Efficiency Assessment Parameters of Public Sector Banks in India
In today’s complex and more competitive banking structure and environment, only efficient banks will survive. This has become more significant in view of the increased pace of globalization and liberalization more particularly after 1991 when the financial liberalization process was initiated in India followed by more stress on globalization in 2000. The consolidation of the banks has been receiving attention of the government and the central bank of the country. However, there remain some practical aspects which are hindrances to this process. In this article an attempt has been made to analyze public sector banks’ efficiency though the scaling technique, as prescribed efficiency indicators of banks while keeping in view the size of the bank. It is observed during the analysis that only a few of the banks are close to high efficiency and rest lie on a satisfactory efficiency level. In addition, to assess the degree of correlation among various efficiency parameters, the Statistical Package for the Social Sciences (SPSS) technique has been used for measuring the efficiency of banks in a more realistic manner. It was further observed that there is a significant relation among return on assets (ROAs), spread and profit per employee.