ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Foreign BanksSubscribe to Foreign Banks

Do Foreign Banks in India Indulge in 'Cream Skimming'?

Foreign banks in developing countries are often found to indulge in "cream skimming," a lending strategy that targets only wealthy segments of the credit market and excludes small and marginal borrowers from the general pool of borrowers. This paper attempts to investigate whether lending patterns of foreign banks in urban regions of Indian states are indicative of such practices. Using credit data on urban regions of 21 states of India for 1999-2011, this paper finds empirical evidence of cream skimming by foreign banks in India.

Setting the Stage for Bank Privatisation

Whether the move towards eventual privatisation, including transfer of control to foreign banks, is the right prescription for a banking system that has shown an improving trend in efficiency while remaining stable needs to be vigorously debated.
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