Banks' foreign exposure up

The international liabilities and assets of banks in India increased during the quarter ended March 2005. The liabilities continued to be almost double the international assets. The international liabilities rose by Rs 16,615 crore at the end of March 2005, compared to its position in the previous quarter.

The increase in liabilities was primarily due to the considerable rise in NRE rupee deposits, foreign currency borrowings, FCNR(B) deposits and capital/remittable profits of foreign banks in India, the Reserve Bank of India (RBI) said in its monthly bulletin for November.

The international assets of banks recorded growth of Rs 5, 648 crore for the March 2005 quarter, over the position in the previous quarter. The growth was due to considerable increase in foreign currency loans to residents, outstanding export bills and investment in other debt securities, the RBI said.

The international claims of banks on India (i.e., India's liabilities) stood at $44.9 billion at the end of March 2005, which was $11.7 billion more than the position a year ago, whereas the international claims of Indian banks on other countries (i.e., India's assets) stood at $17.0 billion "� less by $0.5 billion over the position a year ago.

The consolidated foreign claims (the international claims of Indian banks including the claims of foreign offices of Indian banks) of domestic banks on ultimate risk basis stood at Rs 78,074 crore at the end of March 2005. The consolidated claims of Indian banks arising from derivatives, guarantees and credit commitments stood at Rs 5,015 crore, Rs 4,291 crore and Rs 186 crore, respectively.

The consolidated international claims of banks on the US accounted for the largest share and continued to rise over the quarters.

The reporting banks preferred short-term lending/investments. The claims with residual maturity of 'up to and including the six months' accounted for the largest share at 73.6 per cent of total international claims.