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RBI's Monthly Bulletin For December 2017

Dec 11, 2017: The Reserve Bank of India today released the December 2017 issue of its monthly Bulletin. The Bulletin includes fifth Bi-monthly Monetary Policy Statement for the Year 2017-18, Resolution of the Monetary Policy Committee (MPC), Reserve Bank of India, Speeches by the Top Management, Two Articles, Current Statistics, and Indicative Calendar for Bulletin Articles, 2018. The two articles are: I. Anatomy of India’s External Debt: Assessment of Key Trends; and II. Survey on International Trade in Banking Services: 2016-17.

I. Anatomy of India’s External Debt: Assessment of Key Trends

The article provides a snapshot of the developments relating to India’s external debt in 2016-17 and assesses its changing profile since the early 1990s.

Major highlights of the article are as follows:
  • India’s external debt stock was placed at US$ 471.9 billion at end-March 2017, recording an annual decline for the first time after 2001-02.
  • Short-term debt by residual maturity decreased from US$ 206.9 billion (42.7 per cent of total external debt, and 57.4 per cent of foreign exchange reserves) at end-March 2016 to US$ 195.9 billion (41.5 per cent of total external debt, and 52.9 per cent of foreign exchange reserves) at end-March 2017, due to large scale repayment of FCNR(B) deposits raised by banks under a special swap scheme during September to November 2013.
  • In post-economic reforms period, India’s external indebtedness exhibited compositional shift from government to non-government debt, and from concessional to non-concessional debt; there has been a rapid rise in short-term debt (by original maturity) since mid-2000s, with trade credit debt being the fastest growing component.
  • India’s external debt service ratio remains far modest relative to the 1990s.
  • In terms of external debt to GDP ratio, India’s position is better than its peer emerging market economies (EMEs) such as Brazil, Russia, South Africa, Mexico, Malaysia, Indonesia, Thailand.

II. Survey on International Trade in Banking Services: 2016-17.

This article provides information on international trade in banking services (ITBS) pertaining to overseas branches/subsidiaries of Indian banks and foreign banks operating in India. It is based on 2016-17 round of the annual ITBS survey, which covered 192 overseas branches, 325 overseas subsidiaries of Indian banks and 286 branches of foreign banks operating in India. The survey collects information on the profile of their fund/non-fund based business as well as income, expenditure and profitability.

Major highlights of the article are as follows:
  • The number of branches and employees of foreign banks in India declined during 2016-17 whereas there was a marginal increase in overseas branches of Indian banks.
  • Consolidated balance sheet of all bank-groups with cross-border presence (viz., overseas branches and subsidiaries of Indian banks and foreign banks operating in India) shrunk in 2016-17, reflecting the moderate level of global economic activities.
  • Credit extended by all bank groups declined during 2016-17 whereas deposit mobilisation increased marginally for foreign banks in India but deteriorated for the other two categories of banks.
  • Lower interest income of overseas branches of Indian banks resulted in decline in their total income in 2016-17 despite a rise in fee income, and their expenditure exceeded income during the year.
  • Profitability ratio improved for foreign banks operating in India due to higher increase in non-interest income whereas it plummeted for overseas branches and subsidiaries of Indian banks.

The data relating to the results of Survey on International Trade in Banking Services: 2016-17 were earlier released on the RBI website vide Press release No. 1207/2017-18 on November 1, 2017.

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