Published Online:November 2024
Product Name:The IUP Journal of Bank Management
Product Type:Article
Product Code:IJBM031124
Author Name:Md Nesar Faizi and Aas Mohammad
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:39-53
The global nature of recent financial crises calls for studies on Indian public sector banks (PSBs) with respect to their productivity, efficiency and performance to ensure that past disreputable episodes are not repeated. In this regard, the present study is an empirical attempt to analyze the Indian PSBs for the period 2012-2020 using Stochastic Frontier Approach (SFA), which is one of the popular parametric approaches for estimating technical efficiency and measuring productivity. The study finds that PSBs are not efficient in achieving business goals and pursuing banking growth. Though borrowing and fixed assets are key determinants, its combination with profit goals or bank growth has not been appropriately done. In relation to this, PSBs should pursue attractive deposit policies, efficient risk and exposure management, and optimization of crisis management and communication tools.
Undoubtedly, banking plays a crucial role in determining the extent of prosperous economic development in a country. It lays down the basic architecture that sustains and regulates the growth pattern with a sense of stability. In India, public sector banks (PSBs) have traditionally played an important role by way of integrating the people at large with the banks and also in implementing several economic policies adopted by the government.