This document summarizes a research study analyzing the financial performance of commercial banks in India following economic reforms. It begins by providing background on the importance of banks in India's financial system and the transformation of banking since nationalization. The study aims to evaluate operational performance, profitability, and factors influencing efficiency for different bank groups from 1990-2010. Methodology includes analyzing secondary data from central bank and industry sources using statistical tools like correlation, regression, and factor analysis. An extensive literature review covers prior research on Indian bank profitability, productivity, and efficiency.
Financial sector plays a pivotal role in the economic development, but, in recent time, it has witnessed that the World Economy is passing through some intricate circumstances as bankruptcy of banking & financial institutions, debt crisis in major economies of the world and euro zone crisis. The scenario has become very uncertain causing recession in major economies like US and Europe. The tempo of development for the Indian banking industry has been remarkable over the past decade. It is evident from the higher pace of credit expansion, expanding profitability and productivity similar to banks in developed markets, lower incidence of non- performing assets and focus on financial inclusion have contributed to making Indian banking vibrant and strong. Indian banks have begun to revise their growth approach and re-evaluate the prospects on hand to keep the economy rolling. It is generally agreed that a strong and healthy banking system is a prerequisite for sustainable economic growth. The banking sector has always been one of the important sectors for investment. In the time of uncertainty, some are arguing that the economies are in the process of recovery, and while others are opining that the world is set for another recession soon. In order to resist negative shocks and maintain financial stability, it is important to identify the Performance of Indian Banking Sector. The current study is mainly concerned with the analysis of Performance Of banking sector in India, that reflects the impact of new competitive environment on the bank’s performance in terms of various selected parameters. The article considered the variables like balance sheet operations, efficiency, profitability ,Capital Adequacy, Asset Quality, Sect oral deployment of bank credit, Technological Development, Customer services and Financial Inclusion for a period of 6 years from 2011 to 16. The Data was collected through secondary sources from Statistical Tables relating to banks in India. The results have found strong evidence poor profitability and inefficiency of managing the assets in the year 2016.
MERGERS AND ACQUISITIONS PROSPECTS: INDIAN BANKS STUDYpaperpublications3
Abstract:This research paper looks at Mergers and Acquisitions (M&A’s) that have happened in Indian banking sector to understand the resulting synergies and the long term implications of the merger. The paper also analyses emerging future trends and recommends steps that banks should consider for future. The paper reviews the trends in M&A’s in Indian banking and then impact of M&A’s has been studied in three leading banks of India. The study covers the area of performance evaluation of M&A’s in Indian banking sector during the period from 2000 to 2013. The paper compares pre and post merger financial performance of merged banks with the help of financial parameters like, Net Profit margin, operating Profit margin, Return on Capital Employed, Return on Equity, earnings per share, capital adequacy ratio, dividend per share etc. The findings suggest that to some extent M&A’s has been successful in Indian banking sector. The Government and Policy makers should not promote merger between strong and distressed banks as a way to promote the interest of the depositors of distressed banks, as it will have adverse effect upon the asset quality of the stronger banks.
Keywords:Strategic alliance, capital adequacy, mergers, consolidation, ratios.
A comparison of technical efficiency of performance of different banks before...Alexander Decker
This document summarizes a study that compares the technical efficiency and performance of banks in Pakistan before and after mergers from 2001 to 2010. It analyzes six mergers that occurred: Prime and ABN AMRO, ABN AMRO and Royal Bank of Scotland, RBS and Faysal Bank, Saudi Pak Commercial Bank and Silk Bank, Union Bank and Standard Chartered Bank, and Cres and Samba Bank. Regression and data envelopment analysis are used to analyze variables like assets, advances, branches, and labor productivity. The results found most banks improved somewhat after mergers. A complete comparison of individual bank performance pre-and post-merger identified deficiencies. The study aims to evaluate past mergers to provide guidance on achieving the best
This document contains details of a student project analyzing the financial statements of the top 3 Indian banks - SBI, ICICI, and PNB. It includes the student's name, roll number, project title, subject area, and guide's name. The project involves calculating and comparing various ratios such as profitability, leverage, payout, and liquidity ratios across the three banks. The objectives are to assess the banks' profitability, do comparative analysis between banks, and evaluate operational efficiency. The introduction provides background on banks' role in the economy. The literature review discusses previous research on analyzing banks' financial performance.
This document appears to be a project report on mergers and acquisitions in the Indian banking sector. It discusses several bank mergers that have occurred in India, including HDFC Bank and Times Bank, ICICI Bank and Bank of Madura, and Global Trust Bank and UTI Bank. It analyzes the motives and benefits of mergers, such as increasing competitiveness and shareholder value. The report also examines the recommendations of the Narasimham Committee on banking reforms regarding consolidation in the sector through mergers between strong banks. Overall, the document provides an overview of mergers and acquisitions that have taken place in the Indian banking industry.
The Performance Analysis of Private Conventional Banks: A Case Study of Bangl...IOSR Journals
This study attempts primarily to measure the financial performance of some selected private
commercial banks in Bangladesh for the period 2006-2011 and to identify whether any relationship exists
between a bank’s years of operation and its performance. For this purpose five banks have been selected from
different generations. The financial performances of these banks have been scrutinized from the following four
dimensions: (1) profitability (2) liquidity (3) credit risk and (4) efficiency. The study concluded that there is no
specific relationship between the generation of banks and its performance. The performances of banks are
dependent more on the management’s ability in formulating strategic plans and the efficient implementation of
its strategies. The study findings can be helpful for management of private commercial banks in Bangladesh to
improve their financial performance and formulate policies that will improve their performance. The study also
identified specific areas for each bank to work on which can ensure sustainable growth for these banks
Analysis of Financial Health of the New Private Sector Banks in India throug...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Financial sector plays a pivotal role in the economic development, but, in recent time, it has witnessed that the World Economy is passing through some intricate circumstances as bankruptcy of banking & financial institutions, debt crisis in major economies of the world and euro zone crisis. The scenario has become very uncertain causing recession in major economies like US and Europe. The tempo of development for the Indian banking industry has been remarkable over the past decade. It is evident from the higher pace of credit expansion, expanding profitability and productivity similar to banks in developed markets, lower incidence of non- performing assets and focus on financial inclusion have contributed to making Indian banking vibrant and strong. Indian banks have begun to revise their growth approach and re-evaluate the prospects on hand to keep the economy rolling. It is generally agreed that a strong and healthy banking system is a prerequisite for sustainable economic growth. The banking sector has always been one of the important sectors for investment. In the time of uncertainty, some are arguing that the economies are in the process of recovery, and while others are opining that the world is set for another recession soon. In order to resist negative shocks and maintain financial stability, it is important to identify the Performance of Indian Banking Sector. The current study is mainly concerned with the analysis of Performance Of banking sector in India, that reflects the impact of new competitive environment on the bank’s performance in terms of various selected parameters. The article considered the variables like balance sheet operations, efficiency, profitability ,Capital Adequacy, Asset Quality, Sect oral deployment of bank credit, Technological Development, Customer services and Financial Inclusion for a period of 6 years from 2011 to 16. The Data was collected through secondary sources from Statistical Tables relating to banks in India. The results have found strong evidence poor profitability and inefficiency of managing the assets in the year 2016.
MERGERS AND ACQUISITIONS PROSPECTS: INDIAN BANKS STUDYpaperpublications3
Abstract:This research paper looks at Mergers and Acquisitions (M&A’s) that have happened in Indian banking sector to understand the resulting synergies and the long term implications of the merger. The paper also analyses emerging future trends and recommends steps that banks should consider for future. The paper reviews the trends in M&A’s in Indian banking and then impact of M&A’s has been studied in three leading banks of India. The study covers the area of performance evaluation of M&A’s in Indian banking sector during the period from 2000 to 2013. The paper compares pre and post merger financial performance of merged banks with the help of financial parameters like, Net Profit margin, operating Profit margin, Return on Capital Employed, Return on Equity, earnings per share, capital adequacy ratio, dividend per share etc. The findings suggest that to some extent M&A’s has been successful in Indian banking sector. The Government and Policy makers should not promote merger between strong and distressed banks as a way to promote the interest of the depositors of distressed banks, as it will have adverse effect upon the asset quality of the stronger banks.
Keywords:Strategic alliance, capital adequacy, mergers, consolidation, ratios.
A comparison of technical efficiency of performance of different banks before...Alexander Decker
This document summarizes a study that compares the technical efficiency and performance of banks in Pakistan before and after mergers from 2001 to 2010. It analyzes six mergers that occurred: Prime and ABN AMRO, ABN AMRO and Royal Bank of Scotland, RBS and Faysal Bank, Saudi Pak Commercial Bank and Silk Bank, Union Bank and Standard Chartered Bank, and Cres and Samba Bank. Regression and data envelopment analysis are used to analyze variables like assets, advances, branches, and labor productivity. The results found most banks improved somewhat after mergers. A complete comparison of individual bank performance pre-and post-merger identified deficiencies. The study aims to evaluate past mergers to provide guidance on achieving the best
This document contains details of a student project analyzing the financial statements of the top 3 Indian banks - SBI, ICICI, and PNB. It includes the student's name, roll number, project title, subject area, and guide's name. The project involves calculating and comparing various ratios such as profitability, leverage, payout, and liquidity ratios across the three banks. The objectives are to assess the banks' profitability, do comparative analysis between banks, and evaluate operational efficiency. The introduction provides background on banks' role in the economy. The literature review discusses previous research on analyzing banks' financial performance.
This document appears to be a project report on mergers and acquisitions in the Indian banking sector. It discusses several bank mergers that have occurred in India, including HDFC Bank and Times Bank, ICICI Bank and Bank of Madura, and Global Trust Bank and UTI Bank. It analyzes the motives and benefits of mergers, such as increasing competitiveness and shareholder value. The report also examines the recommendations of the Narasimham Committee on banking reforms regarding consolidation in the sector through mergers between strong banks. Overall, the document provides an overview of mergers and acquisitions that have taken place in the Indian banking industry.
The Performance Analysis of Private Conventional Banks: A Case Study of Bangl...IOSR Journals
This study attempts primarily to measure the financial performance of some selected private
commercial banks in Bangladesh for the period 2006-2011 and to identify whether any relationship exists
between a bank’s years of operation and its performance. For this purpose five banks have been selected from
different generations. The financial performances of these banks have been scrutinized from the following four
dimensions: (1) profitability (2) liquidity (3) credit risk and (4) efficiency. The study concluded that there is no
specific relationship between the generation of banks and its performance. The performances of banks are
dependent more on the management’s ability in formulating strategic plans and the efficient implementation of
its strategies. The study findings can be helpful for management of private commercial banks in Bangladesh to
improve their financial performance and formulate policies that will improve their performance. The study also
identified specific areas for each bank to work on which can ensure sustainable growth for these banks
Analysis of Financial Health of the New Private Sector Banks in India throug...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Evaluation of some private commercial banks in bangladesh from performance pe...ijmvsc
Banks operate on a huge scale at the heart of the modern economy and the banking system has become an
integral part in the progress of economic development in Bangladesh. Besides, the banking sector has
made their innovation and efficiency crucial to the economy as it competes in an e-commerce world. The
role of banking system in this situation cannot be denied at all. This report intends to evaluate the
performance of selected private commercial banks in Bangladesh. In the study, best efforts have been put
on evaluating the performance. The growing pattern of branches, employees, deposits, loans and
advances, classified loan, net income and earnings per share of selected private commercial banks has
been considered to make an analysis on the performance evaluation of the selected private commercial
banks. To evaluate the performance, data have been collected from the secondary sources. Then the
collected data have been analyzed. From the analysis, it has been found that all of the selected banks are
in a position to make a sustainable growth in respect of branches, employees, deposits, loans and
advances, classified loan, net income and earnings per share during the period of 2007-2011 with some
fluctuation. Besides the growth pattern, other forms of calculations have been used for every selected
variable and they are trend equation and square of correlation coefficient. Under trend equation analysis,
the variables named branches, employees, deposits and net incomes hold more positive value than the
other variables considered. As the value of the slope always shows the positive number, it is a clear
indication that Bangladesh has a very good prospect in case of private commercial banks
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
This document provides a literature review on 9 previous research papers related to the relationship between liquidity management and profitability in banks. The papers examined liquidity ratios like CDR, CRDR and IDR and profitability ratios like ROA, ROE and ROI in various public sector, private sector and cooperative banks in India over different time periods. Most of the studies found an inverse or negative relationship between liquidity and profitability, indicating that increased liquidity leads to decreased profits and vice versa. The papers also compared performance between public and private sector banks, with most finding that private banks had better efficiency and profitability.
This document analyzes the financial performance of State Bank of India (SBI) using the Camel approach over the period of 2003-04 to 2009-10. The Camel approach assesses banks based on their Capital Adequacy, Asset Quality, Management Quality, Earnings, and Liquidity. The objective is to identify SBI's strengths and weaknesses to help investors make informed decisions. Previous studies on mergers and acquisitions in the Indian banking sector show mixed results on financial performance improvements. The analysis finds that SBI's performance varies across the different Camel ratios, with some ratios indicating strengths and others requiring improvement.
Measuring Technical and Scale Efficiency of Banks in India Using DEAiosrjce
This document summarizes a study that uses Data Envelopment Analysis (DEA) to measure the technical and scale efficiency of commercial banks in India from 2006 to 2010. Two DEA models, the CCR and BCC models, are used to estimate technical and scale efficiency. The results indicate that deregulation of the banking sector has led to an increase in efficiency over time. Private sector banks performed better than public sector banks during this period. The source of inefficiency was mainly due to scale rather than pure technical inefficiency.
This document provides an overview of public sector undertakings (PSUs) in India. It discusses that PSUs are government-owned companies that play an important role in India's economy. The document then covers several key topics regarding PSUs, including the financial management challenges they face, the role of financial advisors, examples of major PSUs, and reforms around disinvestment and increasing transparency. It analyzes issues like managing risks and growth in the changing banking environment in India. Overall, the document presents an introduction to PSUs and examines their operations, importance, and ongoing development.
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
This document provides background information and a literature review for a study on the relationship between liquidity and profitability in select public and private sector banks in India. It begins with an introduction to the topic, outlining the trade-off between liquidity and profitability for banks. It then reviews 10 previous research papers on similar topics, analyzing factors like liquidity ratios, efficiency, and performance comparisons between public and private sector banks. The reviewed papers examine issues like the effect of liquidity on profitability, comparing liquidity positions between bank types, and evaluating banks' financial health using the CAMEL model.
ICICI Bank was established in 1955 as the Industrial Credit and Investment Corporation of India to provide long-term financing for infrastructure and industry. It later transformed into a full-service bank providing loans, savings, insurance, and investment products. The document discusses ICICI Bank's history, objectives of analyzing its performance, methodology used including ratio analysis, and limitations of the study. It also includes an introduction to the company, outlining its founding, leadership, products, revenues, assets, and merger with ICICI Limited to create a large universal bank.
A project report on analysis of financial statement of icici bankProjects Kart
This document discusses a minor project report on the analysis of the financial statements of ICICI Bank. It provides background information on ICICI Bank, including its history, board of directors, organizational structure, products and services. It then outlines the objectives and contents of the financial statement analysis project, which includes studying ICICI Bank's profit and loss account, balance sheet, and cash flow statement as well as conducting ratio analysis and evaluating the bank's financial soundness.
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
Here are the key ways that banks can achieve liquidity:
1. Holding cash reserves - Banks are required to hold a certain percentage of deposits in the form of cash reserves that can be used immediately to meet liquidity needs. However, excess cash reserves reduce potential earnings.
2. Investing in government securities - Banks invest in short-term government bonds and treasury bills that can be easily sold in the market to generate cash. However, the returns may be lower than other investments.
3. Borrowing from other banks - Banks can borrow from other banks in the interbank market through instruments like federal funds, commercial papers etc. This provides quick access to funds but interest rates may be higher during liquidity cri
A Study on Relationship between Firm Size and Profitability: Selected Private...ijtsrd
The study is to identify the relationship between firm size and profitability of selected private sector banks in India. This study is classified as quantitative research followed with a descriptive research design. The Reserve Bank of India's publication of annual trend and progress of banking in India in June 2018, indicates that the total number of private sector banks in India is 21. The study selected the first five banks based on the hierarchy of the value of its total assets. The study is based on secondary data and it has been collected from the annual reports of the respective banks. The period of study is five years from 2015 to 2019. Firm size such as bank size is measured through the natural log of the book value of deposits, assets, and advances independent variables and the profitability is measured through the natural log of the book value of the net profit of the bank dependent variable . The data analysis includes descriptive statistics, correlation matrix, and linear regression. On the basis of the analysis, the study found that there is a significant relationship between independent variables and the dependent variable. Further, there is a positive correlation and statistically significant between these variables. Dr. Dhanuskodi Rengasamy "A Study on Relationship between Firm Size and Profitability: Selected Private Sector Banks in India" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-1 , December 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29621.pdf Paper URL: https://www.ijtsrd.com/economics/accounting/29621/a-study-on-relationship-between-firm-size-and-profitability-selected-private-sector-banks-in-india/dr-dhanuskodi-rengasamy
The document discusses Nestle India's efforts to promote sustainable agriculture and water stewardship. It describes projects Nestle has partnered on to introduce more efficient cultivation techniques for water-intensive crops like rice and sugarcane in the Kabini River basin. These techniques aim to benefit farmers through higher yields and lower costs while reducing water usage and promoting better soil health. The document also outlines Nestle's work with coffee and milk farmers to raise awareness on water conservation practices like drip irrigation, recycling, and optimizing water use.
Analysis of Internal, Market & Economic Based Financial Performance Measureme...IOSRJBM
The aim of this study is to investigate the financial performance of 10 commercial banks listed on Dhaka Stock Exchange. In this paper, financial performance has been measured by using three indicators. Internal–based performance measured by Return on Assets, Market-based performance measured by Tobin’s Q model (Price / Book value of Equity) and Economic–based performance measured by Economic Value adds. The correlation and multiple regression of annual time series data is used to find the impact of bank size, credit risk, operational efficiency and asset management on financial performance measured by the three indicators, The study rejected the null hypothesis and it is found that there exist statistically significant impact of bank size, credit risk, operational efficiency and asset management with ROA and Economic Value Added. On the other hand Tobin’s Q has insignificant impact on financial performance of commercial banks
This document analyzes the performance of banks in India before and after the World Trade Organization's General Agreement on Trade in Services (GATS). It discusses how GATS led to increased competition in India's banking sector through allowing more foreign bank presence. The study develops a composite index to rank different bank groups (public sector, private sector, foreign) based on measures of productivity, profitability, and efficiency. It finds that while foreign and new private banks initially outperformed public sector banks, the performance of traditional banks (public and old private) improved after GATS as they adapted to greater competition. The document provides context on banking reforms in India and reviews previous related studies.
This document summarizes Mahindra & Mahindra Ltd.'s performance management system. It discusses how the company uses a balanced scorecard approach to set strategic goals and key result areas for departments, functions, and individuals aligned with business objectives. It outlines the annual performance appraisal cycle which includes workshops for setting KRAs, mid-year reviews, final appraisals involving feedback and ratings, and counseling. The goal is to evaluate employee performance, provide development opportunities, and generate data for compensation and promotion decisions.
This document analyzes the financial performance of State Bank of India over a 5-year period from 2013-2018. Key findings from the analysis include:
1) State Bank of India maintained a high current ratio on average of 16.15 times over the period, indicating strong liquidity. Regression analysis showed that increases in current assets positively impacted the current ratio.
2) Profitability ratios like gross profit ratio, operating profit ratio, and return on shareholders' funds were on average 167.36%, 60.964%, and 5.777143% respectively, demonstrating good overall profitability. However, two-way ANOVA found significant differences in profitability ratios over the years.
3) Turnover ratios like
This document analyzes the socio-economic impact of deposit mobilization by Union Bank of India over a 13-year period from 1999-2000 to 2011-2012. It finds that there has been remarkable growth in all types of deposits, including term deposits, savings deposits, and current deposits. The study uses data from Union Bank of India's annual reports and statistical analysis techniques like averages and indices to examine deposit trends. Key findings are that deposit mobilization is essential for banks' operations and lending activities, and has helped boost various sectors of the Indian economy like agriculture and small businesses.
A study to evaluate the banking services provided to SME customers by ICICI b...apurv1993
A study to evaluate the banking services provided to SME customers by ICICI bank in uttar pradesh, introduction to the topic, review of literature,Objective of study, research methodolgy, limitations, conclusion, bibliography.
This document discusses banking sector reforms in India. It provides background on banking sector reforms initiated after 1991, including recommendations from the Narasimham Committee reports. The objectives of the study are outlined as having an overview of post-1991 reforms, evaluating the overall banking system scenario in India, and studying banking sector growth and performance. The structure of the Indian banking system is described, including the roles of public and private sector banks, regional rural banks, cooperative banks, and the Reserve Bank of India as the central bank and monetary authority.
A Study on Factors Influencing the Financial Performance Analysis Selected Pr...Dr. Amarjeet Singh
The growth of a country's banking sector has a significant impact on its economic development. The banking sector plays a critical role in determining a country's economic future. A well-planned, structured, efficient, and viable banking system is an essential component of an economy's economic and social infrastructure. In modern society, a strong banking system is required because it meets the financial needs of the modern society. In a country's economy, the banking system plays a crucial role. Because it connects surplus and deficit economic agents, the bank is the most important financial intermediary in the economy. The banking system is regarded as the economy's lifeline. It meets the financial needs of commerce, industry, and agriculture. As a result, the country's development and the banking system are intertwined. They are critical in the mobilisation of savings and the distribution of credit to various sectors of the economy. India's private sector banks play a critical role in the country's economic development. So The financial performance of private sector banks must be evaluated carefully.
Evaluation of some private commercial banks in bangladesh from performance pe...ijmvsc
Banks operate on a huge scale at the heart of the modern economy and the banking system has become an
integral part in the progress of economic development in Bangladesh. Besides, the banking sector has
made their innovation and efficiency crucial to the economy as it competes in an e-commerce world. The
role of banking system in this situation cannot be denied at all. This report intends to evaluate the
performance of selected private commercial banks in Bangladesh. In the study, best efforts have been put
on evaluating the performance. The growing pattern of branches, employees, deposits, loans and
advances, classified loan, net income and earnings per share of selected private commercial banks has
been considered to make an analysis on the performance evaluation of the selected private commercial
banks. To evaluate the performance, data have been collected from the secondary sources. Then the
collected data have been analyzed. From the analysis, it has been found that all of the selected banks are
in a position to make a sustainable growth in respect of branches, employees, deposits, loans and
advances, classified loan, net income and earnings per share during the period of 2007-2011 with some
fluctuation. Besides the growth pattern, other forms of calculations have been used for every selected
variable and they are trend equation and square of correlation coefficient. Under trend equation analysis,
the variables named branches, employees, deposits and net incomes hold more positive value than the
other variables considered. As the value of the slope always shows the positive number, it is a clear
indication that Bangladesh has a very good prospect in case of private commercial banks
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
This document provides a literature review on 9 previous research papers related to the relationship between liquidity management and profitability in banks. The papers examined liquidity ratios like CDR, CRDR and IDR and profitability ratios like ROA, ROE and ROI in various public sector, private sector and cooperative banks in India over different time periods. Most of the studies found an inverse or negative relationship between liquidity and profitability, indicating that increased liquidity leads to decreased profits and vice versa. The papers also compared performance between public and private sector banks, with most finding that private banks had better efficiency and profitability.
This document analyzes the financial performance of State Bank of India (SBI) using the Camel approach over the period of 2003-04 to 2009-10. The Camel approach assesses banks based on their Capital Adequacy, Asset Quality, Management Quality, Earnings, and Liquidity. The objective is to identify SBI's strengths and weaknesses to help investors make informed decisions. Previous studies on mergers and acquisitions in the Indian banking sector show mixed results on financial performance improvements. The analysis finds that SBI's performance varies across the different Camel ratios, with some ratios indicating strengths and others requiring improvement.
Measuring Technical and Scale Efficiency of Banks in India Using DEAiosrjce
This document summarizes a study that uses Data Envelopment Analysis (DEA) to measure the technical and scale efficiency of commercial banks in India from 2006 to 2010. Two DEA models, the CCR and BCC models, are used to estimate technical and scale efficiency. The results indicate that deregulation of the banking sector has led to an increase in efficiency over time. Private sector banks performed better than public sector banks during this period. The source of inefficiency was mainly due to scale rather than pure technical inefficiency.
This document provides an overview of public sector undertakings (PSUs) in India. It discusses that PSUs are government-owned companies that play an important role in India's economy. The document then covers several key topics regarding PSUs, including the financial management challenges they face, the role of financial advisors, examples of major PSUs, and reforms around disinvestment and increasing transparency. It analyzes issues like managing risks and growth in the changing banking environment in India. Overall, the document presents an introduction to PSUs and examines their operations, importance, and ongoing development.
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
This document provides background information and a literature review for a study on the relationship between liquidity and profitability in select public and private sector banks in India. It begins with an introduction to the topic, outlining the trade-off between liquidity and profitability for banks. It then reviews 10 previous research papers on similar topics, analyzing factors like liquidity ratios, efficiency, and performance comparisons between public and private sector banks. The reviewed papers examine issues like the effect of liquidity on profitability, comparing liquidity positions between bank types, and evaluating banks' financial health using the CAMEL model.
ICICI Bank was established in 1955 as the Industrial Credit and Investment Corporation of India to provide long-term financing for infrastructure and industry. It later transformed into a full-service bank providing loans, savings, insurance, and investment products. The document discusses ICICI Bank's history, objectives of analyzing its performance, methodology used including ratio analysis, and limitations of the study. It also includes an introduction to the company, outlining its founding, leadership, products, revenues, assets, and merger with ICICI Limited to create a large universal bank.
A project report on analysis of financial statement of icici bankProjects Kart
This document discusses a minor project report on the analysis of the financial statements of ICICI Bank. It provides background information on ICICI Bank, including its history, board of directors, organizational structure, products and services. It then outlines the objectives and contents of the financial statement analysis project, which includes studying ICICI Bank's profit and loss account, balance sheet, and cash flow statement as well as conducting ratio analysis and evaluating the bank's financial soundness.
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
Here are the key ways that banks can achieve liquidity:
1. Holding cash reserves - Banks are required to hold a certain percentage of deposits in the form of cash reserves that can be used immediately to meet liquidity needs. However, excess cash reserves reduce potential earnings.
2. Investing in government securities - Banks invest in short-term government bonds and treasury bills that can be easily sold in the market to generate cash. However, the returns may be lower than other investments.
3. Borrowing from other banks - Banks can borrow from other banks in the interbank market through instruments like federal funds, commercial papers etc. This provides quick access to funds but interest rates may be higher during liquidity cri
A Study on Relationship between Firm Size and Profitability: Selected Private...ijtsrd
The study is to identify the relationship between firm size and profitability of selected private sector banks in India. This study is classified as quantitative research followed with a descriptive research design. The Reserve Bank of India's publication of annual trend and progress of banking in India in June 2018, indicates that the total number of private sector banks in India is 21. The study selected the first five banks based on the hierarchy of the value of its total assets. The study is based on secondary data and it has been collected from the annual reports of the respective banks. The period of study is five years from 2015 to 2019. Firm size such as bank size is measured through the natural log of the book value of deposits, assets, and advances independent variables and the profitability is measured through the natural log of the book value of the net profit of the bank dependent variable . The data analysis includes descriptive statistics, correlation matrix, and linear regression. On the basis of the analysis, the study found that there is a significant relationship between independent variables and the dependent variable. Further, there is a positive correlation and statistically significant between these variables. Dr. Dhanuskodi Rengasamy "A Study on Relationship between Firm Size and Profitability: Selected Private Sector Banks in India" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-1 , December 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29621.pdf Paper URL: https://www.ijtsrd.com/economics/accounting/29621/a-study-on-relationship-between-firm-size-and-profitability-selected-private-sector-banks-in-india/dr-dhanuskodi-rengasamy
The document discusses Nestle India's efforts to promote sustainable agriculture and water stewardship. It describes projects Nestle has partnered on to introduce more efficient cultivation techniques for water-intensive crops like rice and sugarcane in the Kabini River basin. These techniques aim to benefit farmers through higher yields and lower costs while reducing water usage and promoting better soil health. The document also outlines Nestle's work with coffee and milk farmers to raise awareness on water conservation practices like drip irrigation, recycling, and optimizing water use.
Analysis of Internal, Market & Economic Based Financial Performance Measureme...IOSRJBM
The aim of this study is to investigate the financial performance of 10 commercial banks listed on Dhaka Stock Exchange. In this paper, financial performance has been measured by using three indicators. Internal–based performance measured by Return on Assets, Market-based performance measured by Tobin’s Q model (Price / Book value of Equity) and Economic–based performance measured by Economic Value adds. The correlation and multiple regression of annual time series data is used to find the impact of bank size, credit risk, operational efficiency and asset management on financial performance measured by the three indicators, The study rejected the null hypothesis and it is found that there exist statistically significant impact of bank size, credit risk, operational efficiency and asset management with ROA and Economic Value Added. On the other hand Tobin’s Q has insignificant impact on financial performance of commercial banks
This document analyzes the performance of banks in India before and after the World Trade Organization's General Agreement on Trade in Services (GATS). It discusses how GATS led to increased competition in India's banking sector through allowing more foreign bank presence. The study develops a composite index to rank different bank groups (public sector, private sector, foreign) based on measures of productivity, profitability, and efficiency. It finds that while foreign and new private banks initially outperformed public sector banks, the performance of traditional banks (public and old private) improved after GATS as they adapted to greater competition. The document provides context on banking reforms in India and reviews previous related studies.
This document summarizes Mahindra & Mahindra Ltd.'s performance management system. It discusses how the company uses a balanced scorecard approach to set strategic goals and key result areas for departments, functions, and individuals aligned with business objectives. It outlines the annual performance appraisal cycle which includes workshops for setting KRAs, mid-year reviews, final appraisals involving feedback and ratings, and counseling. The goal is to evaluate employee performance, provide development opportunities, and generate data for compensation and promotion decisions.
This document analyzes the financial performance of State Bank of India over a 5-year period from 2013-2018. Key findings from the analysis include:
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3) Turnover ratios like
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A study to evaluate the banking services provided to SME customers by ICICI b...apurv1993
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This document discusses banking sector reforms in India. It provides background on banking sector reforms initiated after 1991, including recommendations from the Narasimham Committee reports. The objectives of the study are outlined as having an overview of post-1991 reforms, evaluating the overall banking system scenario in India, and studying banking sector growth and performance. The structure of the Indian banking system is described, including the roles of public and private sector banks, regional rural banks, cooperative banks, and the Reserve Bank of India as the central bank and monetary authority.
A Study on Factors Influencing the Financial Performance Analysis Selected Pr...Dr. Amarjeet Singh
The growth of a country's banking sector has a significant impact on its economic development. The banking sector plays a critical role in determining a country's economic future. A well-planned, structured, efficient, and viable banking system is an essential component of an economy's economic and social infrastructure. In modern society, a strong banking system is required because it meets the financial needs of the modern society. In a country's economy, the banking system plays a crucial role. Because it connects surplus and deficit economic agents, the bank is the most important financial intermediary in the economy. The banking system is regarded as the economy's lifeline. It meets the financial needs of commerce, industry, and agriculture. As a result, the country's development and the banking system are intertwined. They are critical in the mobilisation of savings and the distribution of credit to various sectors of the economy. India's private sector banks play a critical role in the country's economic development. So The financial performance of private sector banks must be evaluated carefully.
- This document provides an introduction and background to a study evaluating the performance of commercial banks in India following banking sector reforms initiated in 1992.
- The objectives of the study are to assess the impact of reforms on efficiency, profitability, and performance of public sector banks compared to private sector banks.
- The study will analyze 11 years of data for 27 public sector banks and 24 private sector banks using 11 key performance indicators. Key findings will compare performance across time periods and bank groups.
052 om c-dhanapal&gganesan-measuring_operational_efficiency_of (1) (1)Anil Aks
This document summarizes a study that measures the operational efficiency of public sector banks in India. It analyzes factors that influence banks' profitability using regression analysis. The study finds that non-performing assets, total income, total expenses, and net interest margin are significant factors. It also uses data envelopment analysis to benchmark the relative efficiency of 21 public sector banks over 5 years. The results show that return on assets, net interest margin, non-performing loans, cost-to-income ratio, advances to deposits ratio, and capital adequacy ratio influence banks' profitability.
A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF PUBLIC SECTOR BANKS IN INDIA:...kishoremeghani
Banking sector is one of the fastest growing sectors in India. Today’s banking sector becoming more complex. The objective of this study is to analyze the Financial Position and Performance of the Bank of Baroda and Punjab National Bank in India based on their financial characteristics. This study attempts to measure the relative performance of Indian banks. For this study, we have used public sector banks. We know that in the service sector, it is difficult to quantify the output because it is intangible. We have chosen the CAMEL model and t-test which measures the performance of bank from each of the important parameter like capital adequacy, asset quality, management efficiency, earning quality, liquidity and Sensitivity.
A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF PUBLIC SECTOR BANKS IN INDIA ...Simar Neasy
This document presents a study comparing the financial performance of two major public sector banks in India, Bank of Baroda and Punjab National Bank, over a five-year period from 2010-2014 using the CAMEL model. The CAMEL model assesses banks based on Capital Adequacy, Asset Quality, Management Efficiency, Earnings, and Liquidity. The study uses various financial ratios under each CAMEL parameter and t-tests to determine if there are any significant differences between the two banks' financial positions and performances. The results of the t-tests show that for some ratios like total assets turnover ratio, there are significant differences, but for most ratios like capital adequacy, debt equity, and
ECONOMIC AND FINANCIAL ANALYSIS OF SBI AND BOB Jeetu Matta
This document provides an analysis of State Bank of India (SBI) and Bank of Baroda (BOB). It begins with an executive summary that outlines the objectives of the analysis, which are to examine different government norms, functions, risks, and strategies related to commercial banking in India. It also aims to analyze how economic issues affect the Indian banking sector. The document then provides detailed information on the introduction and functions of banks in India, types of bank accounts, an introduction to SBI and BOB, comparative analysis of banks and non-banking financial institutions, impact of mergers on cost efficiency, government policies related to SBI and BOB, risk management, effects of inflation on commercial banks, data analysis through financial ratios
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
The document discusses the financial performance of commercial banks in India. It provides background on commercial banks and their role in India's financial system. It then reviews previous literature on assessing bank performance and financial ratios. The document also includes a table showing the consolidated balance sheet of public sector banks in India for 2019-20, with capital, reserves, deposits, loans and other line items. Overall, the document examines the financial performance of commercial banks through analyzing their income, expenditures and consolidated balance sheets.
FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN INDIA
Dr.C. PARAMASIVAN Assistant Professor
G.RAVICHANDIRAN Ph.D. Full Time Research Scholar
PG & Research Department of Commerce Periyar E.V.R.College (Autonomous), Tiruchirappalli620023. (Affiliated to Bharathidasan University, Tiruchirappalli, India)
This document is a project report submitted by Vinay Kumar to Lovely Professional University in partial fulfillment of an MBA degree. The report analyzes the profitability and productivity of public sector banks, private sector banks, and foreign banks in India from 2003-2004 to 2007-2008. It aims to compare the performance of different bank categories and measure the impact of recent economic slowdowns. The methodology involves ratio analysis of key financial metrics like profitability, business per employee, and profit per employee. The report will be useful in understanding efficiency differences between bank ownership models in India.
This document is the index page of a seminar report on analyzing the performance of public sector banks in India using the CAMEL framework. The index lists the following chapter titles: introduction, literature review, history of the CAMEL framework, industry profile of the banking sector in India, description of the CAMEL model, and conclusions. It provides a brief overview of the topics to be discussed in each chapter, including definitions of key terms like scheduled commercial banks. The industry profile section gives a high-level history of banking in India from 1786 to present day and describes the three phases of development and nationalization of banks.
MERGERS AND ACQUISITIONS PROSPECTS: INDIAN BANKS STUDYpaperpublications3
This document discusses mergers and acquisitions in the Indian banking sector from 2000-2013. It analyzes the performance of three major banks that underwent mergers - ICICI Bank, State Bank of India, and HDFC Bank. The key findings were that M&As provided some benefits like economies of scale, increased market share and branch networks, and skill/talent transfer between organizations. However, the government should not promote mergers between strong and distressed banks as it can negatively impact the stronger bank's asset quality. The document also provides details on the history and reasons for M&As in Indian banking, as well as specific examples like ICICI Bank's acquisition of Bank of Madura in 2001.
A Dissertation Report On "Study Of Net Interest Margin {NIM} Of Selected INDIAN Public & Private Sector Banks"
Has Undertaken 10 Years Financial Data Of Selected Banks i.e. 2008-2017 for the Study.
STUDY OF ICICI MARKETING STRATEGIES OF FINANCIAL PRODUCTS by AKSHAT MAHENDRAAKSHAT MAHENDRA
Project on STUDY ON ICICI’s MARKETING STRATEGIES OF FINANCIAL PRODUCTS
ICICI BANK
ICICI
MARKETING STRATEGY
MARKET
Project on ICICI
Project on ICICI BANK
Project on Marketing strategy
Semester 5 BBI Blackbook Project 100 Marks
BBI SEM 5 Project
Project on Finance
Project on Finance BBI
B.Com (BANKING and INSURANCE)
Project for BBI
Project on Finance BANKING INSURANCE
BANKING & INSURANCE
Semester 5 B.Com BANKING and INSURANCE Blackbook Project 100 Marks
BANKING and INSURANCE
Semester 5 BANKING and INSURANCE Blackbook Project 100 Marks
B.Com BANKING and INSURANCE
This document analyzes the performance of banks in India before and after the World Trade Organization's General Agreement on Trade in Services (GATS). It discusses how GATS led to increased competition in India's banking sector through allowing more foreign bank presence. The study develops a composite index to rank different bank groups (public sector, private sector, foreign) based on measures of productivity, profitability, and efficiency. It finds that while foreign and new private banks initially outperformed public sector banks, the traditional banks improved after GATS as they adapted to greater competition. The document provides context on banking reforms in India and reviews prior literature on comparing performance of different bank ownership groups.
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Financial appraisal of commercial banks in india a post reforms asessment
1. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol.5, No.19, 2014
116
Financial Appraisal of Commercial Banks in India: A Post
Reforms Asessment
Laxmikanata Das
Research Scholar in Commerce,Fakir Mohan University, Balasore, Odisha-756025
laxmikanta171@gmail.com
Abstract
Banking sector, commercial banks in particular, dominate the India’s financial services industry that contributes
significantly to the revenues of this industry. Indian banking, as a matter of fact has undergone a metamorphosis
in the very concept, percept and outlook since nationalisation. The massive and speedy expansion and
diversification of banking scenario has not been without its strains. Being a commercial organization, they must
earn a fair return on capital after providing adequately for business risks. Even operating under environmental
constraints, there exists considerable scope for freedom of action for achieving higher operational efficiency of
the banking sector.The Indian bank management, today, is facing a two-sided challenge to improve their
profitability and productivity, and to serve the public in new ways with greater efficiencies and effectiveness.
Commercial viability of banking can seldom be ignored. Banking industry in India is undergoing a major
transformation due to changes in economic conditions and continuous deregulation. The implementation of
reforms has had an all round salutary impact on the financial health of the banking system, as evidenced by the
significant improvements in a few salient financial indicators of the banking system. Since deregulation and
liberalization of economic policy and banking regulation, a number of studies have been made on the impact and
analysis of performance of commercial banks in India in different time frame. Therefore, to be more precise, it is
required that one such study which analyses of financial performance of the banks during post reform period
should be carried on.
Keywords: Commercial Banks in India, Profitability, Factor analysis
01. INTRODUCTION:
The economic growth and stability of a country substantially depends on its capital formation and accumulation.
To achieve the same, financial resources of the country must be mobilized towards productive avenues. Among
the financial institutions, commercial banks play a vital role in capital accumulation in the form of saving, credit
creation and act as intermediaries for different financial services like investment, broking, forex etc. The
country’s economic policy framework combines socialistic and capitalistic features with a heavy bias towards
public sector investment. The new millennium has brought with it challenges and opportunities in various fields
of economic activities including banking.
Today, 20 years after economic liberalization began; we have a vibrant banking sector, powered by both
improved-efficiency public sector banks and growth-hungry private ones. However, the last couple of decades
have witnessed continuous change in regulation, technology and competition in the global financial services
industry. Rising cost-income ratios and declining profitability reflect increased competitive pressure. The
massive expansion in branches, the rapid growth in deposits and advances are quite phenomenal and
unprecedented. It is thus imperative to examine the impact of banking reforms on commercial banks
performance. To assess the stability of the banking system, it is therefore crucial to benchmark the performance
of banks operating in India.
02. IMPORTANCE OF THE STUDY:
In the process of satisfying the canon of social purpose in their lending operations, banks could not adequately
take care of the traditional canons of viability, productivity, liquidity and profitability. As a matter of fact,
commercial banks in India in the recent past have developed certain rigidities and weaknesses. The profitability
of the banking sector during recent times has been under tremendous strain and therefore, the operational
efficiency in the present phase has to be measured by the measuring rod of profitability alone. While there have
been several piecemeal studies covering the various aspects of profitability of various banks groups, there has
been no systematic and comprehensive effort to study the trend of performance, the different parameters of
profitability and a comparative analysis of various bank groups operating in India in terms of profitability. In
view of the importance of improving the profitability and productivity of the banking sector in recent years, an
effort to identify the various factors which significantly influence that performance bottom of banks in either
direction is all most essential.
03. OBJECTIVE OF STUDY:
The main thrust of the study is to make an empirical analysis of performance in terms of profitability and
2. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol.5, No.19, 2014
117
operational efficiency of commercial banks in India over 20 years period covering 1990-2010. The broad
objectives of the study are detailed below:
(i) To evaluate the operational performance of the commercial banks through a comparative study
between different banking groups.
(ii) To examine the profitability of different scheduled commercial banks with application of a
model framework.
(iii) To analysis the factors contributing to the low/high profitability, increased/decreased liquidity
position and operational efficiencies of each group during the period of study.
04. RESEARCH METHODOLOGY:
The present study aims at analyzing the performance of commercial banks during 1990-91 to 2009-10. For the
purpose of this study, all banks are grouped under four group like SBI & Associates, Nationalized Banks, Private
Sector Banks and Foreign Banks. The study includes twenty-eight public sector banks, twenty-one private banks
and thirty foreign banks. It is prominent to mentioned here that state bank of Saurashtra has been merged with
State Bank of India since September 2008. The entire study is based on the secondary data only. The secondary
data have been collected from various publications of Reserve Bank of India, Central Government and Indian
Banks Association. The analysis has been made with statistical tools of analysis like correlation, regression, co-
efficient of variation and Factor Analysis.
05. REVIEW OF LITERATURE:
Earlier a number of studies have been conducted relating to financial performance analysis, cost analysis and
productivity of Indian commercial banks. A close review of those dispersed efforts at research field is attempted
in the following paragraphs.
Goiporia (1992)[1]
in his article has made a general view about the profitability of banks and
maintained that if adequate profit have to flow, following priorities will have to be observed by the banks (a)
among fund based operation the lending operation have to be directed to areas which would maximize
profitability and growth, consistent with the long term objectives of the institution, after priority sector lending
goals are attained (b) to promote non fund based operation (c) charging fees from banks services after taking into
consideration the cost benefit of services offered, etc.
Chidambaram R.M. and Alamelu K (1994)[2]
in their study entitled “Profitability in Banks, a Matter
of Survival” pointed out the problem of declining profit margins in the Indian public sector banks as compared to
their private sector banks counterparts. It was observed that in spite of similar social obligations; all most all the
private sector banks have been registering both high profits and high rate of growth with respect to deposits,
advances and reserves as compared to the public sector banks.
Bhattacharyya et al (1997)[3]
evaluated the impact of limited liberalization initiated before the
deregulation of the nineties on the performance of the different categories of banks, using data envelopment
analysis. Their study covered 70 banks during the period 1986-91. They found that the public sector banks had
the highest efficiency among the three categories, with private and foreign banks having much lower efficiencies.
However, public sector banks started showing a decline in efficiency, private banks showed no change and
foreign banks showed a sharp rise in efficiency after 1987.
Ram Mohan (2003)[4]
in his paper documented and evaluated the performance of the public, private
and foreign banks since deregulation in absolute and in relative terms, and attempts to understand the factors
behind their improved performance. It was observed that the efficiency of the banking system as a whole
measured by declining spreads has improved both in absolute and relative terms. It is observed that efficiency
should not be at the cost of stability. He cautions that Indian experience so far suggests that government
ownership might conduce to such trade off.
Santi and Soma (2006)[5]
analyzed the productivity and profitability of five public and five private
sector bank in India during the period 1996-97 to 2003-04 and revealed that except for a few cases the
productivity index was greater than on for all the selected banks through definite trend was not observed. In the
matter of achieving target level of profitability, SBI and PNB were the most successful banks followed by HDFC
bank and ICICI bank. On the there hand, the performance of Jammu & Kashmir Bank, Canara bank, and Bank
of India was very poor in terms of achievement of target.
Kumar Sharad and Sreeramulu M (2007)[6]
have compared the 12 year’s data from 1997 to 2008 on
3. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol.5, No.19, 2014
118
productivity factors viz. ‘Business per Employee’ (BPE) and ‘Profit per Employee’ (PPE) and employee cost
factors viz. ‘Employee Cost to total Business’, ‘Employee Cost to total Assets’ and ‘Employee Cost to Operating
Expenses’ of banks in India. It was observed that the performance of the modern banks (foreign and new private
sector banks) was much superior to the traditional banks (public sector and old private sector banks). However,
the gap between the performance of modern and traditional banks on all the five variables has shown a decreasing
trend, which has significantly reduced during the period of 12 years under study.
Arora Sangeeta and Kaur Shubpreet (2008)[7]
in their article entitled “ Diversification in Banking
Sector in India Determinants of Financial Performance” attempted to study the determinants of diversification of
banks in India and to analyzed the financial performance of banks over the period of 2000 to 2006. It was found
that though the interest income is still a major source of income in the operation of banks in India, but the
phenomenon of non interest income is also acquiring added significance in the wake of declined interest margins
and increased disintermediation in commercial banking.
Dr. N. Bharathi (2010)[8]
in his study “ Profitability Performance of New Private sector banks- An
Empirical Study” analyzed the profitability and consistency of nine new private sector banks over the period of
10 years from 1998 to 2007. He used 18 different ratios and concluded that the new economic environment
facilitated the growth and development of these private sector banks and can improve their performance by
identifying and concentrating on the relevant areas where the attention is much needed and there is scope for
improvement.
Dey Sanjeeb Kumar (2010)[9]
has made an empirical analysis of performance in terms of profitability
and productivity of public sector banks in India over 06 years period covering 2003-04-2008-09. All twenty
nationalized banks (including IDBI bank) among the public sector bank have performed well in comparison to
SBI and its eight associates banks. It was also seen that the average spread ratio was maximum in Panjab &
Sindh Bank results in more contribution to profits and reverse is for IDBI bank.
Dr. R K Uppal (2011)[10]
his study mainly concerned with the analysis of comparative performance of
specific bank groups during the period of 2003-04 to 2008-09. He concluded that although most of the banks
have succeeded to bring down their non-performing assets and costs, but still they are facing deterioration in
their profitability. Most of the public sector banks even with the highest share in assets, rural branches, priority
sector advances and investments of all scheduled commercial banks, still have to face competition in terms of
new challenges from new private sector banks and foreign banks as their cost is the highest along with
continuous deterioration in profits and spread.
06. ANALYSIS & INTERPRETATION:
The primary objective of this analysis is to determine the factors that significantly influence the bank’s
profitability in either direction. Profitability performance of commercial banks can be studied by measurement
of net profit. In this study total business has been considered as base for calculating the various profitability
ratios instead of working funds i.e. net profit ratio as percentage of total business (Y), the dependent variable for
multivariate statistical analysis.To have a more precise analysis, the following 9 factors (independent variable i.e.
X1 to X9) were selected for the study i.e. Interest earned as percentage of total business (X1), Interest expended
as percentage of total business (X2),Spread as percentage of total business (X3), Non-interest expenses as
percentage of total business (X4), Non-interest income as percentage of total business (X5), Burden as
percentage of total business (X6), Total advances as percentage of total deposit (X7), Non-Interest income as
percentage of total income (X8), Interest Income as percentage of total income (X9).
Correlation Analysis: SBI Groups:
Table No.1 presents the bivariate correlation matrix of the selected variables with bank profitability for State
Bank of India and its associate banks for the period over 20 years i.e. 1990 to 2010. Two variables namely Non-
Interest income as percentage of total income (X8), Interest income as percentage of total income (X9) are
observed to have significant positive and negative relationship respectively with profitability (Y) i.e. net profit as
percentage of total business, the coefficients are 0.653 and -0.654. Analysis of correlation coefficient between
the independent variables reveals that X1 (interest earned) is highly correlated with X2 (interest paid),
X3(spread), X4(non-interest expenses) and X6 (Burden as percentage of total business) where degree of
association is above 0.875. X2 (interest paid) is highly correlated with X4 and X8. X3 is having high degree of
positive correlation with X4 and X6. Similarly X6 (burden) has high degree of negative correlation with X8 i.e.
-0.759.
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Table No. 1: Correlation Matrix of SBI and Associates (1990-2010)
Y X1 X2 X3 X4 X5 X6 X7 X8 X9
Y 1
X1 -.343 1
X2 -.347 .983** 1
X3 -.305 .938** .859** 1
X4 -.421* .965** .915** .969** 1
X5 .215 .701** .678** .678** .678** 1
X6 -.640** .875** .823** .891** .931** .363 1
X7 -.125 -.283 -.261 -.299 -.233 -.481* -.057 1
X8 .653** -.579** -.599** -.486* -.535** .162 -.759** -.199 1
X9 -.654** .579** .599** .485* .535** -.162 .759** .199 -1.000 1
* Correlation is significant at the 0.05 level (1-tailed).
** Correlation is significant at the 0.01 level (1-tailed).
Correlation Analysis: Nationalised Banks:
Table No.2 presents the bivariate correlation matrix of the selected variables with bank profitability for 19
Nationalised banks and IDBI bank for the period over 20 years i.e. 1990 to 2010. Only three variables namely
Burden as percentage of total business (X6), Interest expenses as percentage of total business (X2) and non
Interest expenses as percentage of total income (X4) are observed to have significant relationship with
profitability (Y) i.e. net profit as percentage of total business, the coefficients are –0.849, -0.449 and -0.765.
Analysis of correlation coefficient between the independent variables reveals that X1 shows a high degree of
positive correlation coefficient with X2, X3 and X4 where as it is negatively correlated with X7 & X8. Similarly
X6 witnesses highly degree of positive correlation with X4 and X7 registers a high negative correlation with X4.
Unlike SBI groups, Nationalised banks also witness a high degree (1.000) correlation between X8 and X9. On
the other hand, X7 has almost strong negative correlation matrix with all variables except y.
Table No. 2: Correlation Matrix of Nationalised Banks (1990-2010)
Y X1 X2 X3 X4 X5 X6 X7 X8 X9
Y 1.000
X1 -0.388 1.000
X2 -0.449* 0.976** 1.000
X3 -0.096 0.773** 0.618 1.000
X4 -0.765** 0.753** 0.715** 0.641** 1.000
X5 0.122 0.281 0.163 0.543** 0.323 1.000
X6 -0.849** 0.703 0.702** 0.498* 0.950** 0.011 1.000
X7 0.312 -0.768** -0.693 -0.758** -0.767** -0.705** -0.577 1.000
X8 0.423 -0.546 -0.634 -0.128 -0.328 0.645** -0.559 0.011 1.000
X9 -0.423 0.547 0.634 0.129 0.328 -0.645** 0.559 -0.012 -1.000 1.000
* Correlation is significant at the 0.05 level (1-tailed).
** Correlation is significant at the 0.01 level (1-tailed).
Correlation Analysis: Private Banks:
Table No. 3 presents the bivariate correlation matrix of the selected variables with bank profitability for Private
Banks for the period over 20 years i.e. 1990 to 2010. Only two variables namely Non-interest income as
percentage of total business (X5) and Burden as percentage of total business (X6) are observed to have
significant positive and negative relationship respectively with profitability (Y) i.e. net profit as percentage of
total business, the coefficients are 0.759 and –0.720. Analysis of correlation coefficient between the independent
variables reveals that X1 shows a high degree of positive correlation with X2 & X9 and negative correlation with
X7 and X8. Similarly, X3 shows a high degree of positive correlation coefficient with X4 and X6 witnesses a
high degree of positive relation with X9. Unlike SBI groups, Private banks also witness a high degree (1.000)
correlation between X8 and X9. Among X6, X7,X8 And X9 ,there exists a high degree of colleniality with each
other.
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Table No. 3: Correlation Matrix of Private Banks (1990-2010)
Y X1 X2 X3 X4 X5 X6 X7 X8 X9
Y 1.000
X1 -0.112 1.000
X2 0.020 0.932** 1.000
X3 -0.348 0.548* 0.209 1.000
X4 -0.492* 0.589** 0.295 0.913** 1.000
X5 0.759** -0.222 -0.008 -0.584** -0.504* 1.000
X6 -0.720** 0.471 0.176 0.866** 0.870** -0.864** 1.000
X7 0.387 -0.759** -0.647** -0.556 -0.657** 0.406 -0.614** 1.000
X8 0.574** -0.767** -0.581** -0.730 -0.706 0.793 -0.864 0.747 1.000
X9 -0.571** 0.770** 0.585** 0.730 0.707 -0.789 0.862 -0.751 -1.000 1.000
* Correlation is significant at the 0.05 level (1-tailed).
** Correlation is significant at the 0.01 level (1-tailed).
Correlation Analysis: Foreign Banks:
Table No.4 presents the bivariate correlation matrix of the selected variables with bank profitability of Foreign
Banks for the period over 20 years i.e. 1990 to 2010.
Table No..4: Correlation Matrix of Foreign Banks (1990-2010)
Y X1 X2 X3 X4 X5 X6 X7 X8 X9
Y 1.000
X1 -0.489* 1.000
X2 -0.538* 0.965** 1.000
X3 0.256 -0.010 -0.272 1.000
X4 -0.672** 0.508* 0.498 -0.037 1.000
X5 0.651** -0.367 -0.463 0.419 -0.064 1.000
X6 -0.902** 0.608** 0.657** -0.276 0.807** -0.641** 1.000
X7 0.363 -0.356 -0.305 -0.144 -0.123 0.462 -0.368 1.000
X8 0.658** -0.830** -0.866** 0.255 -0.324 0.818** -0.733 0.521* 1.000
X9 -0.705** 0.820** 0.855** -0.251 0.350 -0.828** 0.759 -0.525* -0.997** 1.000
* Correlation is significant at the 0.05 level (1-tailed).
** Correlation is significant at the 0.01 level (1-tailed).
Only two variables namely non interest income as percentage of total business (X5) and non interest income as
percentage of total income (X8) are observed to have significant and positive relationship with profitability (Y)
i.e. net profit as percentage of total business, the coefficients are 0.651 and 0.658. However interest earned as
percentage of total business (X1), Interest expended as percentage of total business (X2) reveal a negative but
insignificant relationship with profitability i.e. -0.489 and –0.538 (at 0.01 significant level).
Regression Analysis of SBI Group Banks:
Table No. 5 indicates the regression equation along with analysis of variances of selected variables of SBI group
in response to its profitability over the period of 20 years. In response to all two variables (X3 & X6), VIF stands
below 10 which indicate multi co linearity of variables not influencing the regression result . On the other hand,
analysis of variance indicates that DF (degree of freedom) for the variables that are considered for the regression
is 2 and SS (sum of squares) is 0.85. Similarly, p value in the analysis of variance (0.000) shows that the model
estimated by the regression procedure is significant at 0.05. On the other hand, F value (25.89) is much more
than p value. Thus it signifies that the regression equation is well-matched for measuring the profitability of SBI
groups.
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Table No. 5: Regression Analysis of SBI Group Banks
The regression equation is
Y = 0.166 + 0.428 X3 - 0.740 X6
Predictor Coef SE Coef T P VIF
Constant 0.1660 0.1554 1.07 0.300
X3 0.42763 0.08805 4.86 0.000 4.855
X6 -0.7399 0.1098 -6.74 0.000 4.855
S = 0.128298 R-Sq = 75.3% R-Sq(adj) = 72.4%
Analysis of Variance
Source DF SS MS F P
Regression 2 0.85226 0.42613 25.89 0.000
Residual Error 17 0.27983 0.01646
Total 19 1.13209
Durbin-Watson statistic = 1.06297
Regression Analysis: Nationalised Banks (1990-2010):
Table No.6 indicates the regression equation along with analysis of variances of selected variables of
Nationalised bank in response to its profitability over the period of 20 years. The regression equation is proving
the results of stepwise regression analysis that results in 72.80% of coefficient of determination (Adjusted R-sq).
In response to all three variables (X2, X4, & X6), VIF stand around10 which indicate multicollinearity of
variables not influencing the regression result. On the other hand, analysis of variance indicates that DF (degree
of freedom) for the variables that are considered for the regression is 3 and SS (sum of squares) is 6.71.
Similarly, p value in the analysis of variance (0.000) shows that the model estimated by the regression procedure
is significant at 0.05. On the other hand, F value (17.92) is much more than p value. Thus it signifies that the
regression equation is compatible for measuring the profitability of Nationalised Banks.
Table No. 6: Regression Analysis of Nationalized Banks
The regression equation is
Y = 0.387 + 0.161 X2 + 0.308 X4 - 1.47 X6
Predictor Coef SE Coef T P VIF
Constant 0.3869 0.4803 0.81 0.432
X2 0.1605 0.1054 1.52 0.147 2.071
X4 0.3082 0.4163 0.74 0.470 10.763
X6 -1.4660 0.4316 -3.40 0.004 10.362
S = 0.353461 R-Sq = 77.1% R-Sq(adj) = 72.8%
Analysis of Variance
Source DF SS MS F P
Regression 3 6.7170 2.2390 17.92 0.000
Residual Error 16 1.9990 0.1249
Total 19 8.7160
Durbin-Watson statistic = 1.31010
Regression Analysis: Private Banks (1990-2010):
Table No. 7 indicates the regression equation along with analysis of variances of selected variables of Private
bank in response to its profitability over the period of 20 years. The regression equation is proving the results of
regression analysis that results in 80.0% of coefficient of determination (Adjusted R-sq). In response to all three
variables (X3, X4, & X6), VIF stands much below 10 which indicate multicollinearity of variables not
influencing the regression result. On the other hand, analysis of variance indicates that DF (degree of freedom)
for the variables that are considered for the regression is 3 and SS (sum of squares) is 0.69.
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Table No. 7: Regression Analysis of Private Banks (Profitability Analysis)
The regression equation is
Y = 0.231 + 0.572 X3 - 0.212 X4 - 0.667 X6
Predictor Coef SE Coef T P VIF
Constant 0.2306 0.2354 0.98 0.342
X3 0.5719 0.1199 4.77 0.000 6.885
X4 -0.2123 0.1985 -1.07 0.301 7.110
X6 -0.66702 0.09408 -7.09 0.000 4.703
S = 0.0939155 R-Sq = 83.2% R-Sq(adj) = 80.0%
Analysis of Variance
Source DF SS MS F P
Regression 3 0.69818 0.23273 26.39 0.000
Residual Error 16 0.14112 0.00882
Total 19 0.83930
Durbin-Watson statistic = 1.00086
Similarly, p value in the analysis of variance (0.000) shows that the model estimated by the regression procedure
is significant at 0.05. On the other hand, F value ( 26.39) is much more than p value. Thus it signifies that the
regression equation is well-matched for measuring the profitability of Nationalised Banks.
Regression Analysis: Foreign Banks (1990-2010):
Table No. 8 indicates the regression equation along with analysis of variances of selected variables of foreign
bank in response to its profitability over the period of eleven years. The regression equation is proving the
results of regression analysis that results in 79.7% of coefficient of determination (Adjusted R-sq). In response
to selected six variables (X2, X4, & X6), VIF stand below 10 which indicate multicollinearity of variables not
influencing the regression result. On the other hand, analysis of variance indicates that DF (degree of freedom)
for the variables that are considered for the regression is 3 and SS (sum of squares) is 14.95. Similarly, p value
in the analysis of variance (0.000) shows that the model estimated by the regression procedure is significant at
0.05. On the other hand, F value (25.88) is much more than p value. Thus it signifies that the regression equation
is well-matched for measuring the profitability of Nationalised Banks.
Table No. 8: Regression of Foreign Banks (Profitability Analysis)
The regression equation is
Y = 0.977 + 0.0609 X2 + 0.220 X4 - 1.10 X6
Predictor Coef SE Coef T P VIF
Constant 0.9767 0.7224 1.35 0.195
X2 0.06091 0.07866 0.77 0.450 1.770
X4 0.2198 0.2261 0.97 0.345 2.882
X6 -1.1000 0.2001 -5.50 0.000 3.814
S = 0.438875 R-Sq = 82.9% R-Sq(adj) = 79.7%
Analysis of Variance
Source DF SS MS F P
Regression 3 14.9522 4.9841 25.88 0.000
Residual Error 16 3.0818 0.1926
Total 19 18.0340
Durbin-Watson statistic = 1.46235
Factor Analysis: SBI groups:
Table No. 9 represents factor loading of selected variables for the SBI and its seven associate banks over the
period 1990-2010.Factor analysis have identified three factors out of the selected variables under study. The
most important determinant of Factor-I is X1 (interest earned as percentage of total business) with factor loading
0.966 and its influence on the other common factors is very less. The other significant variables in Factor-I are
X4 (Non-interest expenses as percentage of total business), X6 (Burden as percentage of total business) and X8
(Non-Interest income as percentage of total income) with factor loading 0.962, 0.963 and -0.729 respectively.
Further, it observed from the communality factor column, except for five variables (Y, X2, X3, X8,X9),
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all other variables could explain the variations in selected variables to the extent of above 93.20%. This is in
conformity with the results of correlation and regression analysis, each of which revealed that spread as
percentage of total business (X3) has positive effect on bank profitability (Y) and Burden as percentage of total
business (X6) has negative effect on profitability of banks.
Table No..9: Factor Analysis of SBI Group Banks (1990-2010)
Principal Component Factor Analysis of the Correlation Matrix
Unrotated Factor Loadings and Communalities
Variable Factor1 Factor2 Factor3 Communality
Y -0.537 0.595 -0.348 0.763
X1 0.966 0.224 -0.071 0.989
X2 0.941 0.189 -0.070 0.927
X3 0.923 0.268 -0.066 0.929
X4 0.962 0.201 -0.079 0.973
X5 0.518 0.819 -0.182 0.971
X6 0.963 -0.152 -0.010 0.950
X7 -0.186 -0.652 -0.713 0.968
X8 -0.729 0.627 -0.038 0.926
X9 0.729 -0.627 0.038 0.926
Variance 6.1798 2.4570 0.6868 9.3236
% Var 0.618 0.246 0.069 0.932
Principal Component Factor Analysis of the Correlation Matrix, Rotated Factor Loadings and Communalities,
Varimax Rotation
Factor Analysis: Nationalised Banks:
Table No. 10 represents factor loading of selected variables for the nineteen Nationalised Banks and IDBI bank
over the period 1990-2010.Factor analysis has identified three factors out of the selected variables under study.
The most important determinant of Factor-I is X3 (Spread as percentage of total business) with factor loading
0.906 and its influence on the other common factors is very less. The other significant variables in Factor-I are
X1 (Interest Earned as percentage of total business) and X7 (Total advances as percentage of total deposit) with
factor loading 0.876 and -0.868 respectively.
In case of Nationalised bank, the variations of X3 accounted for the Factor-I is square of factor loading
of the variable i.e. (0.906)2
= 0.8208. It implies that 82.08% of the total variation is counted by Factor-I.
Similarly, X8 (non Interest income as percentage of total income) has relatively higher loading (0.961) with
Factor-II and all the three factors could explain nearly 99.80% variation in banks profitability. Further, it
observed from the communality factor column, except for three variables (X2, X3, X7), for all other variables,
the six factor derived could explain the variations in selected variables to the extent of above 95.50%.
Table No..10: Factor Analysis of Nationalised Banks (1990-2010)
Variable Factor1 Factor2 Factor3 Communality
Y -0.034 0.209 0.960 0.966
X1 0.876 -0.374 -0.275 0.982
X2 0.777 -0.473 -0.310 0.924
X3 0.906 0.027 -0.088 0.829
X4 0.601 -0.061 -0.785 0.982
X5 0.626 0.765 -0.004 0.978
X6 0.428 -0.317 -0.829 0.970
X7 -0.868 -0.213 0.346 0.919
X8 -0.147 0.961 0.230 0.998
X9 0.147 -0.961 -0.229 0.998
Variance 3.9252 2.9902 2.6299 9.5453
% Var 0.393 0.299 0.263 0.955
Principal Component Factor Analysis of the Correlation Matrix, Rotated Factor Loadings and Communalities,
Varimax Rotation
Factor Analysis: Private Sector Banks:
Table No. 11 represents factor loading of selected variables for the twenty three Private sector banks over the
period 1990-2010.Factor analysis has identified three factors out of the selected variables under study. The most
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important determinant of Factor-I is X2 (Interest Expended as percentage of total business) with factor loading
0.989 and its influence on the other common factors is very less. The other significant variables in Factor-I are
X1 (Interest Earned as percentage of total business) and X7 (Total advances as percentage of total deposit) with
factor loading 0.929 and -0.720 respectively.
Table No. 11: Factor Analysis of Private Sector Banks (1990-2010)
Variable Factor1 Factor2 Factor3 Communality
Y -0.006 0.902 0.152 0.837
X1 0.929 -0.052 -0.344 0.984
X2 0.989 0.057 -0.004 0.981
X3 0.226 -0.271 -0.921 0.973
X4 0.293 -0.293 -0.873 0.933
X5 -0.071 0.906 0.320 0.928
X6 0.212 -0.688 -0.691 0.995
X7 -0.720 0.306 0.378 0.755
X8 -0.623 0.628 0.432 0.968
X9 0.627 -0.624 -0.432 0.969
Variance 3.3277 3.1496 2.8466 9.3239
% Var 0.333 0.315 0.285 0.932
Principal Component Factor Analysis of the Correlation Matrix, Rotated Factor Loadings and Communalities,
Varimax Rotation
In case of Private Sector bank, the variations of X2 accounted for the Factor-I is square of factor loading of the
variable i.e. (0.989)2
= 0.9781. It implies that 97.81% of the total variation is counted by Factor-I. Similarly, X5
(Non-interest income as percentage of total business) has relatively higher loading (0.906) with Factor-II and all
the three factors could explain nearly 92.8% variation in banks profitability.
Factor Analysis: Foreign Banks:
Table No. 12 represents factor loading of selected variables for the Thirty Foreign banks over the period 1990-
2010. Factor analysis has identified three factors out of the selected variables under study. The most important
determinant of Factor-I is X8 (Non-Interest income as percentage of total income) with factor loading 0.867 and
its influence on the other common factors is very less. The other significant variables in Factor-I are X7 (Total
advances as percentage of total deposit) and X9 (Interest Income as percentage of total income) with factor
loading 0.765 and -0.857 respectively.
Table No. 12: Factor Analysis of Foreign Banks (1990-2010)
Variable Factor1 Factor2 Factor3 Communality
Y 0.394 -0.706 -0.352 0.777
X1 -0.683 0.580 -0.123 0.819
X2 -0.648 0.583 0.121 0.774
X3 -0.036 -0.092 -0.914 0.844
X4 0.006 0.975 -0.067 0.956
X5 0.717 -0.095 -0.608 0.894
X6 -0.420 0.806 0.309 0.921
X7 0.765 -0.004 0.173 0.615
X8 0.867 -0.380 -0.277 0.973
X9 -0.857 0.407 0.285 0.981
Variance 3.8041 3.1033 1.6462 8.5536
% Var 0.380 0.310 0.165 0.855
Principal Component Factor Analysis of the Correlation Matrix, Rotated Factor Loadings and Communalities,
Varimax Rotation
In case of Foreign bank, the variations of X8 accounted for the Factor-I is square of factor loading of the variable
i.e. (0.867)2 =
0.7516. It implies that 75.16% of the total variation is counted by Factor-I. Similarly, X4 (Non-
interest expenses as percentage of total business) has relatively higher loading (0.975) with Factor-II and all the
three factors could explain nearly 95.60% variation in banks profitability.
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07. SUGGESTIONS
Productivity and profitability are interrelated. Though productivity is not the sole factor, it is an important factor
in influencing profitability. The key to increase profitability is increased productivity. Public sector banks (both
SBI group and Nationalised banks as a whole) have not been as profitable as the other banks primarily because
of two reasons – Low Productivity and High Burden ratio. To overcome these drawbacks they should chalk out a
program to increase productivity. We have the following suggestions for the public sector banks.
1. Public sector banks have been trying to reduce the number of staff employed either by encouraging
second round of VRS or opening new branches with the existing manpower.
2. They should have a strategic tie up with the rural regional banks for reaching the far off areas instead of
opening branches themselves in the areas, which cannot provide them the break even business.
3. Indian public sector banks have a unique advantage over their competition in terms of their branch
network and the large customer base, but it is the use of technology that will enable PSBs to build on
their strengths.
4. Irrespective of bank groups, especially SBI group should pay attention to make a set off between the
deposits and advances.
5. Banks should develop core competencies in niche markets, introduce innovative products and adopt
product-branding techniques to augment their business along with income. More and more ancillary
financial services should be undertaken to at least break even the operating expense out of non-interest
incomes.
6. The commercial banks should conduct regular customer survey in order to identify the emerging
demand/ changing need for banking services. No doubt, activation of Banking Ombudsman for
consumer complaint by the RBI is a welcome step since 2006. However, attention must be given not
only to resolve the complaint as quickly as possible but also to initiate action to reduce the same.
7. To improve productivity of banks employees, bank should introduce performance based compensation
plan.
08. CONCLUSION
Mainly two variables namely Non-interest income as percentage of total business (X5) and Non-Interest income
as percentage of total income (X8) are observed having significant positive relation with profitability (Y) i.e. net
profit as percentage of total business irrespective of bank groups. The variables having significant negative
correlation coefficient with bank profitability are Non-interest expenses as percentage of total business (X4)
Burden as percentage of total business (X6) and Interest Income as percentage of total income (X9). Multiple
Regression analysis reveals that X4 and X6 play major role in determination of banks profitability. In case of
SBI Group and private banks, spread as percentage of total business (X3) influences profit significantly . Factor
analysis is primarily used to examine the structure of data by explaining the correlations among variables. It has
identified three factors out of the selected variables under study. This is in conformity with the results of
correlation analysis and multiple regression analysis, each of which revealed that spread as percentage of total
business (X3) has almost positive effect on bank profitability (Y) and Burden as percentage of total business (X6)
has negative effect on profitability of banks.
REFERENCES
1. Goiporia M N., ‘Bank, Profitability- some Issues’, Pigmy Economic Review, Vol. 37, No.9, Apr 1992.
2. Chidambaram R.M.& Alamelu K. (1994), “Productivity in Banks, a matter of survival”, The Banker,
May, pp.1-3
3. Battacharyyaa, Arunava, CAK Lovell and Pankaj Sahay, (1997): ‘ The Impact of Liberalisation on the
Productive Efficiency of Indian Commercial Banks’, European Journal of Operational Research 1998,
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