management efficiency and profitability of selected indian ... · aims at identify management...
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Management Efficiency and Profitability Of Selected Indian Public And
Private Sector Banks
J.Kumar
Research Scholar,
Sathyabama Institute of Science and Technology, Chennai 600 119.
Email id: [email protected]
Dr. R. Thamilselvan
Research Supervisor and Associate Professor,
Faculty of Management studies,
Sathyabama Institute of Science and Technology, Chennai 600 119.
Email id: [email protected]
Abstract
Commercial banks play a vital role in the development of the industry and trade. They are
performing not only the curator of the country but also resource of country. The present study
aims at identify Management Efficiency and Profitability of selected Indian public and private
sector banks. The study considered a sample of top ten Banks (7 public sector banks and 3
private sector banks) for the period from 1, April 2005 to March 31, 2016. The study is based on
the secondary data, procured and extracted from financial statements of the selected banks. The
collected data has analyzed using various financial ratios and statistical tools like Geometric
Mean Standard deviation and Compounded Annual Growth Rate have been accomplished.
Indian banking will brace for new challenges for entry of new types of lenders intensifies
competition while high bad loan. It is found that in management efficiency IDBI bank has top
rank followed by AXIS bank and ICICI bank it shows that better ability of the banks. Punjab
National Bank has last position followed by Canara Bank and State Bank of India. In terms of
International Journal of Pure and Applied MathematicsVolume 119 No. 15 2018, 873-889ISSN: 1314-3395 (on-line version)url: http://www.acadpubl.eu/hub/Special Issue http://www.acadpubl.eu/hub/
873
profitability HDFC bank has top position followed by Canara Bank Punjab National Bank.
Industrial Development of India bank has last position due to under utilization of assets followed
by Bank of India and Canara Bank.
Keywords: Business per employee, public sector banks, profit per employee, private sector
banks, Total Assets and Total income.
Introduction
Indian banking system remain the largest financial sector intermediary in India
with adoption of new innovation to lower transaction cost which facilitate immediate and
faultless payment and enhancing customer service. A modern bank provides important service to
a country. To achieve development there should be a developed financial system to sustain not
only the economic but also for the society. Commercial banks have paying attention to their
situation and beginning different measures such as strengthening the selection process of the
management, setting up a stresses assets funds, legislating a bankruptcy code and recovery
tribunal etc.
Bank are necessary for increasing their structural reform in market , particularly land and
labour. In this environment different levels of government need to act jointly for the preeminent
result. The land acquirement processes are the decisive factor determining the pace of
investment. Labour regulations are frequent cited to be a important obstacle to the growth,
mainly with consider to medium and large scale manufacturing firms.
Review of Literature
Muhittin oral and Reha Yolalan (1990) In their indicated that this kind of approach is not
only complementary to traditionally used financial ratios but also a useful bank management tool
in reallocating resources between the branches in order to achieve higher efficiencies. It has been
also observed that the service-efficient bank branches were also the most profitable ones,
suggesting the existence of a relationship between service efficiency and profitability.
International Journal of Pure and Applied Mathematics Special Issue
874
R.K Uppal (2009) In his study found that there is significant difference among three
banks groups with regard to the time customers have to spend to transact a business. The e-
banks are more efficient in regard to time factor. This is the very important factor of shifting of
potential customers in e-banks.
Viakas Choudhary .Dr and Suman Tandon (2010) in their studies found that the CAGR
of various variables have shown variation form bank to bank. State Bank of Indore has shown
maximum CAGR in case of total advances, total deposits and total assets. Punjab and Sink Bank
has shown least growth of deposits and advances and State Bank of India has least growth of
deposits. CAGR of return on equity and return on assets was at peak of United Bank of India
whereas Dena Bank, Punjab & Sind Bank have shown negative trend in there ratios. Decline of
NPAs ratio was highest in case of State Bank of Hyderabad and least in case of Dena bank.
K.N.V Prasad G. Ravinder, Dr. D. Maheshwara Reddy (2011) In their studies titled “ A
Camel Model analysis of public and private sector banks in India” found that on average Karur
vysya bank was at top most position followed by Andhra Bank, Bank of Baroda and also it is
observed that central Bank of India was at the bottom most position. The largest public sector
banks in India availed 36th position.
Saiful Islam and Md.Borak Ali (2011) in their studies found that the customer satisfaction and
reputation of the bank lead greater loyalty. Hence the findings of the study would open up a new
method of designing banking service in developing county like Bangladesh. It will also guide
the bankers how well they could serve present and prospective customers. In fact the study
provides a framework for bankers to offer quality service.
Shirshendu Ganguli and Sanjit Kumar Roy (2011) identified four generic service quality
dimensions in the technology-based banking services – customer service, technology security
and information quality, technology convenience, and technology usage easiness and reliability.
The study revealed that customer service and technology usage easiness and reliability have
positive and significant impact on customer satisfaction and customer loyalty and technology
convenience and customer satisfaction have significant and positive impact on customer loyalty.
Vighneswara Swamy (2012) In his study titled “Determinants of Bank Asset Quality and
Profitability -An Empirical Assessment” found that Priority sector credit has been found to be
not significant in affecting the NPAs contrary to the general perception and similar is the case
International Journal of Pure and Applied Mathematics Special Issue
875
with that of rural branch simplying that aversion to rural credit is a falsely founded perception.
Public sector banks have shown significant performance in containing bad debts private banks
have continued to be stable in containing the bad debts as they have better risk management
procedures and technology, which definitely allows them to finish up with lower levels of NPAs.
Khalid Ashraf Chisti (2012) In his study titled“The impact of Asset Quality on
Profitability of Private Banks in India” found that his study when a bank’s asset quality becomes
worse, it takes more resources for a bank to conduct non- value-added credit receiving activities,
which leads to poor performance. The asset quality and profitability are negatively correlated in the
banking industry.
George K Amoako (2012) In his study found that the customers perspective is not
satisfactory but has led to the increase in number of new customers, maintenance of existing
customer and increase in profitability among others. Ghana commercial Bank needed to improve
and formalize its customer service and public relation programs.
Murugan (2012) conducted a study to compare the customers’ perceptions of service
quality in public and private banks of Tirupati region. SERVQUAL was used to measure the
service quality of both the banks to determine different dimensions of service quality and chi-
square analysis was used to understand the impact of SERVPERF (service performance)
dimensions on customer satisfaction. It was found from the research that customers of public
sector banks are more satisfied than the customers of private sector banks as regards service
quality.
Ayyappan.S. and M. Sakthivadivel M (2013)In their study titled “Profitability Analysis
of Selected Public and Private Sector Banks in India” found that present study eight public sector
banks have been analyzed by using the key profitability variables and the path analysis identified
the positive and negative contribution of selected variables during the study period. So the
bankers should concentrate on the facts which are influencing negatively which will improve the
profitability in the global competition.
Devanadhen.K (2013) in his study found that the Andhra Bank secured the first
place followed by Corporation Bank and HDFC Bank. Axis Bank and ICICI Bank were ranked
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876
6TH and 14TH respectively. Central Bank of India stood last in the overall performance and SBI
exhibited better performance than ICICI Bank.
Anita Makkar and Shveta Singh (2013) In their studies titled “Analysis of the Financial
Performance of Indian Commercial Bank: A Comparative Study” found that on an average, there
is no statistically significant different in the financial performance of the public and private
sector banks in India, but still, there is a need for overall improvement in the public sector banks
to make their position strong in the competitive market.
Kamlesh and Dr. Hawa Singh (2013) in their study “Employee Productivity of Private
Sector Banks in India” found that the performance of the private banks on all the eight variables
has shown a increasing trend. In the year 2004-05 and 2011-2012, the performance of private
banks has decreasing growth rate over the base year. The private sector banks has higher
exponential growth rate (12.14%) regarding total expenditure per employee than total From the
financial year 2001-02 to 2005-06 the performance of new private sector bank is better than old
private sector bank regarding selected productivity indicators but after 2005-06 the old private
sector banks compete with the new private sector banks and perform better than new private
sector banks.
Biwesh Neupane (2013) In his study “Efficiency and Productivity of Commercial Banks
in Nepal: A Malmquist Index Approach” found that positive relationship between debt to equity
ratio and efficiency as well as between capital adequacy and efficiency. Profitable banks with
lower leverage and higher capital adequacy ratio are found to be more efficient and bank loans
seem to be more highly valued than alternative bank outputs.
Geetu Gupta, Amandeep Kaur (2013) in their study “An Economic Analysis of Productivity and
Performance of Public Sector Banks in India” found that banks are divided into four categories,
excellent, good, fair and poor for the period under study. Finally, appropriate policy suggestions
are made for improvement of productivity in public sector banks in India.
Dr. Ansarul Haque (2013) In his study “comparison of financial performance of
commercial banks” found that there is no significant means in difference of profitability among
various banks groups in respect to ROA and NIM, yet a significant means of difference is seen
among the peer groups in terms of ROE.
Brindadevi .V (2013) In her study the topic is “A Study on Profitability Analysis of
Private Sector Banks In India” conclude that there is difference among the mean value of interest
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spread, net profit margin, return on long term fund and return on net worth and there is no
difference among the mean value of return on asset of private banks. So profitability ratios are
employed by the management in order to assess how efficiently they carry on their business
operations and also it is suggested for the entire bank to take effective steps to improve the
operating efficiency of the business.
Chennu goel and Chitwan Bhutani Rekhi (2013) In their studies titled “A Comparative Study
on the Performance of Selected Public Sector and Private Sector Banks in India “Efficiency and
profitability of the banking sector in India has assumed primal importance due to intense
competition, greater customer demands and changing banking reforms. This study attempts to
measure the relative performance of Indian banks. The analysis supports the conclusion that new
banks are more efficient that old ones. The key to increase Performance depends upon Return on
Assets, Return on Equity and Net interest margin.
Dharmendra S.Mustry (2013) in his study titled “A study on profitability and efficiency
measurement of the selected Indian private sector banks” found that there was no significant
difference in profitability and efficiency of the selected Indian private sector banks. Due to
highest Net Profit (NP) margin as well as higher Return on Assets (ROA), HDFC Bank was at
the first position followed by YES Bank, KarurVysya (KV) Bank, Kotak Mahindra (KM) Bank
and ICICI Bank. Due to highest Net Interest Income (NII) and Non Net Interest Income (NNII)
as well as efficiently controlled Interest Expended (IE); KM Bank occupied first position
followed by HDFC, ICICI, YES and KV Banks.
Syed Qasim Shah Rizwan Jan (2014) .In their studies found that Bank size and Operational
Efficiency is negatively related with ROA and positive relationship was found with Assets
management ratio. While, Bank size is positively related with Interest Income and Asset
Management and Operational Efficiency is negatively related with Interest Income.
J.Kumar and Dr.R .Thamil Selvan (2014). In their studies titled “Capital Adequacy
determinants and profitability of selected Indian commercial banks” found that ICICI bank has
the most favorable capital adequacy ratio compared to other various banks. The Bank of India
and Bank of Baroda are expanding their business much more. The advance of assets in State
Bank of India is better profitability, Satisfactory. Total assets of HDFC bank higher spread
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indicates better earning capacity of the banks. The non-interest income of Total income an Axis
banks are higher in percentage ratio. It helps to determine the liability of the bank to earn
revenue from other than the core activities of banks.
Neha Saini (2014) In her study “Measuring the Profitability and Productivity of Banking
Industry: A case study of selected Commercial Banks in India” found that public sector banks
are coming up with high productivity and low profitability when compared with private sector
banks. To increase profitability banks should embrace to adopt new technology to compete with
private sector banks and also successful survive in market.
Urmila Bharti and, Surrender Singh (2014) in their studies titled “Liquidity and Profitability
Analysis of Commercial Banks in India – A Comparative Study” revealed that that during the
study period the liquidity and profitability position of public sector bank group declined while it
has improved in other two groups. Further the results indicated that in most of the financial
indicators foreign banks recorded the highest mean values. But as far as stability and consistency
is concerned, it was negligible in foreign banks and highest in public sector banks. It is also
found that mean difference was negligible among public and private sector banks but it is
significant when compared with foreign bank group. It depicts that public sector banks need to
improve their performance in order to compete with private and foreign banks groups.
Deepak Kumar Sharma and Anju Saharan (2015) In their studies found that Corporation
Bank has 1st rank and United Bank has 10th rank for business per employee and profit per
employee; and United Bank of India has 1st rank and Bank of India has 10th rank for total
advances to total deposits ratio. It is also resulted that there is a significance difference between
the managerial efficiency of selected Nationalized banks. The study is suggested that
Nationalized Banks need to enhance their skills mainly in marketing and sales of
products/services, service operations, risk management and the overall performance.
Petar Karsavina and Zoran Jović (2015). In their studies titled “Impact of Assets Quality
on Bank Profitability – Case study” found that maturity affects the profitability margins,
primarily the CM1 margin, which is conditioned primarily by the fact that, as a rule, long-term
loans on annual level dictate slightly lower interest rates, while short-term loans dictate a slightly
higher interest rate. A higher level of NPLs increases the provisions towards the NBS and
reduces the level of profitability.
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Lucky Anyike Lucky and Nwosi Anele Andrew (2015) In their studies titled “Assets
Quality and Profitability of Commercial Banks : Evidence from Negeria” found that there is
significant relationship between asset quality and the profitability of the commercial banks. It
recommends that bank lending environment should be well examined before and after credit and
the regulatory authorities should ensure sound bank lending environment to avoid the incidence
of non-performing loans to enhance the profitability of commercial banks in Nigeria.
Dhanabhakyam Dr. and C Karthick (2016). In their studies indicates that public sector
banks were performed better than the private sector banks. The study may help decision makers
of Indian public sector bank and private sector banks in order to concentrate on banking
activities and thereby to increase the bank ranking and profitability performance.
Kumar.J and Dr.R.Thamil Selvan (2016). In their studies found that on the basis of group
averages sub parameters of capital adequacy, Assets Quality and Liquidity Ratio of public
sectors banks was at the top position compared with private sector banks. In terms of
Management Efficiency and Earning quality private sector bank was better than that the selected
public sector banks.
Gurmeet Singh and Dr.Ravi Singla (2016) in their studies titled Observed that the private
sector banks which were established somewhat better earlier in comparison to others have
reported better capital adequacy, better management efficiency, and better liquidity position and
new entrants have displayed lagged performance both in the area of capital adequacy and
liquidity.
Tesfatsion Sahlu Desta.Dr (2016) .In his study found that the banks are rated as strong
and satisfactory when rated in terms of capital adequacy ratio and earning ability. Conversely
they were rated less satisfactory, deficient and critically deficient when rated in terms of assets
quality, management quality and liquidity.
Ishaq AB, Karim A, Ahmed S and Zaheer A (2016). In their studies result shows that
total deposit to equity, non-performing loans to gross advances, non-performing loans to equity,
Administration expense to Interest income ratio, Gross advances to Total deposits ratio were
significantly but negative correlated with a bank’s performance. The return on assets and Return
on equity were significantly and positively correlated with a bank’s performance. The Interest
income to Total assets ratios is statistically insignificant with bank’s performance, whereas the
regression result show that Interest income to Total income is statistically significant with bank’s
International Journal of Pure and Applied Mathematics Special Issue
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performance. The cash ratio is also showing insignificant correlated bank’s performance,
whereas the regression result shows that the cash ratio is statistically significant with a bank’s
performance.
. Kumar.J and Dr.R.Thamil Selvan (2016). In their studies concluded that the various
variable have shown variation, from bank to bank. The total advances to deposits the State Bank
of India is far better than other selected commercial banks but profit per employee of State Bank
of India is less than the other banks. The Bank of Baroda has shown maximum in case of
Business per employee. The Punjab National Bank has least growth of return on net worth.
Kumar J and Dr.R.Thamil Selvan (2017). In their studies “Impact of Assets Quality and
Profitability of Selected Indian Public Sector Banks “found that there is significant relationship
between Assets Quality and the Profitability of selected Public sector banks in India. Punjab
National Bank to improve its position with regard to Quality of assets, Bank of India improves
its Net Non-performing Assets. Industrial Development Bank of India should improve its
profitability and State bank of India improve its Interest Income.
Objectives of the Study
The objectives of the study are
1) To analyze the Management efficiency and Profitability of the selected banks and
2) To make a comparison of various selected Indian public sector banks.
Research Methodology
The study is based upon secondary data covering period from 1st April 2005 to 31st
March 2016.The study is related to public sector and private sector banks, on the basis of their
Total Assets and profits . There are top ten leading banks like State Bank of India, ICICI Bank,
HDFC Bank, Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank, Axis Bank,
Union Bank of India and Industrial Development Bank of India have been selected for the study
based on. The data has been collected from the various banks annul reports, Indian Banking
Association RBI website and Corporate database.
Table .1 Management Efficiency Banks Total Advances to
Total Deposits (%) Business per
Employee(Rs in Lakh) Profit per
Employee(Rs in Lakh) Mean Rank
Rank
G.Mean CAGR Rank G.Mean CAGR Rank G.Mean CAGR Rank
State Bank of
India
77.63
(9.66)
3.28 3 6.90
(3.61)
15.35 10 4.21
(1.34)
10.08 9 7.33 9
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ICICI
Bank 96.35
(6.92)
1.57 2 8.58
(1.49)
1.36 7 11.42
(2.42)
3.92 2 3.67 3
HDFC
Bank 74.56
(7.84)
2.92 5 7.01
(2.12)
4.94 9 7.79
(3.19)
8.91 3 5.67 4
Bank of
Baroda 70.36
(3.38)
0.24 9 10.53
(5.43)
15.01 4 5.20
(2.28)
-8.12 5 6 6
Punjab
National
bank
73.78
(4.77)
1.70 8 8.19
(3.82))
14.20 8 4.24
(1.50)
-10.80 8 8 10
Bank of
India
73.84
(3.09)
0.19 7 10.77
(5.95)
16.01 3 4.00
(2.00)
-4.11 10 6.67 7
Canara
bank
70.26
(2.06)
0.01 10 9.81
(4.02)
11.92 5 4.50
(2.12)
-11.13 7 7.33 9
AXIS
Bank
75.55
(10.99)
5.54 4 11.98
(1.55)
3.79 2 12.23
(3.63)
7.91 1 2.33 2
Union
Bank of
India
74.96
(4.00)
0.79 6 9.08
(3.88)
12.51 6 5.14
(1.65)
6.20 6 6 6
IDBI
Bank 98.87
(38.03)
-7.33 1 21.67
(4.07)
4.29 1 6.43
(2.54)
-52.59 4 2 1
Sources: Annual report of Banks and results generated with the help of SPSS Note: G.Mean- Geometric Mean ; CAGR - Compounded Annual Growth Rate and Data in parenthesis are Standard Deviation
Table.1 indicates that, the three ratios in management efficiency. IDBI has the
highest ratio Total advances to total deposits with geometric mean value of 98. 87 followed by
ICICI bank with 96.35. Canara bank has the lowest standard deviation value of 2.06. IBDI has
the lowest Total advances to total deposits ratio with CAGR value of 7.33. Business per
employee positive and significant CAGR of the banks, which indicates that easily expand their
business activities. IDBI has the Top position with higher geometric mean value of 21.67
followed by ICICI bank and Bank of India. State Bank of India has the least geometric mean
value of 6.90. ICICI Bank has the lowest standard deviation value of 1.49.
Axis Bank has the highest ratio Profit per employee with geometric mean value of 12.23
followed by ICICI bank and HDFC Bank geometric mean value of 11.42 and 7.79. The private
sector banks have a positively significantly CAGR in profit per employee. IDBI bank, Canara
bank, Bank of Baroda and Bank of India were significantly negative CAGR. State Bank of India
has the lowest standard deviation value of 2.06.
In overall management efficiency IDBI bank has top rank with least mean value of 2.00
followed by AXIS bank and ICICI bank it shows that better ability of the banks. Punjab National
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Bank has last position with higher mean value of 8.00 followed by Canara Bank and State Bank
of India mean value of 7.33 and 7.33 due to its inefficiency of management.
Table .2 Profitability Banks Operating Profits to
Average Working Funds Ratio (%)
Spread to Total Assets (%)
Net Profit to Average Assets (%)
Interest Income to Total Income (%)
Mean Rank
Rank
G.Mean CAGR Rank G.Mean CAGR Rank G.Mean CAGR Rank G.Mean CAGR Rank
State Bank of India
1.99
(0.96)
-0.70 5 2.64
(0.34)
-1.40 4 0.74
(0.19)
-2.67 5 85.33
(2.16)
0.28 7 5.25 5
ICICI
Bank
2.56
(0.50)
4.40 3 2.29
(0.44)
5.55 6 1.24
(0.28)
3.34 3 79.16
(2.56)
0.54 10 5.50 6
HDFC
Bank
3.14
(0.21)
1.95 1 3.83
(0.18)
1.28 1 1.44
(0.28)
3.62 2 82.75
(1.55)
0.55 8 3.00 1
Bank of
Baroda 1.81
(0.31)
-2.30 7 2.21
(0.34)
-3.35 7 0.60
(0.55)
-
27.16
7 87.92
(2.44)
0.53 5 6.5 7
Punjab
National
bank
2.29
(0.27)
-1.41 3 2.92
(0.29)
-2.64 2 0.69
(0.54)
-
24.41
6 88.67
(1.81)
-0.07 3 3.5 2
Bank of
India
1.64
(0.48)
-3.42 9 2.14
(0.22)
-1.60 8 0.49
(0.56)
-
39.15
9 88.04
(2.62)
0.66 4 7.5 9
Canara
bank 1.71
(0.29)
-2.85 8 2.07
(0.30)
-3.42 9 0.54
(0.50)
-
25.70
8 89.10
(1.96)
0.39 2 6.75 8
AXIS
Bank 2.93
(0.41)
3.41 2 2.68
(0.37)
3.70 3 2.93
(0.41)
4.72 1 79.53
(2.14)
0.20 9 3.75 3
Union
Bank of
India
1.93
(0.34)
0.04 6 2.42
(0.27)
-2.88 5 0.76
(0.38)
-2.68 4 90.64
(2.90)
0.03 1 4.00 4
IDBI
Bank
1.39
(0.44)
6.59 10 1.15
(0.49)
9.11 10 0.39
(0.47)
-
50.51
10 87.50
(3.22)
0.97 6 9.00 10
Sources: Annual report of Banks and results generated with the help of SPSS
Note: G.Mean- Geometric Mean ; CAGR - Compounded Annual Growth Rate and Data in parenthesis are Standard Deviation
Table.2 reveals that, the earning capacity of the Banks. It indicates the bank’s ability to
create appropriate returns and retain for futures. The HDFC bank has top position with higher
geometric mean of 3.14 followed by Axis Bank and ICICI Bank geometric mean value of 2.93
and 2.56 in Operating profit to average working capital funds ratio. IDBI Bank has lowest rank
with geometric mean value of 1.39 followed by Bank of India and Canara Bank. HDFC Bank
has the lowest standard deviation value of 2.06. Spread to Total Assets HDFC bank has 1st rank
with higher geometric mean of 3.83 followed by Punjab national bank and AXIS Bank. IDBI
bank has last rank due to its poor performance followed by Canara Bank and bank of India .
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883
CAGR was found that negatively significant. Net profit to average assets private sector banks
secured 1st 2nd and 3rd rank respectively. It shows that good earning capacity of the banks.
All the public sector banks have more than 80% in interest income to total income
.Union Bank of India has the top position followed by Canara Bank and Punjab National Bank
.In term of Interest income to total income, GAGR was found positively significant except
Punjab National Bank. Union Bank of India has the top position with higher geometric mean
value of 90.64 followed by Canara Bank and Punjab National Bank. ICICI bank has last position
due to its performance followed by Axis Bank and ICICI Bank .
In overall HDFC bank has top position with least mean value of 3.00 followed by
Canara Bank Punjab National Bank and Industrial Development of India bank has last position
higher mean value of 9.00 due to under utilization of assets followed by Bank of India and
Canara Bank.
Conclusion
Public sector banks are facing turn down in their earnings growth and decline in profit
margin, because of their lower assets quality and increased the sub-standards of assets. In terms
of management efficiency IDBI Bank has the highest ratio Total advances to total deposits
followed by ICICI bank and State Bank of India. Canara bank has the lowest rank followed by
Bank of Baroda and Punjab National Bank. Canara Bank has improve their efficiency among
members. Business per employee IDBI has the Top position with higher geometric mean
followed by AXIS bank and Bank of India. State Bank of India has the least geometric mean
value followed by ICICI Bank and Punjab National Bank. State Bank of India improve their
business per employee. Axis Bank has the highest ratio Profit per employee followed by ICICI
bank and HDFC Bank. The private sector banks have a positively significantly CAGR in profit
per employee. Bank of India has the lowest position followed by State Bank of India and Punjab
National Bank. Bank of India should improve their profit per employee. In overall management
efficiency IDBI bank has top rank followed by AXIS bank and ICICI bank it shows that better
ability of the banks. Punjab National Bank has last position followed by Canara Bank and State
Bank of India. Punjab National Bank should improve their management efficiency. The high
level of non-performing asset (NPAs) and races by Reserve Bank of India to make their
provising for sub-standards assets were the main reasons for the banks to reduce their profits.
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884
In term of profitability HDFC bank has top position with higher geometric mean
followed by Axis Bank and ICICI Bank in Operating profit to average working capital funds
ratio. IDBI Bank has lowest rank followed by Bank of India and Canara Bank. Spread to Total
Assets HDFC bank has 1st rank with higher position followed by Punjab national bank and AXIS
Bank. IDBI bank has last rank due to its poor performance followed by Canara Bank and bank of
India. Net profit to average assets private sector banks secured 1st 2nd and 3rd rank respectively.
It shows that good earning capacity of the banks. Union Bank of India has the top position
followed by Canara Bank and Punjab National Bank. In term of Interest income to total income,
Union Bank of India has the top position followed by Canara Bank and Punjab National Bank.
ICICI bank has last position due to its performance followed by Axis Bank and ICICI Bank.
In overall HDFC bank has top position with least mean value followed by Canara Bank
Punjab National Bank and Industrial Development of India bank has last position due to under
utilization of assets followed by Bank of India and Canara Bank. Reserve Bank of India has
revised performance indicators for banks which are basically built on improving efficiency and
capital utilization.
References
1. Anita Makkar and Shveta Singh (2013) In their studies titled “Analysis of the Financial
Performance of Indian Commercial Bank : A Comparative Study” Indian Journal of
Finance. May 2103.pp.41 to 49.
2. Ayyappan.S. and M. Sakthivadivel . M “Profitability Analysis of Selected Public and
Private Sector Banks in India” Asian Journal of Managerial Science Vol. 2 No. 1, 2013,
pp.44-47.
3. Biwesh Neupane (2013) “Efficiency and Productivity of Commercial Banks in Nepal: A
Malmquist Index Approach” Asian Journal of Finance and Accounting. Vol. 5, No.2, pp
220-243.
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