Banks' external loans dip by $8.46 bn

India’s net international investment declines 6% in June 2008, show RBI data.

The country’s net international investment position declined by 6.45 per cent to $49.12 billion in June this year compared with $52.51 billion on March 31, 2008, indicating net claims of non-residents on India.

The international investment position is a statement taking stock of external financial assets and liabilities of a country. While financial assets account for the country’s financial claims on non-residents, financial liabilities consist of the country’s financial liabilities on non-residents.
 

THE BIG PICTURE Overall global investment position ($bn)
Period	Jun '07	Mar '08	Jun '08
Net IIP	-80.73	-52.51	-49.12
Assets	261.89	381.45	377.63
Direct invt	33.73	46.19	48.21
Portfolio invt	0.93	0.73	0.70
Other invt	13.87	24.80	16.64
Reserve assets	213.35	309.72	312.09
Liabilities	342.62	433.96	426.76
Direct invt	88.33	115.51	119.54
Portfolio invt	93.81	119.45	107.98
Other invt	160.48	199.01	199.24
Note: Figures are partially revised, * Invt=Investment

 

The latest data of the Reserve Bank of India (RBI) showed a $8.46-billion decline in external loans extended through nostro accounts by the banking sector, resulted in a decline in the total external financial assets to the tune of $3.81 billion to $377.63 billion during the first quarter of 2008-09 over the figures in the previous quarter.

However, during the same period, the reserve assets were higher by $2.37 billion compared with those on March 31, 2008, at $312.09 billion, thereby exceeding the entire external debt of $221.30 billion. The reserve assets account for 82.6 per cent of the total external financial assets. Likewise, direct investment abroad was up by $2.02 billion at $48.21 billion.

On the liabilities side, the outflow in the portfolio equity investment of foreign institutional investors (FIIs) during April-June 2008 and valuation changes resulted in a decline of the total external financial liabilities by $7.2 billion over the previous quarter’s $426.76 billion.

Direct investment in India, which accounts for 12.8 per cent of the total external assets, was up by $4.03 billion during the first three months of 2008-09 and trade credits, a component of other investments in India, increased by $2.06 billion, mainly owing to an increase in the short-term trade credit ($2.17 billion).

The data also showed that other investments, which consist of trade credits, loans, currency and deposits and other liabilities, account for 46.7 per cent of the country’s external financial liabilities, followed by direct investment and portfolio investment, accounting for 28 per cent and 25.3 per cent respectively.

After increasing for seven consecutive quarters, from 40.9 per cent to 49.6 per cent, the share of non-debt liabilities to the total external financial liabilities marginally declined to 47.5 per cent during the quarter ended June 30, 2008.

The data are usually disseminated with a time lag of two quarters in accordance with the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF).