Private Indian Banks Lead in Credit Allocation, Foreign Banks Lag Behind
Banks in India behave differently based on their ownership type. Private banks in India follow a specific model for managing their assets, while foreign banks do not. Factors like past patterns, stock exchange listing, regulations, and risk averseness influence how banks allocate their assets between safe government securities and risky credit. Banks adjust their credit mix in response to changes in overall risk levels. These findings have implications for how banks in India lend to small and medium businesses.