Indian banks increased their overseas presence in 2023-24, both in terms of balance sheet size and number of branches and employees, according to the Reserve Bank of India’s 2023-24 International Trade Survey with banking services.

Bank employee strength increased by 8.2% in overseas branches and 1.7% in subsidiaries. During the year, the number of branches and employees of foreign banks in India also increased by 0.6% and 1.4% respectively.

The consolidated balance sheets of Indian banks’ overseas branches and subsidiaries grew by 4.3 percent and 0.4 percent respectively during the year, while those of foreign banks in India grew by more than 7, 2 percent, in US dollars.

In US dollar terms, Indian banks’ overseas branches registered an 8.8% increase in deposits, while their lending declined marginally by 0.8% during the year; these changes, among other things, also reflected crossover movements.

Global monetary policy

The continued tightening of the global monetary policy cycle led to substantial growth in interest income and expenditure across all three cohorts during the year; Interest income and interest expense of overseas branches of Indian banks grew by 72.0 percent and 87.5 percent, respectively, while the corresponding growth for foreign banks in India was 27.1 percent and 47.7 percent, respectively.

The ratio of total income to assets of Indian banks’ overseas branches increased to 6.2% in 2023-24 (3.9% in 2022-23), but remained lower than that of Indian bank branches (7.3 %) and of foreign banks. in India (7.6 percent).

High interest rate growth led to an acceleration of total revenues in 2023-24; Fee income of overseas branches of Indian banks and foreign banks operating in India also increased during the year, but declined for the relatively minor segment of overseas branches of Indian banks.

A major share of fee income for overseas branches of Indian banks was generated by rendering (a) credit related services; (b) trading services with financial derivatives, shares, securities and foreign exchange; and (c) trade finance related services. In the case of branches of foreign banks operating in India, a significant portion of commission income accrued from (a) financial derivatives, shares, securities, foreign exchange trading services; (b) payment and money transmission services; and (c) trade finance related services.

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