Can Foreign Banks Reignite India's Manufacturing, Domestic & Foreign Trade Growth with Application of Competitive Business Practices Models?

Abstract

This research paper attempts to find out foreign banks (FBs) potential to reignite India’s manufacturing, domestic & foreign trade growth with application of competitive business practices models. This task is accomplished with the evaluation of competitive business practices models covering twenty four foreign banks (FBs) operating in India post Reserve Bank of India (RBI) Road Map 2005 and during the period 2003 to 2013 through the use of publicly available information. Competitive business practices models have been evaluated by the application of factor analysis followed by cluster analysis. Twenty three variables related to working of foreign banks supported with five variables related to India’s foreign trade were reduced into four factors by using factor analysis. Using these four factors cluster analysis was carried out to group twenty four foreign banks into three clusters leading to three distinct competitive business practices models. The dataset for analysis was for the period for financial years 2003-04 to 2012-13 and the focus is on post RBI Road Map-2005 for foreign banks. The foreign banks’ sample consists of consistently operating twenty four foreign banks (FBs) out of the universe consisting of forty three foreign banks operating in India between 2003-04 and 2012-13. This study broadly covers foreign banks (FBs) having legal entity and financial roots primarily in home country and entered in India for tapping Indian financial market in the form of term loans, cash credit, bridge loans, investments and funding for business activities (business financing operations)