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Foreign Banks in India

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Foreign Banks in India

shape Introduction

"A foreign bank is a type of International Bank that is obligated to follow the regulations of both the home and host countries. Because the foreign banks' loan limits are based on the parent bank's capital, foreign banks can provide more loans than subsidiary banks." Foreign Banks are present in India either as representative offices or as branches. A bank may choose to open foreign bank branches to meet the needs of multinational corporate customers.
The branch form of presence which means that the foreign bank has its physical branch in India. Second is the presence through Representative Offices in India, which are not actually a branch. Foreign banks often have correspondent banking relationships with domestic banks and provide a useful platform for foreign banks to access opportunities for foreign currency lending to Indian corporate and financial institutions. Foreign banks are defined as banks from a foreign country working in India through branches. RBI has provided rules and guidelines for a foreign bank to establish and operate in India. [Credit Reports - How Often Should You Check Yours?]

shape Eligibility

There is an eligibility criterion on the basis of capital for a foreign bank to operate in India. A Foreign Bank must have at least 5 billion rupees towards capital on establishment. Also, a Foreign Bank must credit 18 % of net ANBC (‘adjusted net bank credit’ – which is total investment made by bank on non-governmental securities.) towards agricultural loans.

shape Operation

The Foreign banks can have different modes of operation in India. As mentioned above branch mode or Subsidiary mode which is known as WOS (Wholly owned Subsidiary). They can either start the bank branches in the initial setup or later convert them to WOS. To function as a WOS there are several factors to be met.
  • Proof of Economic stability and financial soundness to be provided by the bank
  • The bank must provide necessary documents to show the proper ownership.
  • The bank must be rated by any International rating agency.
  • Bank must have a risk management team.

  • shape Market Share

    Foreign Banks account for less than 1% of the total branch network in the country. However, they account for approximately 7% of the total banking sector assets and around 11% of the profits. Most of the foreign banks in India are niche players and their business is usually focused on trade finance, external commercial borrowings, wholesale lending, investment banking and treasury services. Some other banks are confined to private banking and wealth management.

    shape RBI Policy

    RBI policy towards presence of foreign banks in India is based upon two cardinal principles viz. reciprocity and single mode of presence. By reciprocity, it means that overseas banks are given near national treatment in India only if their home country allowed Indian banks to open branches there without much restrictions. By single mode of presence, it means that RBI allows either of the branch mode or a wholly owned subsidiary (WOS) mode in India. Some other policy guidelines of RBI towards foreign banks are as follows:
  • Foreign Banks have to adhere to mandated Capital Adequacy requirements as per Basel Standard.
  • Foreign Banks should have to meet minimum capital requirement of Rs. 5 billion.
  • Foreign Banks should need to maintain minimum CRAR at 10% Priority sector targets for foreign banks in India is 40%.
  • Foreign banks have to follow other norms as set by Reserve Bank of India.

  • shape Foregin Banks

    As of November 2018, there are 45 foreign banks with 286 branches and 40 banks from 22 countries operating as representative offices. Although the discussion around differential licensing is still just coming into existence and beginning to display signs of future potential.
    There is one foreign bank present as a credit card issuer with limited banking licence. In addition, a number of foreign banks have also entered India via the NBFC route, while a considerable number have set up captive centres in the country. Foreign banks have less than 1% of the total branch network but about 7% of the total banking sector assets and a sizeable 11% of profits. With 334 branches in all, the share of foreign bank branches is less than 1%.
    Bank name Operating Branches
    Australian Bank
    Australian and Newzeland Banking group
    Commonwealth Bank of Australia
    National Australian Bank
    Westpac Banking corporation
    Bahrain Bank Bank of Bahrain and Kuwait
    Bangladeshi Bank
    AB Bank
    Sonali Bank
    Belgian Bank Antwerp Diamond Bank
    Canadian Bank Bank of Nova Scotia
    Chinese Bank Industrial and commercial Bank of china
    French Bank
    BNP paribas
    Credit Agricole
    Societe Generale
    German Bank Deutsche Bank
    Indonesia Bank Bank Internasional Indonesia
    japanese Bank
    Mizuho corpporate Bank
    sumitomo mitusui Bank
    Bank of Tokyo-Mitsubishi
    Mauritian Bank state Bank of Mauritius
    Dutch Bank Rabo Bank
    Qatari Bank Doha Bank
    Russian Bank
    Sber Bank
    Omani Bank HSBC Bank Oman
    Singaporean Bank
    DBS Bank
    United overseas Bank
    South African Bank First Rand Bank
    South Korean Bank
    Shinhan Bank
    Woori Bank
    Srilankan Bank Bank of ceylon
    Swiss Bank
    Credit suisse
    UBS AG
    Taiwanese Bank Chinatrust commerical Bank
    Thai Bank Krung Thai Bank
    UAE Bank
    Abu Dhabi Commercial Bank
    Mashreq Bank
    First Abu Dhabi Bank PJSC
    Emirates Bank NBD
    UK Bank
    Barclays Bank
    Standard Charted Bank
    Royal Bank of Scotland(RBS N.V)
    US Bank
    American Express
    Bank of America
    Citi Bank
    JP.Morgan chase Bank
    Foreign Banks Offices in India
    Austrian Bank Raiffeisen Zentral Bank
    Belgian Bank KBC Bank
    Canadian Bank
    Royal Bank of Canada
    Toronto Dominion Bank
    French Bank
    Credit Industriel et Commercial
    German Bank
    Commerz Bank
    DZ Bank
    Landes Bank Baden-Württemberg
    Italian Bank
    Banca Monte dei Paschi di Siena
    Banca Popolare di Milano
    Banca Popolare di Vicenza
    Intesa Sanpaolo
    UBI Banca
    Malaysian Bank CIMB
    Nepalese Bank Everest Bank
    Norwegian Bank DNB ASA
    Portuguese Bank Caixa Geral de Depositos
    Russian Bank
    Gazprom Bank
    Promsvyaz Bank
    Vnesheconom Bank
    South Korean Bank
    Industrial Bank of Korea
    Kookmin Bank
    Korea Exchange Bank
    Spanish Bank
    Banco de Sabadell
    Banco Bilbao Vizcaya Argentaria
    Caixa Bank
    Sri Lankan Bank Hatton National Bank
    Swedish Bank
    Skandinaviska Enskilda Banken
    Zurcher Kantonal Bank
    Taiwanese Bank
    Bank of Taiwan
    Mega International Commercial Bank
    Turkish Bank Bank Asya
    UAE Bank
    Emirates NBD
    First Gulf Bank
    UK Bank Duncan Lawrie
    US Bank
    Bank of New York Mellon
    Wells Fargo Bank
    Singapore Bank Development Bank of Singapore
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