Wto and Indian Banking

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WTO and Indian Banking-Challenges of 2009

Impact of WTO commitments on Indian banking Industry

Prof. S.Visalakshi
Faculty – Banking and Finance, Bangalore Management Academy (BMA).

Naman Kumar Gupta, MPFB II, Bangalore Management Academy (BMA)
Kartheek Yerolla, MPFB II, Bangalore Management Academy (BMA)
Mahesh Bondili, MPFB II, Bangalore Management Academy (BMA)


India had a deep rooted and well structured banking system since independence. After nationalization of the banks, the focus of the Indian banking System has been two fold - commercial and social.
While meeting their commercial considerations like profitability, viability of operations and financial stability the banks have also been focusing on
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Foreign banks also enjoy deposit insurance at the same premium and terms extended to the Indian banks.

4. The market share of foreign banks in Indian foreign exchange business is as high as 52%.

5. The net profit of foreign banks per branch in the year 2007 was Rs.11.99 crores as against Rs. 33 lakhs for domestic public sector banks. (Refer exhibit 4 of Appendix 1).

6. The market share of foreign banks in off balance sheet business in 2007 was as high as 72.66%. (Refer exhibit 3 of Appendix 1)

As may be inferred from the above mentioned facts and figures, it is not an uphill task for RBI or the Government of India to uphold their commitments to WTO. In fact, one can logically say that the commitments have already been met if not far exceeded.

B. Impact of foreign banks on Indian economy

The Indian economy has recorded impressive growth figures in the last few years. With a GDP growth rate of 9%, the Indian industry and the services sector are increasingly tapping global markets and streamlining their activities to gain a competitive edge on a global scale. There is a growing demand for bank credit by the domestic industry. For the growth of the industry and services sector, it is imperative to have access to the world banking and financial centers.

Indian companies are going in for mergers and acquisitions which have to be financed by banks. State Bank of India
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