Foreign Banks in India

There are two ways of presence of foreign banks in India. First is the branch form of presence which means that the foreign bank has its physical branch in India. Second is the presence through Representative Office in India, which is not actually a branch.

Foreign Banks with Branches in India

As of November 2018, India has 45 foreign banks with total 286 branches operating in India. These are listed in below table:

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Foreign Banks with Representative Office

Currently, 40 foreign banks are operating as representative offices in India. Apart from that, few foreign banks have entered into India via the NBFC route also.

What is the share of foreign banks in the banking business in India?

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.

What is the RBI regulation policy towards Foreign Banks in India?

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:

  1. Banks have to adhere to mandated Capital Adequacy requirements as per Basel Standard.
  2. They should have to meet minimum capital requirement of Rs. 5 billion.
  3. They should need to maintain minimum CRAR at 10%
  4. Priority sector targets for foreign banks in India is 40%.

Further, the foreign banks have to follow other norms as set by Reserve Bank of India.


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