An Investigation Of Foreign Direct Investment

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An Investigation of Foreign Direct Investment in Indian Banking Sector L.Kannan

Foreign Direct Investment (FDI) plays an important role in the economic development of a country. The Indian banking system is radically different from those common in other countries due to its unique geographic, social and economic characteristics. India has a huge population, different cultures in different parts of the country and also disparities in income. In this research paper discuss about the role of the Foreign Direct Investment in the Indian Banking Sector and the Rules and Regulations for Foreign Direct Investment in India. To encourage the saving habits
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Also in India the population spread among rural and urban areas is also skewed in the favour of urban areas. All these features reflect in the volume and structure of the Indian banking system. Further in order to fulfill the requirements to the government policy it has been subjected to different nationalization schemes at different times. RBI credit policies form the guidelines for banks in India. Since they had to satisfy the domestic obligations, the banks have so far been confined within the Indian borders. Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1770; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal.

Foreign Direct Investment as seen as a main source of non-debt inflows and is increasing being required as a vehicle for technology flows and as a means of attaining competitive efficiency by creating a meaningful network of global interconnections. FDI plays a critical role in the economy since it does not only give opportunities to host countries to enhance their economic development but also opens new vistas to home countries to optimize their earnings by employing their ideal resources.

In India, FDI is considered as a
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