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The Operations of Foreign Banks
The Operations of Foreign Banks
banks, are mainly confined to metropolitan areas. Foray of foreign banks depends on
been set up to endorse applications for entry and expansion. Foreign banks, in the wake of
the liberalization era, are looking to expand and diversify. Some of the leading foreign banks
that operate in India are Citibank, Standard Chartered Grindlays Bank, Hong Kong Shanghai
Banking Corporation, Bank of America, Deutsche Bank, Development Bank of Singapore and
Functioning of Public Sector Banks (PSBs), which are yet to achieve computerization
across the board, is at a relative disadvantage when compared to the private sector, which is
offering state-of-the-art facilities such as ATMs, doorstep banking, banking on phone, and
net banking. PSBs also suffer from huge costs of labor and low levels of automation. At this
rate, it may not be long before new channels devised by private banks effectively surpass the
This apart, the problems which have assumed enormous proportion today as far as
Public Sector banks are concerned are ballooning NPA levels, declining margins, poor credit
off-take, high overheads, and lack of good quality assets. Banks are sticking to reliable
borrowers for fear of bad debts. In fact, banks largely invest in government securities, which
have zero risk. With GOI being the single largest borrower, the yields on these securities
same time it also wants to retain the controlling stake. This, it is feared, is not going to solve
Corporate governance and self-regulation are the ground rules for the private sector.
Government interference is not preferred. While some private banks such as ICICI Bank, UTI
Bank and IDBI Bank have financial institutions backing them, others are opting for foreign
Private banks have emerged relatively strong, with about 60% growth reported in
net profits in the year ended March 2000. With a net profit of Rs.120 crores (+46%), HDFC
was the clear leader. IDBI Bank, however took the cake by doubling its net profit, which
reached Rs.60.99 crores in March 2000.The jump in profits can mainly be attributed to non-
investments.