Impact of Foreign Direct Investment Policy on Business of Indian Private Sector Banks

Authors

  • Sahila Chaudhry
  • Rakesh Kumar

Abstract

The present study analyzed the impact of foreign direct investment policy on the business of selected Indian private sector banks. The required data were collected from secondary sources like RBI Data-warehouse, Report on Trends and Progress of Banking in India, IBA Bulletins, Journals, and Online databases for a period of fourteen years i.e. from 2004-05 to 2017-18. The collected data were analyzed through descriptive and inferential statistical techniques like correlation, t-test and ANOVA with the help of PASW (18.0 Version). The study found that the relationship of FDI, Staff and Expenditure (independent variables) with Business per Employee (dependent variable) is not significant, whereas there is a significant relationship of FDI, Staff and Expenditure (independent variables) with Business per Branch (dependent variable). The Business per Employee (dependent variable) is explained by the FDI, Staff and Expenditure (independent variables) to the level of 15.0 percent only, whereas the Business per Branch (dependent variable) is explained by the FDI, Staff and Expenditure (independent variables) to the level of 70.3 percent. There is no significant impact of FDI, Staff and Expenditure (independent variables) on Business per Employee (dependent variable), whereas the impact of FDI, Staff and Expenditure (independent variables) on Business per Branch (dependent variable) is found significant. It is recommended that there is a need of investment from abroad to meet the capital adequacy requirements of the banking sector to improve the business of the banking sector and ensure the growth of Indian economy, but  FDI should not over ride the regulations of RBI and other regulatory bodies.

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Published

2020-01-28

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Articles