SAVEETHA SAVEETHA UNIVERSITY UNIVERSITY
SAVEETHA SAVEETHA SCHOOL OF LA L AW SUBJECT : LAW OF BANKING . Financ ncia iall Lib Liber eral aliz izat atio ion n an and d TOPIC : Fina Bank Bankin ing g Sect Sector or Effi Effici cien ency cy:: ! !e e In Indi dian an E"#erience.
SUBMITTED TO :$%S.&AS'N(%A SUBMITTED ON : 17.4.2015 DONE BY : PARTHIBAN .V BA.BL(HONS) IIIYR CONTENT :
• • • • • • • •
INTRODUCTION OBJECTIVE OF THE STUDY LIMITATION HYPOTHESIS REVIEW OF LITERATURE CHAPTERISATION INTRODUCTION INDIAN BANKING SECTOR : AN OVERVIEW PERFORMANCE OF THE INDIAN BANKING SECTOR THE CONCEPT OF EFFICIENCY METHODS OF EFFICIENCY MEASUREMENT STUDIES ON BANKING SECTOR EFFICICIENY IN INDIA ESTIMAT ESTIMATING EFFICIENCY USING THE STOCHASTIC FRONTIER APPROACH THE DATA.
CONCLUSION REFERENCE
OBJECTIVE :
The paper inen!" # ana$%&e he per'#r(an)e #' he In!ian *an+in, "e)#r
a'er he iniiai#n #' 'inan)ia$ $i*era$i&ai#n I a$"# ai(" # (ea"-re he )#" e''i)ien)% #' he In!ian *an+in, "e)#r !-rin, he p#" re'#r( peri#!.
LIMITATION : The "-!% 'in!" a'er !ere,-$ai#n he )#n)enrai#n ha" !e)$ine! /hi)h re"-$e! in in)rea"in, )#(peii#n.
HYPOTHESIS: The pr#'ia*i$i% #' a$$ *an+ ,r#-p" ha" ,#ne -p *- he '#rei,n *an+" are (#re pr#'ia*$e. U"in, S#)ha"i) Fr#nier Appr#a)h 0)#" 'r#nier1 an! RBI !aa '#r 23 In!ian )#((er)ia$ *an+" an! #n he *a"i" #' e(piri)a$ in4e"i,ai#n 0pane$ e"i(ai#n1 he paper )#n)$-!e" ha a'er 'inan)ia$ $i*era$i&ai#n here ha" *een n# "i,ni'i)an )han,e in he )#" e''i)ien)% #' he p-*$i) "e)#r *an+". The 'in!in, "h#/" a (ar,ina$ !e)$ine in he )#" e''i)ien)% #' he p-*$i) "e)#r *an+" in he p#" re'#r( peri#!. A )#(pari"#n a(#n, 4ari#-" *an+ ,r#-p" in he p#" re'#r( peri#! "h#/" he !#(e"i) pri4ae *an+" are *e)#(in, (#re e''i)ien in
)#(pari"#n # he p-*$i) "e)#r an! he '#rei,n *an+". H#/e4er he "-!% 'in!" he p-*$i) "e)#r *an+" # *e (#re )#" e''i)ien han he pri4ae an! he '#rei,n *an+".
REVIEW OF LITERATURE : Ber,er A. N. an! H-(phre% D. B. 056671 E''i)ien)% #' 'inan)ia$ in"i-i#n": inernai#na$ "-r4e% an! !ire)i#n" '#r '--re re"ear)h E-r#pean 8#-rna$ #' Operai#na$ Re"ear)h 69 7;<5<. Ber,er A. N. an! Me"er =. 8. 056671 In"i!e he *$a)+ *#>: /ha e>p$ain" !i''eren)e" in he e''i)ien)ie" #' 'inan)ia$ in"i-i#n" 8#-rna$ #' Ban+in, an! Finan)e <5 96 ;6?7. Bhaa)har%a A. =#4e$$ C. A. K. an! Saha% P. 056671 The i(pa) #' $i*era$i&ai#n #n he pr#!-)i4e e''i)ien)% #' In!ian )#((er)ia$ *an+" E-r#pean 8#-rna$ #' Operai#na$ Re"ear)h 69 @@<;?. Bhi!e M. G. Pra"a! A. an! Gh#"h S. 0<33<1 Ban+in, "e)#r re'#r(": a )rii)a$ #4er4ie/ E)#n#(i) an! P#$ii)a$ Wee+$% Fe*r-ar% @66;?39. Charne" A. C##per W. W. an! Rh#!e" E. 056791 Mea"-rin, he e''i)ien)% #' !e)i"i#n (a+in, -ni E-r#pean 8#-rna$ #' Operai#na$ Re"ear)h < ?<6;??.
INTRODUCTION : The In!ian 'inan)ia$ "e)#r )#(pri"e" a $ar,e ne/#r+ #' )#((er)ia$ *an+" 'inan)ia$ in"i-i#n" "#)+ e>)han,e" an! a /i!e ran,e #' 'inan)ia$ in"r-(en". I
ha" -n!er,#ne a "i,ni'i)an "r-)-ra$ ran"'#r(ai#n "in)e he iniiai#n #' 'inan)ia$ $i*era$i&ai#n in 5663". Be'#re 'inan)ia$ $i*era$i&ai#n "in)e (i! 5623" i$$ he ear$% 5663 he In!ian 'inan)ia$ "%"e( /a" )#n"i!ere! a" an in"r-(en #' p-*$i) 'inan)e 0A,ar/a$ <33@1. The e4#$-i#n #' In!ian 'inan)ia$ "e)#r in he p#" in!epen!en peri#! )an *e !i4i!e! in # hree !i"in) peri#!". D-rin, he 'ir" peri#! 056?7291 he Re"er4e Ban+ #' In!ia 0RBI1 )#n"#$i!ae! i" r#$e a" he a,en)% in )har,e #' "-per4i"i#n an! *an+in, )#nr#$ 0Sen Vai!%a 56671. Ti$$ 5623" he ne#Ke%ne"ian per"pe)i4e !#(inae! ar,-e! inere" rae" "h#-$! *e +ep $#/ in #r!er # pr#(#e )apia$ a))-(-$ai#n 0Sen Vai!%a 56671. D-rin, hi" peri#! In!ian 'inan)ia$ "e)#r /a" )hara)eri&e! *% nai#na$i&ai#n #' *an+" !ire)e! )re!i an! a!(ini"ere! inere" rae" 0=a/ren)e =#n,a( <33@1. The "e)#n! peri#! 05626 (i! 5693"1 +n#/n a" he peri#! #' 'inan)ia$ repre""i#n. The 'inan)ia$ repre""i#n "are! /ih he nai#na$i&ai#n #' 5? )#((er)ia$ *an+" 5 in 5626. A" a re"-$ inere" rae )#nr#$" !ire)e! )re!i pr#,ra((e" e). in)rea"e! in (a,ni-!e !-rin, hi" peri#! 0Sen Vai!%a 5667 Nair1. The hir! peri#! (i! 5693" #n/ar!" i" )hara)eri&e! *% )#n"#$i!ai#n !i4er"i'i)ai#n an! $i*era$i&ai#n. H#/e4er a (#re )#(prehen"i4e $i*era$i&ai#n pr#,ra((e /a" iniiae! *% he ,#4ern(en #' In!ia !-rin, ear$% 5663".The i(pe-" # 'inan)ia$ "e)#r re'#r(" )a(e /ih he "-*(i""i#n #' hree in'$-enia$ rep#r" *% he 1 Under the banking companies act ,1949
Cha+ra4ar% C#((iee in 569 he Va,h-$ in 5697 an! he Nara"hi(a( C#((iee in 5665. B- he re)#((en!ai#n" #' he Nara"i(ha( C#((iee pr#4i!e! he *$-eprin #' he re'#r(" e"pe)ia$$% /ih re,ar! # *an+" an! #her 'inan)ia$ in"i-i#n". In 5665 he ,#4ern(en #' In!ia iniiae! a )#(prehen"i4e 'inan)ia$ "e)#r $i*era$i&ai#n pr#,ra((e. The $i*era$i&ai#n pr#,ra((e in)$-!e" !e)#nr#$$e! inere" rae" re!-)e! re"er4e rai#" an! "$#/$% re!-)e! ,#4ern(en )#nr#$ #' *an+in, #perai#n" /hi$e e"a*$i"hin, a (ar+e re,-$a#r% 'ra(e/#r+. The (a#r #*e)i4e" #' he 'inan)ia$ $i*era$i&ai#n /ere # i(pr#4e he #4era$$ per'#r(an)e #' he In!ian 'inan)ia$ "e)#r # (a+e he 'inan)ia$ in"i-i#n" (#re )#(peen an! (#re e''i)ien. A" (eni#ne! ear$ier he 'inan)ia$ "e)#r )#(pri"e" )#((er)ia$ *an+" "#)+ e>)han,e" an! #her 'inan)ia$ in"i-i#n". H#/e4er In!ian 'inan)ia$ "%"e( )#nin-e" # *e a *an+ *a"e! 'inan)ia$ "%"e( an! he *an+in, "e)#r p$a%" an i(p#ran r#$e a" a re"#-r)e (#*i$i"er. I re(ain" he prin)ipa$ "#-r)e #' re"#-r)e" '#r (an% h#-"eh#$!" "(a$$ an! (e!i-( enerpri"e" an! a$"# )aer" he $ar,e in!-"rie". An! a$"# pr#4i!e" (an% #her 'inan)ia$ "er4i)e". Un!er$inin, he i(p#ran)e #' he *an+in, "e)#r "e4era$ *an+in, "e)#r "pe)i'i) re'#r("@ a" a par #' 'inan)ia$ re'#r(" /ere inr#!-)e! # i(pr#4e he per'#r(an)e #' he In!ian *an+in, "e)#r an! # (a+e he In!ian *an+" (#re )#(peen an! e''i)ien. A,ain" hi" *a)+!r#p he pre"en paper inen!" # "-!% he per'#r(an)e #' he In!ian *an+in, "e)#r in he p#"
$i*era$i&ai#n peri#!. A he "a(e i(e i a$"# ai(" # !eer(ine he )#" e''i)ien)% #' he In!ian *an+" in )#ne> #' 'inan)ia$ $i*era$i&ai#n.
INDIAN BANKIN SECTOR : AN OVERVIEW
The In!ian *an+in, "e)#r ha" *een !#(inae! *% he p-*$i) "e)#r *an+" in er(" #' n-(*er an! a""e "hare. The *an+in, "e)#r )#(pri"e" #' <9 p-*$i) "e)#r *an+" /ih (a#ri% ,#4ern(en #/ner"hip <@ pri4ae *an+" an! <7 '#rei,n *an+". ha he n-(*er #' p-*$i) "e)#r )#((er)ia$ *an+" ha" a$(#" re(aine! he "a(e #4er $a" hree !e)a!e". An! in er(" #' a""e "hare he p-*$i) "e)#r *an+" )#n"i-e a*#- 73 per)en #' he #a$ )#((er)ia$ *an+in, a""e. B- he p#in # *e n#e! he a""e "hare #' he p-*$i) "e)#r *an+" ha" ,#ne !#/n 'r#( a*#- 63 per)en in 5693 # a*#- 29 per)en in <337. E4en h#-,h he n-(*er #' !#(e"i) pri4ae *an+" ha" !e)$ine! "in)e 5693" he a""e "hare #' he"e *an+" ha" ,#ne -p # a*#- <3 per)en in <337. On he #her han! e4en h#-,h he n-(*er #' '#rei,n *an+" ha" ,#ne -p "i,ni'i)an$% heir a""e "hare ha" n# in)rea"e! in ha /a%. The #a$ *an+in, "e)#r a""e )#n"i-e" (#re han 65.9 per)en #' he GDP < a he en! #' Mar)h <339 an! he )#((er)ia$ *an+in, a""e )#n"i-e" (#re han 6 per)en #' he #a$ *an+in, a""e.
2 RBI (http://www.rbi.org.in/scripts/!b"ications#iew.asp$%id&1'922
Sin)e 5663" here ha" *een "pe)a)-$ar ,r#/h #' he In!ian *an+in, "e)#r. Se4era$ 4aria*$e" $i+e #a$ a""e #a$ !ep#"i #a$ )re!i an! ne pr#'i ha" *een ana$%&e! # "-!% he re$ai4e pr#,re"" #' he In!ian *an+in, "e)#r. In er(" #' a""e a$$ *an+ ,r#-p" ha4e re)#r!e! hi,her a""e ,r#/h a'er he 'inan)ia$ re'#r(". !-rin, 'inan)ia$ re'#r(" he #a$ a""e #' he In!ian *an+in, "e)#r re)#r!e! hi,her ,r#/h an! "in)e 5666 #a$ a""e #' he *an+in, "e)#r ha" ,r#/n "i,ni'i)an$%. D-rin, 5666 he #a$ )#((er)ia$ *an+ a""e /a" R". 2@5.@7 *i$$i#n /hi)h in)rea"e! # R". 579?.72 *i$$i#n in <337. T#a$ !ep#"i" #' he )#((er)ia$ *an+" ha4e ,#ne -p "i,ni'i)an$% "in)e 5666 A$$ *an+ ,r#-p" re)#r!e! hi,her !ep#"i e"pe)ia$$% a'er 5666. T#a$ !ep#"i #' a$$ *an+" in)rea"e! # R". 5@637.? *i$$i#n in <337 /hi)h /a" R". <9@.<7 *i$$i#n in 5666. The #a$ a!4an)e" #' a$$ )#((er)ia$ *an+" ha4e ,#ne -p "i,ni'i)an$% #4er $a" 'i4e %ear". Sin)e <33@ he #a$ a!4an)e" #' a$$ )#((er)ia$ *an+" ha4e *een (#re han !#-*$e. In <33@ #a$ a!4an)e" /ere R". ?@??.2 *i$$i#n an! in)rea"e! # R". 535?7.72 *i$$i#n. The ne pr#'i #' he In!ian )#((er)ia$ *an+" ha" ,#ne -p "i,ni'i)an$% #4er $a" 7 %ear". I ha" ,#ne -p 'r#( R".
[email protected]? *i$$i#n in <335 # R". 59.5 *i$$i#n in <337.
The p-*$i) "e)#r *an+" an! he !#(e"i) pri4ae *an+" /ine""e! (ani'#$! ri"e in ne pr#'i. P!"#$"%&'(! $# )*! I'+,&' B&'-,' S!()$": Impact of Reform Management Performance:
The )re!i !ep#"i rai# re'$e)" he (ana,e(en per'#r(an)e #' he *an+". I )an *e "een a'er 'inan)ia$ $i*era$i&ai#n (#" #' he *an+" rep#re! hi,her CD rai#. The CD rai# i" he hi,he" in )a"e #' he '#rei,n *an+" an! $#/e" in )a"e #' he p-*$i) "e)#r *an+". The #4er )#((er)ia$ *an+in, "e)#r /ine""e! an in)rea"e in he )re!i!ep#"i rai#. In 5693 he CD rai# '#r a$$ )#((er)ia$ *an+" /a" 2@.@< per)en an! in)rea"e! # 7@.?2 per)en in <337. The in4e"(en !ep#"i rai# ha" a$"# in)rea"e! *- (ar,ina$$%. Asset Quality:
The a""e -a$i% re'$e)" he "r-)-ra$ "#-n!ne"" #' he *an+in, "e)#r. The rai# #' )#nin,en $ia*i$i% "h#/" he '#rei,n *an+" are (#re e>p#"e! # !e'a-$ /hi)h i(p$ie" he '#rei,n *an+" pr#4i!e (#" "#phi"i)ae! "er4i)e". I i" *e)a-"e (#" #' he '#rei,n *an+" are )#n)enrae! in -r*an area" an! (#"$% )arer # $ar,e )$ien". The )#nin,en $ia*i$i% # a""e rai# #' he #a$ )#((er)ia$ *an+" "h#/" i ha" !e)$ine! 'r#( < per)en in 5693 # 52 per)en in <337 . The '#rei,n *an+" an! he
pri4ae *an+" are e>p#"e! # (#re $#""e" in )a"e #' !e'a-$ an! he p-*$i) "e)#r *an+" are $e"" e>p#"e! # !e'a-$. The rai# #' in4e"(en in "e)-riie" # a""e" in!i)ae" ha *an+" in4e" a*#- <3 # @3 per)en in ,#4ern(en "e)-riie" in re"p#n"e # S=R . The p-*$i) "e)#r *an+" ha4e hi,her per)ena,e #' in4e"(en in ,#4ern(en "e)-riie" an! he '#rei,n *an+" in4e"(en i" he $#/e". The p-*$i) "e)#r *an+" pre'er # in4e" (#re in he ,#4ern(en "e)-riie" *e)a-"e i i" (#re $i-i! an! he "a'e" in4e"(en. E4en a'er 'inan)ia$ re'#r(" he PSB"" in4e"(en in ,#4ern(en "e)-riie" ha" ,#ne -p. The rai# #' er( $#an" # a""e "h#/" #4er %ear" i ha" in)rea"e! # a*#- 9 per)en in <337 . The pri4ae *an+" ha4e in)rea"e! he er( $#an" # a*#- 73 per)en an! he p-*$i) "e)#r *an+" ha4e *een a$(#" )#n"i"en a*#- @3 per)en #n a4era,e i$$ <33@ an! herea'er /ine""e! a rapi! in)rea"e in heir er( $#an".
Profitability:
Pr#'ia*i$i% )an *e (ea"-re! /ih /# in!i)a#r" Re-rn #n A""e 0ROA1 an! he Re-rn #n E-i% 0ROE1. The re-rn #n a""e i" !e'ine! a" he rai# #' ne pr#'i #
a4era,e a""e. ha a'er 'inan)ia$ re'#r(" he *an+" are (#re pr#'ia*$e. The '#rei,n *an+" are (#re pr#'ia*$e han he !#(e"i) pri4ae *an+" an! he p-*$i) "e)#r *an+". A'er 'inan)ia$ $i*era$i&ai#n he pri4ae an! he '#rei,n *an+" re)#r!e! hi,her rae #' re-rn #n a""e. D-rin, he ear$% pha"e #' re'#r(" he re-rn #n a""e /a" ne,ai4e. B- a'er ha i in)rea"e! 'r#( 3.96 per)en in 566? # 5 per)en in <337. Re-rn #n e-i% )an *e a+en a" pr#>% # (ea"-re pr#'ia*i$i%. The pri4ae *an+" are (#re )#n"i"en "in)e 5663" in er(" #' he re-rn #n e-i% /here a" he '#rei,n *an+" ha4e *een he (#" in)#n"i"en. D-rin, ear$% 5663" he re-rn #n e-i% #' he '#rei,n *an+" /a" a*#- 5@< per)en an! in <337 i i" a*#- 52 per)en. The p-*$i) "e)#r *an+" are per'#r(in, *eer /ih 52.5? per)en re-rn #n e-i%. Concentration:
The In!ian *an+in, "e)#r i" !#(inae! *% he p-*$i) "e)#r *an+". H#/e4er /ih he iniiai#n #' 'inan)ia$ $i*era$i&ai#n "e4era$ pri4ae an! '#rei,n *an+" "are! '-n)i#nin, /hi)h -"here! in )#(peii#n in he In!ian *an+in, "e)#r. E4en he "hare #' p-*$i) "e)#r *an+" in #a$ a""e !ep#"i an! )re!i ha" !e)$ine! "i$$ he% !#(inae he In!ian *an+in, "e)#r. T# (ea"-re he !e,ree #' )#n)enrai#n
Her'in!ah$Hir")h(an In!e> 0HHI1 ha" *een )a$)-$ae! ha "h#/" here ha" *een a !e)$ine in he )#n)enrai#n #' a""e !ep#"i" an! )re!i. T*! C$'(!/) $# E##,(,!'(
The e''i)ien)% #' he *an+in, "e)#r )an *e !e)#(p#"e! in # ")a$e e''i)ien)% ")#pe e''i)ien)% p-re e)hni)a$ e''i)ien)% an! a$$#)ai4e e''i)ien)% 0Chen <3351. The *an+ i" "ai! # ha4e ")a$e e''i)ien)% /hen i #perae" in he ran,e #' )#n"an re-rn" # ")a$e an! ha4e ")#pe e''i)ien)% /hen i #perae" in !i''eren !i4er"i'ie! $#)ai#n". Ma>i(i&in, #-p- 'r#( a ,i4en $e4e$ #' inp- i" )a$$e! e)hni)a$ e''i)ien)% an! /hen a *an+ )h##"e" he re4en-e (a>i(i&in, (i> #' #-p- he a$$#)ai4e e''i)ien)% #))-r" 0Chen <3351. A))#r!in, # Ber,er he (#" i(p#ran #ri,in #' he )#" pr#*$e(" in *an+in, i" he e''i)ien)% /hi)h i" he !i''eren)e" in he (ana,eria$ a*i$i% # )#nr#$ )#" '#r a ,i4en $e4e$ #' pr#!-)i#n 0a" !i")-""e! in Chen <3351. The e''i)ien)% in)$-!e" *#h he e)hni)a$ an! a$$#)ai4e e''i)ien)%. The e''i)ien)% )an *e e"i(ae! in '#-r /a%". The"e are he Daa En4e$#p(en Ana$%"i" 0DEA1 he S#)ha"i) Fr#nier Appr#a)h 0SFA1 he Thi)+ Fr#nier Appr#a)h 0TFA1 an! he Di"ri*-i#n Free Appr#a)h 0DFA1 0Chen <3351. M!)*$+ $# E##,(,!'( M!&"!%!') :
Br#a!$% he appr#a)he" # e''i)ien)% (ea"-re(en )an *e !i4i!e! in# para(eri) an! n#npara(eri). The *a"i) !i''eren)e *e/een he /# i" h#/ (-)h "hape i" i(p#"e! #n he 'r#nier an! he !i"ri*-i#na$ a""-(pi#n" i(p#"e! #n he ran!#( err#r an! ine''i)ien)% 0Ber,er H-(pre% 5667 a" !i")-""e! in Tahir Har#n <3391. There are hree para(eri) appr#a)he" '#r e''i)ien)% (ea"-re(en: he S#)ha"i) Fr#nier Appr#a)h 0SFA1 he Thi)+ Fr#nier Appr#a)h 0TFA1 an! he Di"ri*-i#n Free Appr#a)h 0DFA1. On he #her han! /i!e$% he Daa En4e$#p(en Ana$%"i" 0DEA1 i" *ein, /i!e$% -"e! a" he n#npara(eri) appr#a)h # (ea"-re e''i)ien)%. The para(eri) (eh#! in)$-!e" pr#!-)i#n )#" pr#'i an! he re4en-e '-n)i#n a" a$ernai4e (eh#!" #' e"i(ain, e''i)ien)% /here a" he n#n para(eri) (eh#! -"e" he $inear pr#,ra((in, e)hni-e" 0Ai*e'-n <3391. H#/e4er here ha" *een n# )#n"en"-" #n he "-peri#ri% #' an% #' he /# appr#a)he". B- "#(e "-!ie" ha4e rie! # e>p$ain he "-peri#ri% #' SFA (eh#! #4er he DEA (eh#!. Farre$" 05671 /#r+ #n he (ea"-re(en #' pr#!-)i4e e''i)ien)% $ai! he *a"i) 'ra(e/#r+ '#r "-!%in, an! (ea"-rin, ine''i)ien)% /ih a 'r#nier. Ine''i)ien)% ha" *een !e'ine! a" he !e4iai#n" #' a)-a$ 'r#( #pi(-( *eha4i#-r 0Kapara+i" e. a$ 566?1. The re$e4an 'r#nier )an *e )#n"r-)e! an! e"i(ae! -"in, "ai"i)a$ an! (ahe(ai)a$ pr#,ra((in, e)hni-e". Br#a!$% he e)hni-e" )an *e )$-**e! in /# ,r#-p" he !eer(ini"i) an! he "#)ha"i) 'r#nier". The
!eer(ini"i) 'r#nier a""-(e" n# "ai"i)a$ n#i"e /here a" he "#)ha"i) 'r#nier )#n"i!er" he "#)ha"i) pr#perie" an! h-" "ee(" "ai"i)a$$% (#re a))-rae an! a))epa*$e. H#/e4er hi" e)hni-e i" a$"# n# err#r 'ree. Kapara+i" e. A$ 0566?1 p#in" #- "#(e i(p#ran pr#*$e(" ha e>i" /ih he para(eri) "#)ha"i) 'r#nier appr#a)h. One #' he( i" i i" re-ire! # )h##"e an e>p$i)i '-n)i#na$ '#r( '#r he pr#!-)i#n an! he )#" '-n)i#n in (an% #))a"i#n" i" appr#priaene"" ha" *een -e"i#ne!. H#/e4er he -"e #' '$e>i*$e '-n)i#na$ '#r(" $i+e" he ran"$#, ae(p" # a4#i! hi" )#n)ern # "#(e e>en. O4er %ear" /# prin)ipa$ (eh#!" he !aa in4#$4e(en ana$%"i" 0DEA1 an! "#)ha"i) 'r#nier" ha4e !#(inae! he e''i)ien)% (ea"-re(en $iera-re 0C#e$$i e. A$ <3331. The DEA (eh#! i" n#npara(eri) in4#$4e" (ahe(ai)a$ pr#,ra((in, an! he "#)ha"i) 'r#nier" i" a para(eri) (eh#! /hi)h in4#$4e" he e)#n#(eri) (eh#!. The (a#r a!4ana,e #' he DEA (eh#! i" i (ea"-re" he re$ai4e e''i)ien)% an! (a#r !ra/*a)+ i" i i" a !eer(ini"i) (#!e$ 0-%%a( Khan <3371. On he #her han! he (a#r a!4ana,e #' -"in, SFA (eh#! i" i a$$#/" he (ea"-re(en err#r an! pr#4i!e" a 'ir( "pe)i'i) e''i)ien)% e"i(ae 0Sai+#-ra" e. a$ <3391
S)+,! $' B&'-,' S!()$" E##,(,!'( ,' I'+,&:
A re4ie/ Se4era$ "-!ie" ha4e *een )arrie! #- # "-!% he *an+in, "e)#r per'#r(an)e in In!ia in )#ne> #' 'inan)ia$ $i*era$i&ai#n. H#/e4er 'e/ "-!ie" ha4e *een !#ne #n he )#" e''i)ien)% #' he In!ian *an+in, "e)#r. S-!ie" *% Bhaa)har%a e. a$056671Sah%e 0<33@1 Da" Gh#"h 0<3321 Ra% Da" 0<3361 ha4e rie! # (ea"-re he e''i)ien)% #' he In!ian *an+in, "e)#r. Bhaa)har%a e. a$ 056671 in heir "-!% e>a(ine! he pr#!-)i4i% e''i)ien)% #' 73 In!ian )#((er)ia$ *an+" !-rin, 5692 # 5665. U"in, Daa E4#$4e(en Ana$%"i" 0DEA1 heir "-!% )#n)$-!e" he p-*$i) "e)#r *an+" ha4e *een he (#" e''i)ien '#$$#/e! *% he '#rei,n an! he pri4ae *an+". Sah%e 0<33@1 -"in, he DEA # e"i(ae e''i)ien)% '#-n! he pri4ae *an+" are $e"" e''i)ien han he p-*$i) an! he '#rei,n *an+". Da" an! Gh#"e 0<3321 -"e! he n#npara(eri) DEA # e"i(ae he e''i)ien)% #' he In!ian )#((er)ia$ *an+" in he p#" re'#r( peri#! 566< <33<. U"in, n#npara(eri) DEA # e"i(ae he )#" an! pr#'i e''i)ien)% #' he In!ian *an+in, "e)#r in he p#" re'#r( peri#! Ra% an! Da" 0<3361 '#-n! he p-*$i) "e)#r *an+" are (#re e''i)ien han he pri4ae *an+".
E),%&),' E##,(,!'( U,' )*! S)$(*&),( F"$'),!" A//"$&(* :
In re)en %ear" he 'r#nier ana$%"i" (eh#! ha" *een -ie p#p-$ar. Se4era$ "-!ie" ha4e *een )arrie! #- # (ea"-re he *an+in, "e)#r per'#r(an)e 0e''i)ien)%1 -"in, he 'r#nier ana$%"i" (eh#! 0A**a"#,$- e. a$ <337 Car*# e. a$ <33<1. The 'r#nier ana$%"i" "eparae" he in"i-i#n" h#"e per'#r( *eer re$ai4e # a pari)-$ar "an!ar! 'r#( he in"i-i#n" h#"e per'#r(an)e" are p##r. S-)h "eparai#n" )an *e !#ne *% -"in, a para(eri) #r n#npara(eri) 'r#nier ana$%"i". The para(eri) appr#a)h in)$-!e" he "#)ha"i) 'r#nier ana$%"i" 0Sah%e <33@1. The S#)ha"i) Fr#nier Meh#! ha" *een e>en"i4e$% -"e! #4er $a" !e)a!e 0Cra' Tirir#,$- 5669 Kar4a$# Ka"(an <33 Ha"an Mar#n<33@ Cra' e. a$ <33< A$-n*a" e. a$ <335 Sai+#-ra" e. a$ <339 F- an! He''ernan <3371. S-!ie" #n e''i)ien)% ae(p" # (ea"-re a 'ir(" p#"ii#n re$ai4e # an e''i)ien 'r#nier. The DEA an! he SFA are /# e)hni-e" /hi)h he$p in e"i(ain, he p#"ii#n #' a 'ir( re$ai4e # an e''i)ien 'r#nier 08#han""#n <331. The pre"en "-!% -"e" he SFA (eh#! # e"i(ae he )#" e''i)ien)% #' he In!ian *an+in, "e)#r "in)e -"in, SFA e"i(ai#n i" p#""i*$e 4ia he pr#!-)i#n )#" #r he pr#'i '-n)i#n 08#han""#n <331. The S#)ha"i) Fr#nier Appr#a)h 0SFA1 /hi)h i" re'erre! a" he E)#n#(eri) Fr#nier Appr#a)h @0EFA1 /a" !e4e$#pe! *% Ai,ner =#4e$$ an! S)h(i! an! Van !en Br#e)+ in 5677. I "pe)i'ie" a '-n)i#na$ '#r( '#r ) *owe+er, the rst econometric approach to e-cienc meas!rement was de+e"oped b igner 0 h! in 193, b!t did not inc"!de a stochastic term to contro" or random dist!rbances (Resti, 1995. 6!bse7!ent", the 68 was de+e"oped with a composite error term, which can be di+ided in to two parts
he )#" pr#'i #r he pr#!-)i#n 'r#nier an! a$$#/" '#r ran!#( err#r 0Tahir an! Har#n <3391. The )#" 'r#nier )an *e )#n"r-)e! *% -"in, he '#$$#/in, re,re""i#n '-n)i#n 0A**a"#,$- e. a$ <337 Car*# e. a$ <33<1. TC J ' 0INPUTS1 L 0OUTPUTS1 L e
he inp!ts inc"!de, the interest cost4 , "abor cost and the capita" cost
.he o!tp!t inc"!des three +ariab"es "ike tota" "oans,
in+estment in sec!rities and other in+estments. he e-cienc indices are ca"c!"ated b the di;erence between the cost rontier constr!cted and the rea"i
On *an+in, "ai"i)" in In!ia he Re"er4e Ban+ #' In!ia 0RBI1 re(ain" he (#" re$ia*$e "#-r)e. The !aa ha" *een a+en 'r#( he Sai"i)a$ Ta*$e" Re$ain, # Ban+" in In!ia !aa *a"e. The pre"en "-!% ana$%"e" he e''i)ien)% #' p-*$i) "e)#r *an+" *#h a pre an! he p#" re'#r( peri#! an! e''i)ien)% #' he p-*$i) pri4ae an! '#rei,n *an+" in he p#" re'#r( peri#!. A$$ he 4aria*$e" -"e! in he "-!% ha4e *een !e'$ae! /ih he GDP !e'$a#r an! )#n4ere! # )#n"an pri)e" 4 Interest cost & tota" interest e$pense / tota" borrowings =abor cost & ersona" e$penses / n!mber o emp"oees apita" cost & capita" e$pendit!re (depreciation / book +a"!e o the tota" asset
0566@6? pri)e"1. T# !eer(ine he )#" e''i)ien)% #' he p-*$i) "e)#r *an+" *#h !-rin, he pre an! p#" re'#r( peri#! ana$%&e <7 p-*$i) "e)#r *an+" ha4e *een a+en in # a))#-n. D-e # !aa $i(iai#n he prere'#r( peri#! ha" *een a+en a" 'r#( 5693 # 5699 an! he p#" re'#r( peri#! ha" *een a+en a" 566< # <337. T# e>a(ine he e''i)ien)% $e4e$ #' he In!ian *an+" *% #/ner"hip <7 PSB" 57 pri4ae *an+" an! 52 '#rei,n *an+" ha4e *een a+en in # a))#-n. The *an+" h#"e ha4e *een in)$-!e! ha4e *een #perain, )#nin-#-"$% "in)e 5662 an! *an+" h#"e !i")#nin-e! ha4e n# *een )#n"i!ere!. CONCLUSION :
The "-!% 'in!" here ha" *een "i,ni'i)an )han,e in he per'#r(an)e #' he *an+in, "e)#r a'er he iniiai#n #' 'inan)ia$ $i*era$i&ai#n in In!ia. Bein, a *an+ *a"e! 'inan)ia$ "%"e( he *an+in, per'#r(an)e ha" an #*4i#-" i(pa) #n he e)#n#(%. U"in, RBI !aa 'r#( he Sai"i)a$ Ta*$e" Re$ain, # Ban+" in In!ia !aa *a"e he "-!% 'in!" here ha" *een "i,ni'i)an ran"'#r(ai#n in he "r-)-re #' he *an+in, "e)#r. The re$ai4e i(p#ran)e #' he p-*$i) "e)#r *an+" ha" *een !e)$inin, /hi)h re"-$" in he e(er,en)e #' he !#(e"i) pri4ae "e)#r *an+" an! (#re '#rei,n *an+". The a""e he !ep#"i an! he )re!i "hare "h#/" he "hare #' p-*$i) "e)#r ha" *een !e)$inin, an! he "hare #' he pri4ae *an+" ,#in, -p /hi)h
i(p$ie" !e)$inin, )#n)enrai#n an! in)rea"in, )#(peii#n. The in!i)a#r" #' pr#'ia*i$i% !e(#n"rae a$$ *an+ ,r#-p" re)#r!e! an in)rea"e in he rae #' pr#'i an! he '#rei,n *an+" are '#-n! # *e he (#re pr#'ia*$e in )#(pari"#n # he !#(e"i) pri4ae *an+" an! he p-*$i) "e)#r *an+". The e''i)ien)% re"-$" "h#/ ha here ha" *een n# "i,ni'i)an )han,e in he $e4e$ #' e''i)ien)% #' he p-*$i) "e)#r *an+". There ha" *een (ar,ina$ !e)$ine in he e''i)ien)% #' he p-*$i) "e)#r *an+" in he p#" re'#r( peri#!. An ana$%"i" #' he p#" re'#r( peri#! "h#/" he !#(e"i) pri4ae *an+" are *e)#(in, (#re e''i)ien. H#/e4er a+in, he p#" re'#r( peri#! a" a /h#$e he "-!% '#-n! ha he p-*$i) "e)#r *an+" are (#re e''i)ien han he pri4ae an! he '#rei,n *an+". An! he '#rei,n *an+" "ee( # *e he $ea" e''i)ien *an+" in In!ia.
REFERENCE :
5. A**a"#,$- O"(an F-r+an A%"an Ah(e Far-+ an! G-ne" A$i 0<3371 C#n)enrai#n C#(peii#n E''i)ien)% an! Pr#'ia*i$i% #' he T-r+i"h Ban+in, Se)#r in he P#"Cri"e" Peri#! MPRA Paper N#. ?6?. <. A*!(#-$ah M 01 Ban+in, "e)#r $i*era$i&ai#n an! e''i)ien)%: The T-ni"ian e>perien)e 'r#( 5663 # <332 @. A,ar/a$ R. N 0<33@1 Capia$ Mar+e De4e$#p(en C#rp#rae Finan)in, Paern an! E)#n#(i) Gr#/h in In!ia A"ian E)#n#(i) Re4ie/ V#$. ? N#.5 Apri$ <33@ Pp. <@ @?. ?. A+(a$ M an! M-ha((a! Sa$ee( 0<3391 Te)hni)a$ E''i)ien)% #' he Ban+in, Se)#r in Pa+i"an SBP Re"ear)h B-$$ein V#$-(e ? N-(*er 5 N#4e(*er <339 pp. 2593. . A$-n*a" Y E.P.M. Gar!ener P. M#$%ne-> an! B. M##re 0<3351 E''i)ien)% in E-r#pean Ban+in, E-r#pean E)#n#(i) Re4ie/ ? pp. 56@556. 2. An!er"#n Ran!% I . Danie$$e =e/i" an! =e#nar! V. -(pan# 0<3331 Ine''i)ien)ie" in he Re"i!enia$ Rea$ E"ae Mar+e: A S#)ha"i) Fr#nier Appr#a)h 8RER V#$.<3 N#. pp. 6@53@.
7. A%!in N-rhan A*!-$$ah Ya$a(a an! M-"a'a Sa%i( 0<3361 Ban+in, E''i)ien)% in De4e$#pin, E)#n#(%: E(piri)a$ E4i!en)e 'r#( T-r+e% 8#-rna$ #' M#ne% In4e"(en an! Ban+in, I""-e 9 0<3361 pp. ?673. 9. Bhaa)har%a A. =#4e$$ C.A.K. an! Saha% P. 5667. The i(pa) #' $i*era$i&ai#n #n he pr#!-)i4e e''i)ien)% #' In!ian )#((er)ia$ *an+" E-r#pean 8#-rna$ #' Operai#na$ Re"ear)h 69 @@<@?. 6. B#$ W an! Da4i! H-(phre% 0<3391 Ban+ C#(peii#n E''i)ien)% in E-r#pe: A Fr#nier Appr#a)h DNB W#r+in, Paper N#. 56?.
