Foreign lending activities of 6 Indian banks jumped 7-33% in FY22, data shows

The overseas loan portfolio of six Indian banks grew by 7-33% in FY22, mainly due to a recovery in foreign exchange, which boosted demand for foreign exchange funding. In any case, external commercial borrowing – loans taken out by Indian organizations abroad – has been appeased. This is because they tapped into domestic sources due to the modest liquidity accessible at home amid abundant liquidity. The State Bank of India (SBI) detailed a 15.42% move in its international loan portfolio to Rs 4.12 trillion in FY22.

Ashwini Kumar Tewari, Managing Director (International Banking, Subsidiaries), SBI, said the bank expects momentum (around 15%) in international lending expansion in FY23 as reported. saw in FY22. This with trade finance and factoring support. It provides supply chain finance in partnership with major banks on their platforms.

Bank officials said India-focused firms had a predominant share – financing exports and imports as well as term lending. Along with this, lenders also finance well-rated companies in local markets. However, the size of the loan and the share in local businesses are low.

The intention is to generate more business from Indian companies on its own platform. On demand for overseas loans from Indian firms, bank officials said it would depend on how the cost of funds develops in light of rising interest rates in the regions.

ICICI Bank – on a call with analysts – said the overseas loan book, in dollars, grew 5.9% year-on-year (YoY) and was flat sequentially on 31 March 2022.

Indian companies would raise funds overseas if the cost of currency hedging plus lending rates became advantageous relative to the cost of funds in the domestic market.

The year-on-year increase in these banks’ overseas loan portfolio was mainly due to the increase in India-related trade finance portfolio. The foreign loan portfolio represented 4.8% of the overall loan portfolio as of March 31, 2022.

Summary of news:

  • Foreign lending activities of 6 Indian banks jumped 7-33% in FY22, data shows
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