Foreign banks are those banks whose branch offices are in India but they are incorporated outside India, and have their head office in a foreign country. These banks were allowed to set up their subsidiaries in India from the year 2002. They have to operate their business by following all the rules and regulations laid down by the RBI - Reserve Bank of India. They have to pay more attention to the priority sector by giving them a special place in bank lending. These banks are expected to follow all the banking regulations, just like any other domestic banks. The foreign banks can operate in India only, if they have a sound financial status. They must have a minimum of 25 million US dollars in minimum 3 branches. The first branch and the second branch must have 10 million US dollars each. The third branch should have a minimum of 5 million US dollars. The foreign banks are permitted to open up more branches in the country, if the performance of the bank is more than satisfactory and it matches the criteria laid adopted by the domestic banks. There are 40 foreign banks from 21 different countries operating in India. The business is conducted with the help of more than 205 branches. These branches are located in more than 15 states which includes union territories. Apart from these banks there are representative branches operating in India from 12 different countries.
Foreign banks who wish to open up branches in India have to apply to the RBI. These banks should be able to satisfy the RBI regulations. The banks should also get permission from their home country to set up branches in India. Other factors that are considered while approving the application of setting up the presence of foreign banks in India are as follows:
Financial soundness of the foreign banks
Economic and political relations between the home country of the foreign banks and India.
International ranking of the bank
Home country ranking of the bank
International presence of the bank
Rating given to the bank by international rating agencies
Foreign banks have played an important role in the Indian economy, especially in the priority sectors. Globalization has compelled the banking sector to reach out to more customers in order to expand their business. This meant opening banking businesses even in the foreign countries. Many of the private banks were interested in expanding their business all over the world. They opened up branches across the globe to serve large number of customers, and also improve service to the existing customers. This change was a blessing for India. Currently, the foreign banks are growing tremendously in India.
The services provided by these banks are very impressive. The presence of these banks in India brought a lot of technical development. Banks of all categories, be it a domestic bank or an international bank, started using the latest technologies to provide better service to the customers. The technological development saved a lot time of the customers as well as the bankers. They introduced innovative and unique banking practices in India.
The previous years witnessed cut throat competition in the banking sector with the presence of foreign banks. The competition has compelled banks to come up with something new that no other bank can provide to the customers. Banks are partially a part of the service industry. The main objective of all the banks was to provide a better service to a large number of customers and look after their financial requirements. Customer satisfaction was a priority for domestic banks as well as the foreign banks.
Here is a list of some foreign banks operating in India.
ABN Amro Bank NV
Abu Dhabi Commercial Bank Ltd.
American Express Bank Ltd.
Arab Bangladesh Bank Ltd.
Banca di Roma
Banco Bibao Vizcaya Argentina SA
Bank of America NA
Bank of Ceylon
Bank of Muscat S.A.O.G
Barclays Bank
BNP Paribas
China Trust Commercial Bank
Citibank NA
DBS Bank Ltd.
Depfa Bank PLC
Deutches Bank
HSBC - Hong Kong and Shanghai Banking Corporation
JP Morgan Chase Bank
National Australia Bank
Oman International Bank S.A.O.G
Overseas Chinese Banking Corporation Ltd.
Scotia Bank
Standard Charted Bank
State Bank of Mauritius Ltd.
Taib Bank
The Siam Commercial Bank
UFJ Bank Ltd. (The Sanwa Bank Ltd.)