RESEARCH METHODOLOGY

Name :DEVVRAT TIWARI

Roll No.0141PG022

RESEARCH TITLE

IMPACT OF FDI ON INDIAN BANKING SECTOR

INTRODUCTION

Today Indian Banks are as technology savvy as their

counter parts in developed countries.
The competitive and reform force have led to the
emergence of internet, e-banking, ATM, credit card and
mobile banking too, to let banks attract and retain
customers.
In recent times economy is been pushing to increase the
role of multi-national banks in the banking sector.

SECONDARY RESEARCH

Data is secondary data. Secondary data uses accounting

data of deposit Indian money banks from the year 20102014. The data for the determination of sect oral FDI
inflows into the Indian banking sector were obtained from
the Reserve bank of India data base for the period 20102014 .

REVIEW OF LITERATURE

Arpmittal ( August 29, 2011) stated that the

developing countries have changed their attitude
towards FDI because it is believed that FDI can
contribute to the development efforts of a country. In
general, multinational firms decision to extend
production to another country is driven by lower costs
and higher efficiency considerations. From the host
countrys perspective though, he benefits of FDI are not
restricted to improved use of its resources, but also stem
from the introduction of new processes to the domestic
market, learning-by-observing, networks, training of the
labor force, and other spillovers and externalities.

REVIEW OF LITERATURE

By Qaiser Abbas, Salman Akbar , Ali Shan Nasir

,Hafiz Aman Ullah , Muhammad Akram Naseem
(Aug.2011) stated that the impact of foreign direct
investment on Growth (GDP) of SAARC countries. This
relationship is tested by applying multiple regression
models. The change in GDP is taken as dependent viable
while FDI and inflation are considered as independent
variables. The data used for this is ranging from year
2001 to 2010 of SAARC Countries. The result shows that
the overall model is significant.

RESEARCH OBJECTIVES

To find out the Impact of FDI on Indian banking

services.
To Analyze the Impact of FDI on Indian
banking capital base.
To understand the Impact of FDI on Indian
banking Infrastructure and technology.

SIGNIFICANCE

HYPOTHESIS

H(0) Foreign direct investment does not have a

significant positive impact on the capital base of
the Indian banking sector.
H(a) - Foreign direct investment does have a
significant positive impact on the capital base of
the Indian banking sector .

SCOPE

SAMPLING TECHNIQUES

Probability sampling

SCALING TECHNIQUES

QUESTIONNAIRE

Q1 DO you know about FDI ?

A YES
B NO

Q2 Are you aware about FDI limit in private and public sector banks ?

A YES
B NO

Q3 Do you have a account in bank ?

A YES
B NO


Q4 Is it good or bad that FDI limit in private banks is more than public sector
banks ?

A GOOD
B BAD
C CANT SAY

Q5 Are you satisfied with services offered by private banks?

A YES
B NO

Q6 Do you think private banks have better infrastructure than public sector banks?

A YES
B NO

Q7 Do you think private banks uses latest technology?

A YES
B No
Q8 do you think that capital base of banks will
increase by FDI ?
A YES
B NO

PRIMARY DATA IN
TABULATION FORM

TEST OF MEAN

Type of test t-test

Hypothesis
H(0) Foreign direct investment does not have a significant
positive impact on the capital base of the Indian banking
sector
H(a) Foreign direct investment does have a significant
positive impact on the capital base of the Indian banking
sector .
Result as per the P value-<.05

CORRELATION AND
REGRESSION
H(0) Foreign direct investment does not have a significant
positive impact on the capital base of the Indian banking sector
H(a) - Foreign direct investment does have a significant positive
impact on the capital base of the Indian banking sector .

Regression Equation CAP=5.10+1.10FDI

Prediction-Increase in FDI by 1.00% will only lead to a
1.10% increase in the capital base of Indian banks

TEST OF PROPORTION

H(0)
H(a) Type of test
Result as per the P value

CONCLUSION

This studies pertaining to foreign investment in Indian Banking

sector suggests the importance of foreign investment in Indian
banks and tries to gauge the impact thereof. It can be concluded
that, indeed, FDI policy and FDI content have shown significant
impact on the performance variables of Indian banking industry.
As FDI has positive impact on managerial effectiveness, capital,
banking products, productivity, bank coverage and expansion,
new technology and technical knowhow and latest banking
trends, etc. FDI may be encouraged in this sector. This would
lead to the overall improvement of the performance of this
sector and bring it to international standards.
Foreign direct investment has an insignificant positive impact on
the capital base of the Indian banking sector.

RECOMMENDATIONS

From the above conclusion it is seen that productivity has

improved due to competition of these new entrant banks
with foreign capital. Profitability does not show significant
impact presently. However, it is proposed to be further
liberalized to 100 per cent FDI for exiting private sector
banks. For public sector banks the FDI limit is proposed to
be increased to 49 per cent.
Also few more bank licenses should be issued shortly with
74 per cent foreign capital (FDI). This would increase
competition among the FDI banks and improve the overall
performance of not only the FDI banks but also the non FDI
banks.