Annexure-IRecommendations of the Working Group on International Banking Statistics The Group made the following recommendations: -
Under the data reporting arrangements in existence at the time of the writing of the Working Group Report, all the requisite details relating to banks’ international assets and liabilities are not reported .The Group was of the view that such information would be useful to the reporting banks as well from the point of view of developing risk management strategies, especially in the context of the liberalization of exchange control and a relatively high measure of freedom given to banks in India to undertake foreign exchange transactions. It would, therefore, be appropriate to introduce a comprehensive return to enable effective monitoring of the international claims and liabilities of the banking system as well as India’s participation in the International Banking Statistics. -
In view of the need to minimise the reporting burden on the banking system arising from multiplicity of returns, the Group strongly recommended that the Reserve Bank should undertake rationalisation/ simplification of existing statistical returns, keeping in view the emerging developments on the technological front. While under the present reporting arrangements, data sharing by different departments is found to be difficult, introduction of Data Warehousing in RBI should render it possible for various user departments in the RBI to share the information reported by banks. Towards this, the Group further recommended the establishment of a Central Data Base Management System (CDBMS) at RBI with access to all the data user departments. Once the CDBMS stabilises, the need to continue with or to modify the proposed comprehensive return may be reviewed. -
As the information being sought is quite comprehensive and as the banks would need some time to put in place necessary arrangements for the purpose, the Group recommended a step-by-step approach for instituting reporting arrangements. The reporting mechanism could be implemented in three stages. As CBS is considered more complex and as most of the banks do not have requisite details for reporting the same at present, initially the reporting could be done in respect of LBS only. Initially, the banks may be asked to provide aggregate information along with details already available with them. Further refinements could be undertaken in a time bound manner. Under the recommended arrangements, there could be a pre-determined implementation schedule for the purpose. The data reporting by banks in the LBS format could begin with the quarter ending December 1999. Further refinements could be undertaken in the LBS data by end December 2000, which could include reporting of country-wise information on all the items under assets and liabilities as also according to nationality of the parent bank. Reporting of full information in the CBS format could begin with end-March 2001. The RBI would need to advise the banks to prepare themselves to adhere to the timeframe. -
The Group took note of the fact that although most of the branches can have foreign liabilities in the form of deposits, there is enormous concentration of business in a few branches. Based on rough estimates, it is estimated that about 500 branches (including public sector, private sector and foreign banks) would account for above 85 per cent of the overall foreign exchange business. In view of this, the data collection could be confined, at least in the initial periods, to these large branches. For the purpose of selection of top branches, the list of branches that are furnishing balance of payments data to the RBI in floppies could be utilised. However, in addition to these branches, there could be branches, which may be important from the point of view of international banking transactions (e.g. Non-Resident Indian Deposits). With improvement in information technology, the coverage could be further expanded in future. -
The Group recommended that data transmission should be from the selected branches to the head offices of the concerned bank and from the head office to RBI in a consolidated manner covering all its branches. The system of data flow from the branch level through the Head Office/Principal Office to RBI need to be set in place by December 1999. Information flow from banks to RBI could be initially through floppies from the banks to the RBI. Once the VSAT - based network becomes operational, there could be a direct flow of information from the banks to RBI through this network. -
The Group recommended that the banks should undertake speedy computerisation of the foreign exchange transactions in the relevant branches and establish requisite connectivity between branches and the head office to facilitate speedy data transmission. -
As regards periodicity, the Group recommended collection of data on a quarterly basis both in respect of international claims and liabilities. -
The RBI could identify the new data fields, which would be necessary for this purpose and these should form part of banks’ record keeping practices. A few such items identified by the Group relate to areas, such as, (i) the ultimate country-risk in respect of all international claims, (ii) the undisbursed credit limits and back-up facilities, and (iii) the country and residual maturity particulars of non-resident deposits. The RBI should advise banks to make necessary changes in their book keeping practices to enable proper reporting as per the recommended timeframe. -
As the personnel at the branch level may not be familiar with this kind of reporting in a number of branches, it would be necessary to provide comprehensive guidelines to the concerned banks by the RBI to enable proper understanding of the exact reporting requirement. The RBI may design a suitable reporting format and provide detailed guidelines consisting of definition and coverage under each item to be reported. -
The RBI may organise training programmes/ workshops for the concerned bank officials at least in the initial periods of data reporting. -
As the data reporting could involve collection of data from different branches, coordination by a senior officer in each bank would be necessary. For the purpose of close monitoring of the receipt of information, banks may be asked to designate an officer at the senior level. -
With regard to the feasibility of developing software to facilitate reporting by banks, the Group recognised the advantages of a standardised software package. The Group is of the view that RBI may develop and supply the requisite software to banks. The Group recommended that the responsibility of developing the software could be entrusted to a core group of experts from RBI and selected banks preferably with specialisation in software programming/ development. The core group should develop and test the software in a few banks in a time bound manner before the introduction of the recommended reporting arrangement. -
To facilitate implementation of the recommendations in an effective manner and to enable adherence to the recommended time schedule, the Group favoured the setting up of a Standing Monitoring Group which would oversee the implementation of the recommended reporting arrangements and also consider necessary changes in the same in the event of further easing of foreign exchange controls. The Standing Group could consist of members from RBI as well as commercial banks. -
With regard to liabilities arising from non-repatriable deposits, these should be reported to the RBI separately. The Group, however, recognised that non-resident deposits which are non-repatriable in nature do not lead to the same type of pressures on the foreign exchange market as other NRI deposits because in these cases the principal amount is not allowed to be remitted abroad. In view of this, it was recommended that RBI may consider providing data on the non-repatriable portion of the liabilities of the banking system as memo item while reporting to the BIS. -
In terms of the international standards, the maturity-wise data are generally reported under different maturities such as less than one year, 1 to 2 years and so on. As the period of one year is considered fairly long from the angle of monitoring of banking sectors’ assets, it would be useful to have information in respect of claims for lesser maturity such as say up to 6 months. Furthermore, to facilitate asset-liability management, it would be useful to have maturity-wise information in respect of both assets and liabilities. This should be reflected in the format of the returns being devised by the Reserve Bank. The maturity classification should be on the basis of residual maturity. -
An important aspect of data reporting by banks is ensuring consistency of data reported by banks for various individual items with various other returns. The banks should be advised to institute necessary checks to ensure reporting of quality data. As aggregates are available in the Balance Sheet, the amount reported should be consistent with the Balance Sheet information wherever applicable. -
In view of the increasing liberalisation of the foreign exchange transactions and increasing freedom to banks regarding derivative transactions, it would be useful to develop a monitoring mechanism covering derivatives, guarantees, etc. -
Regarding reporting of currency-wise information on assets and liabilities denominated in foreign currency, in view of the concentration of foreign exchange business in a few currencies in the country, the Group recommended reporting in terms of five major currencies, viz., US dollar, Yen, Pound Sterling, Deutsche Mark (applicable up to December 31, 2001) and Euro.
Annexure - IINumber of Reporting Institutions and Coverage of Data in the Reporting Countries under IBS Reporting System of the Bank for International Settlement A. Industrialised Reporting Countries |
| BIS Member | Types of Bank and Bank-like | Number of | Percentage | Country | reporting institutions | Reporting | coverage | | | | Institutions | assets/ | | | | (End-1999) | liabilites1 |
| Australia | All depository corporations. Includes licensed banks, cash management trust, money market corporations, building societies, credit co-operatives, pastoral finance companies, finance companies and general financiers. | 145 | 100 | | | | | | Austria | Commercial banks, savings banks and specialised credit insitutions. | 31 | Approx.90 | | | | | | Belgium | Commercial banks some savings banks conducting business abroad. | 101 | Nearly 100 | | | | | | Canada | All commercial banks incorporated in Canada. | 50 | Nearly 100 | | | | | | Denmark | Banks with external positions exceeding approximately 1% of banks’ total external positions. | 10 | Approx. 95 | | | | | | Finland | All credit instutions with external assets or liabilities exceeding EUR 200 million. | 12 | 99/97 | | | | | | France | All authorised credit institutions. | 270 | Nearly 100 | | | | | | Germany | All credit institutions with external assets or labilities above DEM 20 million. | 1000 | Nearly 100 | | | | | | Ireland | All credit Institutions. | 81 | Nearly 100 | | | | | | Italy | All legally defined banks with international assets and liabilities of any size. | 700 | 100 | | | | | | Japan | All banks authorised to conduct business in the Japan Offshore Market. | 209 | Nearly 100 | | | | | | Luxembourg | All licensed banks with total assets above EUR 360 million. | 135 | Approx. 97 | | | | | | Netherlands2 | All credit institutions supervised by the central bank which make up at least 95% of total bank balance sheet volume. | 20@ | 95 | | | | | | Norway | Commercial and Savings banks. | 7 | 90/86 | | | | | | Portugal | All monetary financial institutions other than the central bank. | 224 | 100 | | | | | | Spain | All banking Institutions (banks, savings banks, credit co-operative banks and the official credit institute) with cross-border claims or liabilities above EUR 5 million or with at least one foreign branch. | 133 | Nearly 100 | | | | | | Sweden | Larger banks authorised to conduct business in foreign exchange. | 8 | Approx.95 | | | | | | Switzerland | All banks with total international business above CHF 1 billion. | 131 | Over 90 | | | | | | United Kingdom | All institutions authorised to take deposits under the banking Act. 1987 and certain institutions recognised under the 1992 Banking Co-ordination Regulations3. | 424 | 100 | | | | | | United States | All depository institutions, bank holding companies and brokers and dealers in the US with external assets or liabilities of USD 15 million or more. | 714 | Nearly 100 | | | | | | B. Other Reporting Countries | | | | | | | | Bahamas | All institutions with external positions in excess of USD 10 million. | 256 | Not Available | | | | | | Bahrain | All institutions (commercial banks, offshore banking units and investment banks. | 85 | 100 | | | | | | Cayman Islands | All category "A" and "B" banks conducting banking business. | 462 | >95 | | | | | | Hongkong | All licensed banks, all restricted licence banks and deposit taking companies. | 285 | 100 | | | | | | Netherlands Anilles | Offices conducting offshore business exclusively. | 42 | 100 | | | | | | Singapore | Only departments of commercial banks conducting offshore business. | 197 | More than 90 |
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1 : | Share of reporting banks’ external assets and liabilities in the corresponding totals for all banking institutions. | 2 : | Includes bank subsidiaries of the same banking group | 3 : | Cut-off points exists for providing full geographical and currency breakdowns | @: | Includes bank subsidiaries of same banking group. | Source: Guide to the International Banking Statistics-July 2000, Bank for International Settlements. |
Annexure-IIIInterpreting the data reported by banks for international banking statistics : March 2001 Data reported by the 101 banks for the quarter ended March 31, 2001 need to be interpreted with caution for several reasons such as the following. -
Relative data have not been received from all concerned bank branches of 101 banks due to lack of infrastructure (non-computerised branches accepting NR Deposits) and other constraints for the period ended March 2001. -
Due to non-reporting of details on external commercial borrowing by the concerned banks in the IBS return, the same have not been included in the survey. -
In certain cases, country, currency, maturity and sector details were not available in the data reported by banks. Accordingly, suitable footnotes have been incorporated in the respective statements. -
The information on "country of ultimate risk" is, at present, not captured by most of the banks and the banks in many cases have used the country of residence as the "country of ultimate risk". However, banks have been instructed to capture such information in their information system on a continual basis. -
Not all the 95 foreign branches of 9 Indian banks have submitted data through their head offices for the purpose of compilation of consolidated banking statistics (CBS). -
The international liabilities, as per definition in the BIS guidelines, have been collected and compiled. However, all liabilities of banks towards nonresidents furnished in LBS are not strictly comparable with the external debt accounted for by the banking sector in India. For example, nonresident non-repatriable deposits accepted by the banks, non-debt credit items, such as, American Depository Receipts(ADRs), Global Depository Receipts(GDRs), capital of foreign banks in India, etc., do not form part of external debt but these are included in LBS on the basis of the definition of external liabilities of banks.
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