Indian Banks Expand Global Presence, Overseas Employee Strength Rises: RBI Report

In a recent report released on Wednesday, the Reserve Bank of India (RBI) revealed that Indian banks have significantly increased their global footprint through subsidiaries, experiencing a 0.5% growth in employee strength for foreign branches and subsidiaries during the 2022-23 period. Conversely, foreign banks in India witnessed a contraction in both branches and workforce over the same timeframe.

The expansion of overseas operations for Indian banks was attributed to a boost in deposit mobilization and lending activities during the fiscal year. Notably, branches in the United Arab Emirates (UAE) emerged as top earners in fee income, followed by those in the United Kingdom, Hong Kong, and Singapore. Despite the positive growth, the total income-to-assets ratio for overseas branches of Indian banks stood at 3.9%, trailing behind the 6.9% ratio observed for foreign banks operating within India.

The RBI report also highlighted the impact of a major foreign bank’s retail business shift to a domestic private sector bank, resulting in a decline in aggregate deposits and credit for foreign banks in India. Nevertheless, the consolidated balance sheet of foreign banks in India increased by 5.7% in US dollar terms.

As the global monetary policy tightened, interest income and expenses rose across all bank groups. The report noted a substantial increase in interest income due to higher interest rates. Interestingly, while foreign banks in India maintained a higher share of fee income at 11.5%, the majority of fee income for overseas branches of Indian banks came from credit and trade finance-related services.

The RBI survey encompassed 14 Indian banks with overseas branches or subsidiaries and 44 foreign banks with branches or subsidiaries in India.