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Survey on International Trade in Banking Services: 2013-14 Data Release

The Reserve Bank of India today released, on its website, the data related to the 2013-14 round of Survey on International Trade in Banking Services.

The annual survey onInternational Trade in Banking Services (ITBS) provides information on the branches/subsidiaries of Indian banks operating abroad and foreign banks operating in India. Consistent and comparable data are captured on financial auxiliaries’ services rendered by the banks based on explicit/implicit fee/commission charged to customers (details of these services are explained in Annex). The survey covered 188 overseas branches, 260 overseas subsidiaries of Indian Banks and 307 branches of foreign banks operating in India. As all scheduled commercial banks with cross-border presence responded to the survey, the results present the census position.

Main Findings:

  • Employment Distribution and Growth: Indian banks branches operating abroad employed 62.3 per cent of employees from local sources, 29.8 per cent from India and remaining 7.9 per cent from other countries in 2013-14. In contrast, foreign banks working in India had an overwhelming share of local employees (99.4 per cent) in their total employees. The number of employees in Indian banks’ branches operating abroad increased by 5.5 per cent during 2013-14. In the case of foreign banks operating in India, number of employees declined by 1.6 per cent (Table 1).
  • Credit and Deposit Growth: Credit extended by Indian banks’ branches operating overseas increased by 31.2 per cent to ` 7,684.4 billion (US$ 127.9 billion) in 2013-14. In contrast, credit by foreign banks in India declined by 3.1 per cent to ` 2,982.1 billion (US$ 49.6 billion). Deposits of Indian banks’ branches operating abroad increased by 30.8 per cent to ` 5,143 billion during 2013-14 whereas deposit mobilisation by foreign banks operating in India recorded 23.5 per cent growth to ` 3,501 billion (US$ 58.2 billion) in March 2014 (Table 2).
  • Income and Expenditure: Total income of Indian banks’ overseas branches increased by 7.7 per cent to ` 393.7 billion (US$ 6.6 billion) in 2013-14. In comparison, foreign banks operating in India had larger income growth of 11.8 per cent and the amount of their total income was also higher at ` 590.6 billion (US$ 9.8 billion). The ratio of total expenditure to total income stood at 76.4 per cent and 76.1 per cent for Indian banks’ overseas branches and foreign banks operating in India, respectively (Table 3).
  • Fee Income Generated: During 2013-14, the fee income generated by overseas branches of Indian banks was ` 89.6 billion (US$ 1.5 billion) as against ` 93.5 billion (US$1.7 billion) in the previous year. For foreign banks operating in India, the fee income generated was ` 79.6 billion (US$ 1.3 billion) as compared to `74.5 billion (US$ 1.4 billion) in the previous year (Table 4).
  • Activity-wise Banking Services: Indian banks’ branches operating abroad generated major share of fee income by rendering ˜Credit related services’, ˜Derivative, stock, securities, foreign exchange trading services’, and ˜Trade finance related services’. For the foreign banks operating in India, ˜Derivative, stock, securities, foreign exchange trading services’, ˜Trade finance related services’ along with ˜Financial consultancy and advisory services’ and ˜Payment and money transmission services’ were the major sources of fee income (Table 4).
  • Country-wise Banking Services: In terms of fee income, the branches of Indian banks in UK had the largest contribution in providing banking services followed by Hong Kong and Singapore (Table 5).

Sangeeta Das
Director

Press Release : 2014-2015/1510


Annex

Banking Services Covered in the Survey

Banking services include, acceptance of deposits and lending (the core banking services), and the other financial services (para-banking services) like payment services, securities trading, asset management, financial advice, settlement and clearing service, etc. With the improvements in economic integration of financial markets and activities, the international trade in banking services has significantly increased.

The GATS framework envisages that the delivery of any commercial services can be through four different modes viz., Mode 1 Cross Border Service, Mode 2 Consumption abroad, Mode 3 Commercial presence and Mode 4 movement of natural persons. In Mode 3, the bank has a commercial presence in the territory of the service importing country and the service is delivered therein. The commercial presence can be through various investment vehicles like representative offices, branches, subsidiaries, associates and correspondents.

Banking services covered in this survey include financial auxiliary services such as (i) deposit account management services, (ii) credit related services, (iii) financial leasing services, (iv) trade finance related services, (v) payment and money transmission services, (vi) fund management services, (vii) financial consultancy and advisory services, (viii) underwriting services, (ix) clearing and settlement services, and (x) derivative, stock, securities and foreign exchange trading services. While carrying out the banking business, banks cater to the financial services needs of the residents of the country of operation as well as non-residents of that country. Keeping this in view, the survey also collected the information with bifurcation of financial services rendered to residents and non-residents separately.

Services Covered:

¢ Deposit Account Management services include fees and commissions charged to or received from the deposit account holders, for maintaining deposit accounts such as fee for cheque book, fee for internet banking, commission on draft and other instrument provided, penalty for not maintaining minimum balance, etc. and any other fees charged to deposit account holders.

¢ Credit related services include fees received for credit-related or lending related services like credit processing fees, late payment or default charges and early redemption charges. Charges for facility and management fees, fees for renegotiating debt terms, mortgage fees, etc. also to be reported here.

¢ Financial Leasing services include fees or commission received for arranging or entering into financial lease contracts. This also includes fees received directly or deducted from the proceedings.

¢ Trade Finance related services include commission or fees charged for arranging trade finance like buyers’ and suppliers’ credit, fees for establishing/originating, maintaining or arranging standby letters of credit, letter of indemnity, lines of credit, fees for factoring services, bankers acceptance, issuing financial guaranty, commitment fees, handling charges for trade bills.

¢ Payment and Money Transmission services include fees or charges for electronic fund transfer services like SWIFT, TT, wire transfer, etc. ATM network Services, annual credit /debit card fees, Interchange charges, fees for point of services, etc. also have to be reported here. Further, charges on the customer for making remittances abroad or receiving remittances from abroad have to be reported here.

¢ Fund Management services include fee or income received for managing or administering financial portfolios, all forms of collective investment management, pension fund management, custodial, depository and trust services. Commission or fees for safe custody of shares/equities, transaction fee for custodian account, communication cost or any other fees/charges related to custodian account should also be reported.

¢ Financial Consultancy and Advisory services include fees for advisory, intermediation and other auxiliary financial services including credit reference and analysis, portfolio research and advice, advice on mergers and acquisitions and on corporate restructuring and strategy. Arrangement/management fees for Private placement of share/equities are also to be included.

¢ Underwriting services include underwriting fees, earning from buying and reselling an entire or substantial portion of newly issued securities.

¢ Clearing and Settlement services include settlement and clearance services for financial assets, including securities, derivative products, and other negotiable instruments.

¢ Derivative, Stock, Securities, Foreign Exchange trading services include commissions, margin fees, etc. received for carrying out financial derivative transactions, placement services, and redemption fees. Earnings received on banks’ own account as well as on behalf of customers for carrying out foreign exchange trading has to be reported under this item. Explicit brokerage fees and commissions for foreign exchange brokerage services are also to be reported. Earnings received on banks’ own account for carrying out trading in derivative, stock, securities etc. should not be reported.

A technical Group on Statistics for International Trade in Banking Services (TG-SITBS) was set up by the Reserve Bank of India including members from Ministry of Finance, Ministry of Commerce and various departments (Department of Economic and Policy Research, Department of Banking Regulation and Department of Statistics and Information Management) of the Bank.

The TG-SITBS, after examining the different data sources available in the Reserve Bank, recommended collection of activity-wise international trade in services through annual surveys and suggested that initially the data may be collected on banking services from foreign banks operating in India and Indian banks having operations abroad. The TG-SITBS also recommended that a suitable questionnaire with explanatory notes should be prepared/framed in consultation with the banks and suggested conducting annual survey for the financial year 2006-07 by June 2007. Accordingly, a survey schedule was prepared after detailed discussions with the major foreign banks operating in India and Indian banks functioning abroad.


Table1: Employment Distribution of Indian Banks’ Overseas Branches, Subsidiaries and Foreign Banks Operating in India
Indian Banks’ Overseas Branches Indian Banks’ Subsidiaries Operating Abroad Foreign Banks’ Branches in India
2012-13 2013-14 2012-13 2013-14 2012-13 2013-14
Total number of branches 170 188 184 260 316 307
Annual Growth (in per cent)
Number of Employees 7.8 5.5 9.2 34.1 -8.1 -1.6
of which:
Local 4.8 2.0 10.6 33.4 -8.1 -1.8
Indians 13.9 -3.1 -0.5 29.3 NA NA
Others 11.8 173.7 55.6 119.0 -7.5 47.5
NA: Not applicable.
Table 2: Balance Sheet Items of Indian Banks’ Overseas Branches, Subsidiaries and Foreign Banks’ Branches in India (end-March)
Items Amount in ` billion Amount in US$ billion*
2012-13 2013-14 2012-13 2013-14
Indian Banks’ Branches Operating Abroad
Credit extended 5855.7 7684.4 107.7 127.9
Deposits mobilized 3930.7 5143.3 72.3 85.6
Total Assets/ Liabilities 9939.8 13564.6 182.8 225.7
Indian Banks’ Subsidiaries Operating Abroad
Credit extended 563.8 722.7 10.4 12.0
Deposits mobilized 468.2 625.1 8.6 10.4
Total Assets/ Liabilities 848.3 1068.8 15.6 17.8
Foreign Banks’ Branches in India
Credit extended 3077.0 2982.1 56.6 49.6
Deposits mobilized 2835.1 3501.0 52.1 58.2
Total Assets/ Liabilities 6066.5 7314.9 111.5 121.7
*: Using end-March Rupee/ Dollar RBI reference rate.
Table 3: Income and Expenditure of Indian Banks’ Overseas Branches, Subsidiaries and Foreign Banks’ Branches in India
(Amount in ` billion)
Items Indian Banks’ Overseas Branches Indian Banks’ Subsidiaries Operating Abroad Foreign Banks’ Branches in India
2012-13 2013-14 2012-13 2013-14 2012-13 2013-14
Income 365.6 393.7 48.1 59.0 528.4 590.6
(28.1) (7.7) (14.2) (22.9) (13.1) (11.8)
Of which;
Interest Income 307.5 331.7 44.8 48.6 417.2 455.7
(33.4) (7.9) (40.8) (8.5) (15.5) (9.2)
Expenditure 273.7 300.6 34.4 48.4 372.6 449.5
(32.7) (9.8) (1.6) (41.1) (13.6) (20.6)
Of which; 220.1 223.7 23.6 23.4 186.4 210.8
Interest Expenses (37.6) (1.6) (3.5) (-0.8) (23.0) (13.1)
Note: Figures in the parentheses indicate annual growth in the respective items for all tables.
Table 4: Activity-wise Composition of Fee Income from Banking Services of Indian Banks’ Overseas Branches and Foreign Banks operating in India
(Amount in ` billion)
Banking Service Indian Banks’ Overseas Branches Foreign Banks’ Branches Operating in India
2012-13 2013-14 2012-13 2013-14
Deposit Account Management Services 7.8 1.2 3.8 3.6
Credit Related Services 40.5 30.0 9.1 9.4
Financial Leasing Services 0.0 0.0 0.0 0.0
Trade Finance Related Services 34.4 13.3 16.5 13.9
Payment and Money Transmission Services 5.3 2.7 11.2 12.5
Fund Management Services 0.0 0.0 4.5 3.5
Financial Consultancy and Advisory Services 0.1 0.7 11.2 13.1
Underwriting Services 0.0 0.0 0.1 2.3
Clearing and Settlement Services 0.2 0.4 0.9 0.7
Derivative, Stock, Securities, Foreign Exchange trading Services 3.1 14.8 13.1 16.5
Other Financial Services 2.1 26.4 4.2 4.0
Total 93.5 89.6 74.5 79.6
(37.6) (-4.2) (-21.0) (6.8)
Note: Figures in the parentheses indicate annual growth in the respective items for all tables.
Table 5: Country-wise and Activity-wise Banking Services delivered by Overseas Branches of Indian Banks and Subsidiaries of Indian Bank
(Amount in ` billion)
Indian Banks’ Overseas Branches
Country Trade in Banking Services Total
DAM CRS TFR PMT DER Other Services All Services
2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14
Bahrain 0.0 0.0 1.8 2.0 0.4 0.5 0.0 0.0 0.1 0.1 0.5 1.3 2.9 3.9
Belgium 0.0 0.0 1.1 0.6 0.9 0.3 0.1 0.2 0.0 0.0 0.0 0.0 2.1 1.1
Hong Kong 1.4 0.2 4.3 3.2 2.2 2.8 0.2 0.2 0.8 0.4 0.4 0.7 9.4 7.5
Japan 0.0 0.0 0.3 0.5 0.1 0.1 0.1 0.1 0.5 0.4 0.0 0.0 1.0 1.1
Singapore 0.0 0.0 4.8 2.9 1.3 1.8 0.3 0.6 1.3 0.7 0.4 0.8 8.2 6.9
Sri Lanka 0.0 0.0 0.0 0.1 14.1 0.1 1.3 0.0 0.0 0.1 0.0 0.0 15.4 0.3
UAE 0.1 0.7 1.9 2.5 1.1 2.8 1.0 0.1 0.0 1.0 0.0 0.0 4.1 7.1
UK 6.1 0.1 20.7 14.2 12.0 2.0 0.0 0.1 0.0 11.5 0.0 24.3 38.8 52.2
USA 0.1 0.0 3.0 1.8 0.3 1.3 0.2 0.4 0.3 0.0 0.5 0.1 4.3 3.6
Other Countries 0.1 0.2 2.5 2.2 2.0 1.6 2.0 1.0 0.1 0.6 0.7 0.3 7.3 5.9
Total 7.6 1.2 40.5 30.0 34.4 13.3 5.3 2.7 3.1 14.8 2.5 27.5 93.5 89.6
Indian Banks’ Subsidiaries Operating Abroad
Botswana 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0
Canada 0.1 0.1 0.4 0.4 0.0 0.1 0.0 0.0 0.1 0.1 0.0 0.0 0.6 0.7
Russia 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0
UK 0.0 0.0 0.3 0.8 0.2 0.3 0.0 0.1 0.0 0.1 0.5 1.6 1.1 2.9
Other Countries 0.1 4.0 0.4 2.5 0.2 5.0 0.3 0.6 0.3 0.3 1.4 1.3 2.7 13.7
Total 0.2 4.1 1.3 3.7 0.5 5.4 0.4 0.7 0.4 0.5 1.9 2.9 4.8 17.3
DAM: Deposit Account Management Services
CRS: Credit Related Services
TFR: Trade Finance Related Services
PMT: Payment & Money Transmission Services
DER: Derivative, Stock, Securities, Foreign Exchange Trading services
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