If there is a decline in the number of Indian students pursuing higher studies in Canada due to the ongoing diplomatic tensions between the two countries, it may have implications for Indian banks operating in the North American country, senior bank officials said.
India and Canada have expelled their top diplomats amid escalating tensions over the assassination of a Khalistani leader on Canadian soil.
“Majority of our customers in Canada are Indian students who do financial transactions through us.
"If there is a fall in Indian students travelling to Canada for studies, it may impact our business.
"However, the situation has not reached that level so far and are hoping to run the business as usual,” a senior bank official said.
State Bank of India (SBI) and ICICI Bank have subsidiaries in Canada.
They could face potential impacts if this key segment of their customer base shrinks.
“I don’t think there will be any significant impact on the financial sector.
"Some impact may occur, but it will be limited to certain sectors. We need to see to what extent,” said another senior bank official.
“As a policy, (the) bank does not comment upon such matters,” SBI said in response to a query.
ICICI Bank didn’t respond to a query till the time of going to the press.
As of March 2023, SBI Canada reported assets under management (AUM) totalling Rs 8,854 crore. In comparison, ICICI Bank Canada had an AUM of Rs 2,343 crore. ICICI Bank Canada’s core operating profit saw a significant rise, increasing from Canadian dollar (CAD) 26.2 million in FY22 to CAD 61.2 million in FY23. This was attributed to higher net interest income (NII) and fee income, despite a partial offset from rising operating expenses.
As of March 31, 2023, ICICI Bank Canada maintained a total capital adequacy ratio (CAR) of 17.3 per cent, up from 17.2 per cent from the previous year.
In contrast, SBI’s CAR stood at 13.89 per cent as of March 31, 2023.
Canada has historically been a popular destination for foreign students.
Last year, a record 1,040,000 foreign students were accepted, according to the immigration department data.
Since 2015, the number of foreign study permits issued has nearly tripled.
However, the numbers have been falling.
In 2023, Canada approved 509,390 international study permits, but in the first seven months of 2024, only 175,920 were issued.
The changes aim to bring the number of study permits down to 437,000 by 2025.
According to the Indian government’s data released last month, about 1.3 million Indian students are studying abroad, with about 427,000 in Canada.
Between 2013 and 2022, the number of Indian students moving to Canada saw an increase of 260 per cent.
