Foreign banks in India see deposit slowdown; Indian lenders expand overseas

Foreign banks operating in India witnessed a marked slowdown in deposit growth during FY25, expanding by 6.8% compared with 16.4% a year earlier, Reserve Bank of India data revealed.

Total deposits held by these foreign bank branches in India rose to $129.5 billion in FY25, up from $121.2 billion in FY24, equivalent to ₹11.08 lakh crore versus ₹10.10 lakh crore, respectively.

Despite the slowdown in deposits, foreign banks maintained robust credit growth, which edged up to 8.4% in FY25 from 8.1% in the previous year. Fee income for these banks also strengthened, increasing by 9.4%, whereas overseas branches of Indian banks reported a 4.3% rise.

The Reserve Bank noted that over two-thirds of the total fee income stemmed from services such as credit-related products, derivatives, securities and stock trading, forex operations, payments and money transfers, and trade finance.

Indian banks expand global footprint

Indian banks further expanded their overseas operations through subsidiaries and joint ventures, with branch numbers and staff rising by 1.9% and 6.1%, respectively.

Also Read: RBI bulletin: Economy resilient on GST reforms, strong Q1 growth, low inflation

When combined with Indian bank branches abroad, total employee strength increased by 3.4% in FY25. Lending and deposit mobilisation by these overseas branches also improved, registering growth of 5.6% and 9.4% in dollar terms.

Regionally, branches of Indian banks in Hong Kong emerged as the top fee generators, moving from fourth position last year, while UK branches experienced a sharp decline, falling from first to fourth place, RBI noted.

Also Read: RBI skips dollar purchases in July, first time in 11 years; here’s why

Separately, bank credit in India grew 10.3% year-on-year as of September 5, 2025, while deposits rose 9.8% over the same period, RBI data showed.

(With inputs from Moneycontrol)

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