Financial soundness indicators of scheduled commercial banks in India- An empirical study

Financial sector of any country is the pivot of its growth and development. The growth of the economy depends largely on the growth patterns of the financial sector. If the banks do well, then the economy will also do well. The banks can do well, if they earn profits and invest these profits for their future growth and development. So it is necessary to timely evaluate the performance of various bank groups in terms of their profitability. In the present study a comparative performance evaluation of various bank groups is done w.r.t. the factors that determines their profitability mainly cost of funds and return on funds during the study period 2008–09 to 2010–11. For this the whole Indian banking industry is divided in to four bank groups. The study reveals that foreign bank group is the most successful bank group as it shows maximum spread in comparison to other bank groups and old private sector banks shows least spread during the study period. New private sector banks and public sector banks come at 2nd and 3rd place respectively.