on International Trade in Banking Services 2022-23 encompasses 14 Indian banks with overseas branches or subsidiaries and 44 foreign banks with branches or subsidiaries in India, providing a comprehensive overview of the banking landscape.

Contraction of Foreign Banks in India

In contrast to the expansion of Indian banks overseas, foreign banks in India faced a reduction in their operations. The number of branches and employees of foreign banks in India decreased from 858 in 2021-22 to 774 in 2022-23.

Overseas Business Expansion

Indian banks' overseas business experienced growth, with both deposit mobilization and lending activities increasing during the year. This expansion contributed to the overall growth of Indian banks' international operations.

Shifting of Retail Business

The shifting of retail business from a major foreign bank in India to a domestic private sector bank impacted the aggregate deposits and credit of foreign banks. However, their capital and investments witnessed an increase during 2022-23.

Consolidated Balance Sheet Growth

The consolidated balance sheet of foreign banks in India grew by 5.7% in US dollar terms, reflecting their continued presence and operations in the country.

Impact of Global Monetary Policy

The RBI highlighted the impact of the tightening global monetary policy cycle during the year, which led to a substantial rise in interest income and expenses across bank groups.

Income to Assets Ratio

The total income to assets ratio of overseas branches of Indian banks improved from 1.6% in 2021-22 to 3.9% in 2022-23. However, it remained lower compared to the 6.9% ratio achieved by foreign banks in India.

Top Fee Income Generators

Among Indian banks' overseas branches, those in the United Arab Emirates (UAE) generated the highest fee income, followed by branches in the United Kingdom (UK), Hong Kong, and Singapore.

The data from the RBI survey reveals the dynamic landscape of banking operations in India and abroad. Indian banks are expanding their global reach through subsidiaries, while foreign banks in India are facing challenges and adapting to the evolving market conditions.