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According to one report, 50 per cent of external commercial borrowings (aggregating $80 billion) are now funded by Indian banks, up from 30 per cent a few years ago. This just might be true for incremental business, if Indian banks have begun to play a more active part in a business in which they have long been involved as intermediaries.
Though hard data on ‘foreign' lending are not available, there is definite evidence of increased foreign borrowings by banks.
RBI figures show a sharp rise in inflows of ‘banking capital' in recent months. Net of NRI deposits, there was an inflow of $15.4 billion during April-September 2011, as against a total of $14.2 billion for the past 20 years.
Asked about these figures, an RBI spokesman replied that the increased ‘capital' in fact represents ‘foreign borrowings by banks'.
As we know, during calendar 2011, FIIs invested a record Rs 40,000 crore in government and corporate debt (Rs 20,000 crore of it in December), while steering clear of equities. And now it turns out that foreign investors have begun lending much larger sums to banks.
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