Indian banks set to draw more global investment, says S&P Global

Higher credit growth, improved margins and stable asset quality boosting lenders’ prospects, market intelligence provider says

September 25, 2023 09:57 pm | Updated 11:29 pm IST - MUMBAI

Top investees for FIIs include ICICI Bank Ltd., HDFC Bank Ltd. and Kotak Mahindra Bank Ltd. File.

Top investees for FIIs include ICICI Bank Ltd., HDFC Bank Ltd. and Kotak Mahindra Bank Ltd. File.

Indian banks are expected to attract increasing global investment from investors looking for better returns as higher credit growth, improved margins and stable asset quality have boosted the prospects of the lenders, said S&P Global Market Intelligence in a report.

As per S&P Global, the total market value of foreign institutional investors’ holdings in Indian banks had risen in recent years, climbing to ₹8.36 trillion as of June 30, from ₹7.71 trillion a year earlier. “This is a significant rise from the ₹6.73 trillion figure in June 2020,“ the market intelligence provider said.

The majority of FII holdings — 93.5% of the value as of June 30 — was concentrated in India’s biggest private-sector banks, S&P Global Market Intelligence data show.

Top investees for FIIs include ICICI Bank Ltd., HDFC Bank Ltd. and Kotak Mahindra Bank Ltd.

The market value of FIIs’ holdings in Indian private-sector banks rose to ₹7.82 trillion as of June from ₹7.29 trillion a year earlier. The value stood at ₹6.37 trillion as of June 2020, S&P Global Market Intelligence noted.

On the other hand, the market value of FIIs’ holdings in Indian state-owned banks clocked in at ₹541 billion as of June, versus ₹422 billion a year earlier.

U.S.-based Capital Research and Management Co. sat atop the list of foreign investors in Indian banks by market value, followed by BlackRock Inc. and Singapore’s GIC Private Ltd. 

With more than 6% stake in Kotak Mahindra Bank, Capital Research and Management’s value of holdings in Indian banks stood at ₹542.90 billion as of June, the data show.

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