Review of Allocation of Advances by Foreign Banks Operating in India to Exports & Small Scale Sector (SSI) During 2006-2010

Abstract

This research paper provides an overview of the performance of Foreign Banks’ (FBs) with reference to allocation of advances to Exports/Small Scale Sector (SSI) during 2006-2010. The paper analyses the trends in lending and target achievement as set by Reserve Bank of India for Foreign banks operating in India. The target for priority sector lending during the aforesaid period was 32% out of which 12 % is covered for export sector and 10% for SSI sector. This was with a view for securing a better adaptation of the lending system to the needs of economic planning and it is playing a more active role in aiding sectors like export and SSI sector. This study is based on the parameters like lending to aforesaid sector by foreign banks, targets achieved by foreign banks group NPAs (Non-performing assets), while lending to these sectors. On the basis of these parameters, the study concludes that foreign banks have achieved the SSI lending and export credit and overall target. The performance of foreign banks in lending has improved year by year during the period 2006-10, although substantial variations have been observed in the performance of various foreign banks as also in meeting the sub - targets within the these sectors. The paper also discusses the problems or issues which arise due to providing advances to these sectors and also suggest some ways to sought out these issues. All the parameters have been analyzed for the period, 2006 – 2010 (Five years).