Performance of public sector banks: An analysis

The Indian banking system has been exposed to increase competition with the enhanced presence of foreign banks and entry of new private sector banks. Public sector banks form major part of total banking system in India so there is a need to evaluate the performance of these banks. Profitability and performance is a common measure of success of commercial undertakings. This paper attempts to analyze the financial performance of public sector banks and commercial banks in India. The whole study is analytical in nature and it is based on the secondary data retrieved from report on trend and progress of banking in India, report on currency and finance etc. The scope of the study is limited to analysis the performance, risk and return of the public sector banks (State Bank and its associates; and Nationalized Banks) and all commercial banks (SBI and its associates, Nationalized Banks, Private Sector Banks, and foreign banks) for the period of 2001–02 to 2006–07.It examine the productivity and efficiency of public sector banks v/s commercial banks trend of operating cost/total cost, cost to income, labour/non labour cost, net interest income, non performing assets and capital to risk weighted assets ratio etc. The study observed that there is a need for increased absorption of enhanced technological capability by several banks to further argument yield of the banking sector. This would call for changes in processes and improvement in human resource skills.