Role of foreign banks in emerging economies (india)Presentation Transcript
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. 83Follows HSBC which entered in India in the year 1867, with 47 branches
Foreign Banks operating in India are banks of other countries having their branches in India. At present, there are about 50foreign 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.
S. No Name and address of the representative Country Centre Date of opening office of incorporation1. The Bank of New York USA Mumbai 27.10.19832. National Bank Australia Australia Mumbai 3.11.2006 Ltd 3 Raiffeisen Zentral Bank Austria Mumbai 1.11.1992 Osterreich AG 4 Fortis Bank Belgium Mumbai 6.10.1987 5 Bayerische Hypo - Germany Mumbai 12.07.1995 und Vereinsbank 6 Emirates Bank Dubai Mumbai 16.06.2000 International 7 Credit Industriel et France New Delhi 1.04.1997 Commercial
Importance offoreign banks Latest technology Latest ranking Made Indian banking system more competitive and efficient.
ABU DHABIABN-AMRO BANK COMMERCIAL BANK
AMERICAN EXPRESSBANK BNP PARIBAS
CITIBANK HSBC LTD
BARCLAYS BANK DEUTSCHE BANK
Foreign banks tend to increase the efficiency of the local banking system, bring in more sophisticated financial servicesThemain contention—that foreign banks account for just 5% of India’s loanmarket—is misleading. Local banks have been on a borrowing spree abroad. They raised more than $12 billion between 2003 and 2006, which is onereason that India could support credit growth of 28.1% despite the fact that deposits grew at only 18.5%.
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 country cycles. 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 could also help to amplify the effectiveness of monetary policy. Foreign banks could also be more resilient during currency crises. Not only do they tend to be more aware of currency mismatches, they can also call on their parent organisations to provide foreign currency liquidity.
Item 2005-06 2006-07 variation Absolute percentageA.INCOME (i + ii) 17,662.07 24,959.06 7293.99 41.03i)Interest Income 12,290.82 18,018.92 5728.09 46.60 of which : Interest on Advance 7379.75 10,941.49 3,561.74 48.26 Income on Investment 3,950.57 5,432.04 1,481.46 37.50ii) Other Income 5,371.25 6,937.14 1,565.90 29.15 of which : Commission &Brokerage 2,872.39 3,789.29 916.89 31.92B.EXPENDITURE (i+ii+iii) 14,593.47 20,370.90 5,777.43 39.59i)Interest Expended 5,149.50 7,615.02 2,465.53 47.88 of which :Interest on Deposits 3,161.17 4,758.24 1,597.07 50.52ii) Provisions and Contingencies 3,589.84 5,014.65 1,424.81 39.69 of which : Provision for NPAs 96.43 332.48 236.06 244.81iii) Operating Expenses 5,854.13 7,741.22 1,887.09 32.24 of which : Wage Bill 2,005.17 3,081.11 1,075.94 53.66C.PROFIT i) Operating Profit 6,658.44 9,599.81 2,941.37 44.18 3,068.60 4,585.16 1,516.56 49.42 ii) Net ProfitD.NET INTEREST INCOME/MARGIN 7,141.33 10,403.89 3,262.57 45.69E.TOTAL ASSETS 1,99,358.03 2,78,016.49 78,658.46 39.46
Article 13 criteria for selection BUSINESS 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