Abstract
In view of effective financing of domestic and foreign trade, foreign banks have been given more free hand in Indian banking sector after India’s accession to WTO. Under WTO regime, developed countries are seeking progressive removal of the limitations relating to further opening of branches and allowing establishment of wholly-owned subsidiaries. After 2005 RBI’s Road Map for foreign banks, which allowed fair competition and geographical expansion, foreign banks became aware of new strategic possibilities. Trade financing activity received new momentum as foreign banks are free to enter new markets either by acquiring existing competitor bank franchises or by opening one of their own set up under Wholly-Owned Subsidiary (WOS) model proposed by RBI. The aim of this paper is to assess the role of foreign banks operating in India specifically post RBI Road MAP 2005. Financing function of foreign banks is summarized in the form of allocation of advances, investments, India’s GDP figures and inflation rate during the period covering financial years 2003-04 to 2012-13.
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