Page 386 - Contributed Paper Session (CPS) - Volume 4

CPS2444 Avijit Joarder et al.
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the financial system . Banking reforms gradually transformed Indian banking
landscape into level playing fields. In addition, the process enabled the
banking system as stable and prosperous financial entities not only in India
but also in foreign countries (Banga and Das [2012]). Foreign inflow and
outflow of capital were not limited to banking sector also but also to non-bank
sector as well. The non-bank sector remained active in placing their funds
(deposits) with banks in foreign countries and foreign banks too built up
confidence in lending (loans) to Indian non-bank sector.
While Indian banking system was recovering by mid-1990s, the Asian
Financial Crisis (AFC) hit in the South East Asian countries. This led to loss of
demand and confidence throughout the South-East Asian region. While the
global impact of the Asian crisis was not possible to judge, it led to increased
global attention to the health of financial institutions, particularly banks, and
it was felt necessary to collect relevant data to help monitoring overall global
situations. India and several other developing countries as well as important
offshore financial centres were encouraged by the BIS to collect and compile
international claims and liabilities of internationally active banks. Therefore, a
concerted effort was made to improve the timeliness, frequency and coverage
of the BIS international banking statistics. This led to increase in the global
coverage of the BIS statistics.
The Global Financial Crisis (GFC, 2007-2009) underscored the need for
granular data on funding and lending activities of both globally and regionally
important banking systems. In a number of recent articles of post-Asian crisis
developments, researchers at the BIS concluded that countries affected during
the Asian crisis have gradually improved their financial conditions (Avdjiev et.
al. [2018]). During past 20 years the cross-border claims of BIS reporting banks
on the emerging Asian countries more than quadrupled, totalling $2 trillion in
end 2017(Koch and Remolona [2018]). The latest BIS article in December 2018
Quarterly Review stated that over the past decade, the cross-border activity of
banks from emerging market economies (EME) has been growing at a faster
pace than that of banks from advanced economies, mainly driven by
increasing EME-to-EME interlinkages (Eugenio, Koch and Pradhan [2018]). It
has been reported that as of end-2017, Indian banks located abroad in the LBS
reporting countries had lent 84% or $43.7 billion out of $52 billion, to non-
resident counterparties and rest 16% from those located in India.
In view of the above background, we explore the RBI and the BIS statistics
offering perspectives on following aspects:
· Longer-term development in business by scheduled commercial banks
in India, including business by Indian-owned banks in foreign
countries.

3 M. Narasimham, the former Governor of RBI (from 2 May 1977 to 30 November 1977)
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