Money & Banking
Foreign banks earning more income from services other than banking

According to RBI survey, foreign banks operating in India generated more income from fee-based business like derivatives, stock, securities, foreign exchange trading services and financial consultancy or advisory services


Foreign banks operating in India are generating more fee-based income from derivatives, stock, securities, and foreign exchange trading services and financial consultancy or advisory services, says a study conducted by the Reserve Bank of India (RBI)

The survey on ‘International Trade in Banking Services’ (2012-2013) shows a study on Indian banks’ branches and subsidiaries operating outside the country as well as the foreign banks operating in India.

The survey reveals that, the Indian banks’ branches, which originated outside India, generated their major share of fee income by rendering credit-related services and trade finance-related services. However,

Findings of the Survey on International Trade in Banking Services:

Employment Distribution and Growth

  1. Indian banks’ branches operating abroad employed 64.5% of employees from local sources, 32.5 %from India and remaining 3.0% from other countries;
  2. The total share of local employees in foreign banks working in India was 99.6 % in 2012-13. However the number of employees of foreign banks operating in India decreased 8.1%;
  3. Total number of employees of Indian banks operating abroad increased by 7.8 % during 2012-13.

Credit and Deposit Growth

  1. Growth of credit extended by Indian banks’ branches operating abroad increased 31.7 % to Rs5,855.7 billion (US$ 107.7 billion);
  2. Credit extended by foreign banks operating in India increased by 27.5% to Rs 3,077.0 billion (US$ 56.6 billion) during 2012-13;
  3. Deposit mobilised by Indian banks’ branches operating abroad increased by 45.5 %during 2012-13;
  4. In case of foreign banks operating in India, deposit growth moderated to 3.2 %from 14.3 %in the previous year.

Income and Expenditure

  1. The total income of Indian banks’ overseas branches increased 28.1% to Rs365.6 billion (US$ 6.7billion) in 2012-13;
  2. The total income of Foreign banks operating in India, increased 13.1% to Rs528.4 billion (US$ 9.7 billion);
  3. Total expenditure accounted for about 75% and 71% of the total income of Indian overseas branches and foreign banks operating in India respectively.

Fee Income Generated

  1. Total fee income generated by 170 overseas branches of Indian banks increased to Rs93.5 billion (US$ 1.7 billion) in 2012-13 from Rs68.0 billion (US$1.4 billion) in 2011-12;
  2. Total fee income generated during 2012-13, by foreign banks operating in India declined to Rs74.5 billion (US$ 1.4 billion) from Rs 94.3 billion (US$ 2.0 billion) in 2011-12.

Country-wise Banking Services

Bahrain, Belgium, Hong Kong, Japan, Singapore, Sri Lanka, UAE, UK and USA were the major countries which together accounted for nearly 92.2% of the total banking services of the branches of Indian banks operating abroad.

The survey covered 170 overseas branches, 184 overseas subsidiaries of Indian Banks and 316 branches of foreign banks operating in India.

RBI said that it has done the survey with the intention of providing information on International trade in banking services (ITBS) of India. RBI has released the survey results including statistical data in tabular format to provide consistent and comparable data which are captured on financial auxiliaries’ services rendered by the banks based on explicit, implicit fees and commission charged to customers.


Increase agriculture exports instead of resorting to floor price ideas
India must ensure taking the opportunity to push its export, targeting, particularly the Middle East, Africa and South Asia instead of resorting to ‘floor price’ ideas, which may not work all the time
According to the statistical data available, thanks to the timely monsoon, which was good and evenly spread out, the Agriculture Ministry projects a record foodgrains output of over 263.20 million tonnes, as against last year's bounty of 257.13 million tonnes.  Rice production has been projected at 106.19 million tonnes and wheat at 95.60 million, coarse cereals at 30.11 mt, pulses at 19.77 mt and oilseeds at 32.98 mt.  Whole sale inflation is reported to have eased to an eight month low of 5.05% for January in food prices, mainly vegetables, with retail inflation also reached a 2 year low!
After China, India is the 2nd largest producer of wheat, with the main production being concentrated in UP (31.93%), Punjab (18.21%), Haryana (13.37%),  MP (12.16%), Rajasthan (9.82%) and Bihar (4.98%).  Domestic consumption has been estimated at about 85 to 90 million tonnes (mt).  It may be borne in mind that India is the 3rd largest consumer in the world, after China and the European Union. Though China produces about 121 mt, imports are likely to be around 9 to 9.5 mt this year. India is likely to export about 5.5 mt.
As at the beginning of last year, the total storage capacity of Food Corporation of India (FCI) and state agencies was estimated at 72 mt, consisting of 53 mt of covered space and 19 mt under cover and plinth (CAP).  According to Tejinder Narang, a grains trader and analyst of repute, government needs only 30 mt in the central pool by June 2014 for targeted public distribution system and flour millers. The disposable and exportable surplus may vary between 23 mt  and 28 mt and, at an economical cost of Rs20,000 a tonne, the wheat stocks could be worth Rs56,000 crore or roughly $6 billion!  
The international market price hovers around $270-275 a tonne and India must ensure taking the opportunity to push its export, targeting, particularly the Middle East, Africa and South Asia instead of resorting to "floor price" ideas, which may not work all the time.
One of the well developed markets, for instance, for Indian agricultural products, has been Iran, which has been cooperative and understanding enough to accept, part payment, in rupees, for their oil supplies to India. Indian soya bean production has been estimated at 12.2 mt, out of which as much as 1.91 mt, in the form of soya meal, has gone to Iran, which has become the largest buyer.  Japan and the European Union (EU) also imported the soya meal.  In view of the very large harvests of soya bean in both Brazil and Argentina, reported in the press, it is in our interest to press ahead with supplies to the traditional Indian markets of Iran, Japan and EU, and the advantage gained so far, should not be lost, should the Latin American suppliers resort to push the prices down!
In the meantime, there has been a lot of debate about the excess sugar in the country and the urgent need to export raw sugar. The industry sought the government assistance for subsidy, and to overcome various troubles faced, the Food Ministry proposed an export subsidy of Rs2,000 per tonne, while Sharad Pawar, Agriculture Minister recommend Rs3,500 which, finally, was settled at Rs3,333 by the Cabinet Committee for Economic Affairs, confirming that this rate will be reviewed after2 million tonnes have been shipped out of the country.  This subsidy is likely to result in our total raw sugar export of about 4 mt.
One other area, where success has been noticed, is in the production of pulses in the country, which has now reached a record 19.8 mt in 2013-14 (estimates) against 18.4 mt last year. Gram or Chana harvest has also been projected to reach 9.8 mt (against 8.8 mt).  The only fly in the ointment has been the ban on export of pulses (except for kabuli chana) for the last several years. This ban should now be lifted, without any fear that our competitors may undermine our sales efforts. The production of pulses the world over has increased.
The most important thing to remember is the irrefutable fact of the very large number of Indians living and working in the Middle East.  While exact figures are not available, millions of them toil in the harsh climate there and remit their hard earned foreign exchange back to the country. It is especially for them, there needs to be a consideration of relaxation of rules pertaining to what they need, pulses or other items of day to day use, and such bans should not apply!
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


Sensex, Nifty may rally again: Thursday closing report

Nifty should rise above 6,115 gaining some strength

Thursday’s fall on the Indian bourses wiped off most of the gains of the past two days and brought a halt to the four-day winning streak. The fall followed from the weakness in the Asian indices and weak closing of the US market. Asian stocks declined Thursday as a private survey showed a faster-than-estimated drop in China's manufacturing in February. US indices were pulled down after the minutes from the Federal Reserve's policy setting meeting revealed little consensus about when short-term rates would begin to rise.


The BSE 30-share Sensex opened at 20,661 while the NSE Nifty opened at 6,127. The indices moved in a narrow range. The Sensex moved between 20,522 and 20,663 and closed at 20,537 (down 186 points or 0.90%), while Nifty moved in the range of 6,086 and 6,129 and closed at 6,091 (down 61 points or 1%). NSE recorded a volume of 50.51 crore shares.


The International Monetary Fund, in a staff report prepared for central bankers and finance ministers from the Group of 20, said on Wednesday that significant downside risks remain for the world economy.


US indices closed lower. Federal Reserve policy makers backed away from their year-old commitment to consider raising interest rates when unemployment falls below 6.5%. Minutes of their January meeting showed that several policy makers also said that in "the absence of an appreciable change in the economic outlook, there should be a clear presumption in favour" of continuing to trim the Fed's bond purchases by $10 billion at each meeting.


Atlanta Federal Reserve President Dennis Lockhart said he expects a mid-2015 interest-rate hike.


A larger-than-expected drop in home construction in January also weighed on sentiment. Construction on new US homes tumbled 16% in January to a seasonally adjusted annual rate of 880,000, with drops for single-family homes and apartments, according to Commerce Department.


Except for Jakarta Composite (up 0.12%) all the other Asian indices closed in the red. Nikkei 225 was the top loser (2.15%).


A Chinese manufacturing index fell to the lowest level in seven months in February, adding to challenges for Communist Party officials grappling with risks to the financial system from trust defaults and soured loans. The preliminary February reading of 48.3 for a Purchasing Managers' Index released by HSBC Holdings Plc and Markit Economics compared with January's final figure of 49.5.


Japan's trade deficit widened to a record in January on the back of surging import costs. The 2.79 trillion yen ($27.3 billion) shortfall reported by the Ministry of Finance in Tokyo today. Imports rose 25% from a year earlier and outbound shipments gained 9.5%.


Singapore's economy expanded last quarter after a pick-up in manufacturing at the year end, with the government predicting an improvement in overseas demand in 2014 amid a global recovery. Gross domestic product rose an annualized 6.1% in the three months through December from the previous quarter, when it climbed a revised 0.3%, the trade ministry said in a statement today.


European indices were trading in the red while US Futures were trading marginally lower.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)