Role of foreign banks in emerging economies (india)
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Transcript of Role of foreign banks in emerging economies (india)
Role of foreign banks in emerging economies (India)
Foreign banks in India
Introduction
29 foreign banks are present in India through 273 branches
There are 871 offsite ATM’S
Besides there are 34 foreign banks operating through representative
offices
FACTS OF SOME FOREIGN BANKS IN INDIA
Standard Chartered bank is the oldest foreign bank that came to India i.e. 150 years ago, now operates the maximum number of branches i.e.
83
Follows HSBC which entered in India in the year 1867, with 47 branches
CITIBANK has the 3rd largest branches in India i.e.39
Follows ABN AMRO with 28 branches
FOREIGN BANKS IN INDIAForeign Banks operating in India are banks of other
countries having their branches in India. At present, there are about 50 foreign banks having a total of more than 250 branches in most of the big cities of the country.
These foreign banks have a flourishing business and earn large profits.
Some economists are of the view that foreign banks should not be allowed to operate in the country. But
permission to such banks to operate in the country is unavoidable on the basis of reciprocity. This is certainly
the view of the Reserve Bank of India, and it is justified by the success of Indian banks operating in foreign countries.
List of foreign banks having representative offices in India
S. No Name and address of the representative office
Country of incorporation
Centre Date of opening
1. The Bank of New York USA Mumbai 27.10.1983
2. National Bank Australia Ltd
Australia Mumbai 3.11.2006
3 Raiffeisen Zentral Bank Osterreich AG
Austria Mumbai 1.11.1992
4 Fortis Bank Belgium Mumbai 6.10.1987
5 Bayerische Hypo - und Vereinsbank
Germany Mumbai 12.07.1995
6 Emirates Bank International
Dubai Mumbai 16.06.2000
7 Credit Industriel et Commercial
France New Delhi 1.04.1997
Importance of foreign banks Latest
technology Latest
ranking Made Indian
banking system more competitive and efficient.
Major foreign banks in India
ABN-AMRO BANK ABU DHABI COMMERCIAL BANK
Major foreign banks in India
AMERICAN EXPRESS BANK BNP PARIBAS
Major foreign banks in India
CITIBANK HSBC LTD
Major foreign banks in India
BARCLAYS BANK DEUTSCHE BANK
ROLE OF FOREIGN BANKS IN INDIAForeign banks tend to increase the efficiency of the local
banking system, bring in more sophisticated financial services
The main contention—that foreign banks account for just 5% of India’s loan market—is misleading. Local banks have been
on a borrowing spree abroad. They raised more than $12 billion between 2003 and 2006, which is one reason that India
could support credit growth of 28.1% despite the fact that deposits grew at only 18.5%.
Do we need foreign banks in India????
FOREIGN BANKS AND CREDIT MARKETS
IMPACT OF FOREIGN BANK ON FINANCIAL AND ECONOMIC STABILITY
Foreign bank entry may enhance financial stability by permitting greater diversification of exposures
and by improving risk management. It could also contribute to making more capital or liquidity
available when needed.A foreign bank presence could be particularly valuable during periods of banking stress,
to diversifyagainst country-specific (systemic) risks that can severely impair the capital of the
banking system.The fact that foreign banks are diversified across different countries could well change
the cyclicalbehaviour of the host country financial system since foreign banks are less sensitive to
host countrycycles. How valuable this proves to be in practice depends on how closely the domestic
economiccycle is correlated with the global economy. Counter cyclical changes in foreign bank
lending couldalso help to amplify the effectiveness of monetary policy. Foreign banks could also be
more resilientduring currency crises. Not only do they tend to be more aware of currency
mismatches, they can alsocall on their parent organisations to provide foreign currency liquidity.
FINANCIAL PERFORMANCE OF FOREIGN BANKS IN
INDIA
Item 2005-06 2006-07 variation
Absolute percentage
A.INCOME (i + ii) 17,662.07 24,959.06 7293.99 41.03
i)Interest Income of which : Interest on Advance Income on Investment ii) Other Income of which : Commission &Brokerage
12,290.827379.753,950.575,371.252,872.39
18,018.9210,941.495,432.046,937.143,789.29
5728.093,561.741,481.461,565.90916.89
46.6048.2637.5029.1531.92
B.EXPENDITURE (i+ii+iii) 14,593.47 20,370.90 5,777.43 39.59
i)Interest Expended of which :Interest on Depositsii) Provisions and Contingencies of which : Provision for NPAsiii) Operating Expenses of which : Wage Bill
5,149.503,161.173,589.84
96.435,854.132,005.17
7,615.024,758.245,014.65332.48
7,741.223,081.11
2,465.531,597.071,424.81236.06
1,887.091,075.94
47.8850.5239.69
244.8132.2453.66
C.PROFIT i) Operating Profit
ii) Net Profit 6,658.443,068.60
9,599.814,585.16
2,941.371,516.56
44.1849.42
D.NET INTEREST INCOME/MARGIN 7,141.33 10,403.89 3,262.57 45.69
E.TOTAL ASSETS 1,99,358.03 2,78,016.49 78,658.46 39.46
INCLUSIVE GROWTH IN INDIA
RECENT STRATEGIES IN INCLUSIVE BANKING
CASE STUDY
Article 13 criteria for selectionBUSINESS INSIGHTS
1)Turnover 2)Core Service
3)Employees 4)Vision
TRANSFORMATION 1)Overarching values
2) Community investment in emerging markets
3)Micro-finance 4)Partnerships
5)Measuring performance
Conclusion
THE END