Page 387 - Contributed Paper Session (CPS) - Volume 4

CPS2444 Avijit Joarder et al.
· Nature of international exposures of Indian banking system.
· Cross-border capital inflow and outflow of India through banks in
foreign countries, with a special focus on foreign assets of Indian non-
bank sector.
· Longer-term behaviour of certain indicators in Indian context
compared to select Asian countries viz., Thailand, Indonesia, Malaysia,
Philippines and Korea .
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2. Methodology
In order to analyse long-term developments in Indian banking business,
we rely on balance sheet of Scheduled Banks comprising both Indian and
foreign owned banks. The RBI compiles such data and publishes on its website.
The balance sheet data also provide breakdown of business by foreign
affiliates of Indian banks. A subset of Scheduled Banks also reports
international banking business, and we consider such statistics to analyse
cross-border banking business by banks in India with counterparties in foreign
countries. The IBS of India is in fact a part of global initiative by the BIS that
among others compiles international banking statistics of banks operating in
about four dozen countries around the world. The IBS statistics are useful to
analyse exposure of international banks in foreign countries with their
counterparties (banks and non-banks) in India. In addition, we use country-
level data on foreign exchange reserves, GDP and the BIS international debt
securities (IDS) to measure and understand banks’ behaviours at different
periods during the past 30 years.
It is widely acknowledged that the BIS international banking and financial
statistics are the best source for analysis of cross-border capital flows. In
particular, the locational banking statistics (LBS) measures gross cross-border
claims and liabilities, including inter-office positions, of banking offices
resident in a reporting country with their counterparts in other countries. The
LBS also constitutes the key source of information on the instruments,
currency, bank nationality, counterparty sector and counterparties’
geographical composition of balance sheets positions. On the other hand, the
consolidated banking statistics (CBS) measure worldwide-consolidated claims
of banks headquartered in reporting countries, including claims of their
foreign affiliates but excluding inter-office claims. In addition to LBS and CBS,
the IDS statistics is a security-by-security data set built by the BIS using
commercial data provider’s information. The IDS are issued under
international law or the debt securities that are issued outside the local market
of the country. The statistics capture euro bonds and foreign bonds and

4 We did not consider other jurisdictions such as Hong Kong SAR and Singapore as they are
different in terms of financial activities (Maria [2009], Raymond and James [2004])
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