Volume : I, Issue : VI, March - 2012

Performance Analysis of Indian Banks

Ajay K. Shah

Abstract :

The Financial sector reforms have had a moderately positive impact on reducing the concentration of the Banking sector and improving performance. This sector is the foundation of modern economic development and forms the core of the Financial Sector of an economy. Banking in India is fairly mature in terms of supply, product range and reach. Performance evaluation of Banks, particularly in an economy that is dominated by Public Sector Banks that are not driven purely by profit motive, is not a simple task. The principal objectives of financial analysis are to determine the sources, quality and sustainability of a Bank’s earnings, sufficiency of liquidity and adequacy of Capital. Various ratios are used as indicators of profitability, liquidity and Capital Adequacy. Some of the most commonly used ratios/indicators for measurement of performance of Banks are Return on Assets (ROA), Return on Equity Capital (ROCE), Net Spread, Net Interest Margin (NIM), Fee – based income, Net operating margin etc. The empirical estimation showed that regulation lowered the profitability and cost efficiency of Public–Sector Banks at the initial stage of the reforms, but such a negative impact disappeared once they adjusted to the new environment. Moreover, allowing Banks to engage in non–traditional activities has contributed to improved profitability and cost and earnings efficiency of the whole Banking sector, including Public–Sector Banks.

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Article: Download PDF   DOI : 10.36106/ijar  

Cite This Article:

Ajay K. Shah Performance Analysis of Indian Banks Indian Journal of Applied Research, Vol.I, Issue.VI March 2012

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