Efficiency of Private Sector Banks in India (2005-2010)
Abstract
The main focus of the study on “Efficiency of Private Sector Banks “, was to measure the efficiency levels of the 15 private sector hanks taken for the study. The secondary objectives were to compute and evaluate the details of the input and the output of the different banks to analyze the performances in each of the five years and to rank the three most efficient and three least efficient banks. The significance of the study, apart from mea-suring efficiency, relates to the best practices of the banks to achieve a high level of efficiency. The deposits, advances, non performing assess (NPAs), interest and operating expenses and the investments were taken and the efficiency score% was computed using the formula output/input *100. Further, the mean scores were compiled to discover the independent and overall efficiency and the year of highest efficiency. The findings of the study were that the NPAs posed a major threat to the bank. The failureto monitor the quality Qf assets was the main problem behind the NPAs. Also. the credit processes were not scrutinized properly unless there was a fall in any of the years. Lending to the priority sectors also contributed much to the NPAs. Based on the study, the recommendations include, conducting recovery camps, increasing customer database, continuous monitoring of the quality of assets and stricter credit policies. It was concluded that the formation of unique strategies for each issue stated above and providing customized services would alone assist the banks to uphold their efficiency levels.
Authors
P htradhara.ian, Dr P Bikkraman