Professional Documents
Culture Documents
Performance Analysis of Public Sector Bank in India
Performance Analysis of Public Sector Bank in India
5.1. INTRODUCTION
Having discussed the development of Indian banks and the rationale
for banking sector reforms and various reform measures undertaken to
improve productivity, efficiency and profitability of banks by freeing them from
a number of regulations and review of literature, it is felt desirable to evaluate
the performance of public and private sector banks separately and as a next
step attempt made for comparison between the relative performances of
these two groups.
This chapter deals with performance evaluation of Public Sector Banks
comprising of three Parts. The First Part covers evolution of PSBs and
examines the recent trends. The Second Part is devoted to the performance
analysis in terms of efficiency and profitability indices of PSBs for the entire
study period. The Third Part deals with period-wise analyses of performance
of PSBs and grouping of banks is carried out using principle component
analysis.
5.2 PUBLIC SECTOR BANKS EVOLUTION
Public sector in the banking industry emerged with the nationalization
of Imperial Bank of India (1921) and creating the State Bank of India (1955)
as a part of integrated scheme of rural credit proposed by the All India Rural
Credit Survey Committee (1951). The Bank is unique in several respects and
it enjoys a position of preeminence as the agent of RBI wherever RBI has no
branches. It is the single largest bank in the country with large international
presence, with a network of 48 overseas offices spread over 28 countries
covering all the time zones. One of the objectives of establishing the SBI was
96
The Public sector in the Indian banking got widened with two rounds of
nationalization-first in July 1969 of 14 major private sector banks each with
deposits of Rs. 50 crore or more, and thereafter in April 1980, 6 more banks
with deposits of not less than Rs. 2 Crore each. It resulted in the creation of
public sector banking with a market share of 76.87 per cent in deposits and
72.92 per cent of assets in the banking industry at the end of March 2003.
With the merger of 'New Bank of India' with 'Punjab National Bank' in 1993,
the number of nationalized banks became 19 and the number of public sector
banks 27. The number of branches of public sector banks, which was 6,669
in June 1969, increased to 41874 by Mach 1990 and again to 46,752 by
March 30, 2003. The public sector banks thus came to occupy a predominant
position in the Indian banking scene. It is however, important to note that
there has been a steady decline in the share of PSB's in the total assets of
SCB's during the latter - half of 1990s. While their share was 84.5 per cent at
the end of March 1996, it declined to 81.7 per cent in 1998 and further to 81
per cent in 1999.
5.3 FINANCIAL HEALTH
Over a period of time, the financial health of PSBs continually to
deteriorate resulting in decline in their efficiency. Since so many obligations,
economic and social, are imposed on PSBs, it was thought, that their
performance should not be judged merely in terms of profits. Since 1969,
PSBs began to playa large and
dominant supplementary role to the government programmes in alleviating
poverty, employment creation and generation of fresh resources for
development.
97
98
The government has been making budgetary provisions year after year for
recapitalization of nationalized banks since 1984-85 their capital base has
eroded. The total recapitalization of Rs. 2446 Crore took place from 1985-86
to 2000-01. The Re-capitalisation measure was undertaken in three phases.
In the phase-I, i. e., in the pre-reform period from 1984-85 to 1992-93, all the
nationalized banks were recapitalized every year to meet their capital
requirements without any preset norm and special securities (perpetual at
interest rate of 7.75 per cent) were allotted to the banks. The annual exercise
in the Phase I period involved an allotment of Rs. 4000 Crore. Phase II was
period of two years, 1993-94 and 1994-95, when banking sector reforms were
being given a big push and recapitalization of all nationalized banks had to be
accorded priority. Under a well-designed recovery programme in general Rs.
10,987 crore were injected as cash capital into the banks to repay the
damage of the past.
99
TABLE 5.1
PHASES OF RECAPITALIZATION OF NATIONALIZED BANKS
Period/Year
No. of Banks
Recapitalized
Rs. Crore
19
19
18
18
8
11
15
13
400
400
200
200
700
700
700
700
4000
PROGRAMME IN GENERAL
19
13
5,700
5,287
10,987
850
1590
2700
400
Nil
Nil
5459
20446
A further provision of Rs. 770 Crore in the Union Budget 2002-03 was
made mostly for the weak banks. The stronger banks were asked to
approach the market for further capital. Towards this end the banking
companies (Acquisition and Transfer of undertakings) Act, 1970-80 was
amended with effect. from July 15, 1994 for permitting banks to raise capital
up to 49 per cent from the public.
100
5.5 PRIVATISATION
The banking sector reforms sought to improve profitability of banks by
lowering pre-emotions and to strengthen the banking system through
institution of capital adequacy norms, in addition to income recognition, asset
classification and provisioning requirements in line with the international
standards. Competition is sought to be promoted through the entry of new
private sector banks and more liberal entry of foreign banks. PSBs had to
make lot of improvement in their work culture and in their technology etc. to
be able to compete with the new entrants with aggressive marketing
practices.
One way to satisfy capital adequacy norms for these banks is to
approach the capital market to raise equity. Until 1991-92, all PSBs are
owned by the Government. After the reform process was initiated, the
Governments stake was permitted to be reduced to 51 per cent. The
Committee on Banking Sector Reforms (1998) recommended that PSBs
should access market to meet their needs of capital and for the purpose, the
minimum shareholding by the Government/RBI should be brought down to 33
per cent from the existing statutory minimum of 51 per cent. Till 2000-01, as
many as 12 PSBs accessed capital market and raised an amount of Rs. 64
Crore. The State Bank of India alone raised through public issue over Rs.
2200 Crore by public issue of equity shares and Rs. 1,000 Crore through
bond issue in December 1993 and January 1994. The reduction in
government stake in PSBs amounts to partial privatization of banks.
5.6 BRANCH EXPANSION
Indian banking system is predominantly branch-banking system. After
nationalization of major banks, for nearly have decades there had been
massive branch expansion, primarily with the objective of covering the
unbanked centers in rural and semi-urban centers, coupled with intensive
branch network in metro urban centers to sustain profitability. In the decade
that followed 1990 (reform period) it was felt that haphazard growth should be
contained '.and there should be qualitative network in branch banking. The
Narasimham Committee-I recommended that branch licensing be abolished
and the matter of opening and closing branches are left to commercial
judgment of individual banks. This recommendation was partlyimplemented.
101
number of branches of all PSBs put together was 1.01 per cent, it was 0.89
per cent for the 19 nationalized banks. The Associate Banks made a bigger
contribution (1.67) than the nationalized bank and SBI for the percentage
increase in the number of branches of all PSBs.
5.7 TREND IN EMPLOYEES OF PSBs: 1992-93 to 2002-03
(0.75)
(0.58)
(1.66)
(1.38)
Source: Compiled from various issues of statistical Tables and Data case
published by ISA, Mumbai.
5.8. PROFITABILITY OFPSBS : 1992-93 TO 2002-03
Public sector banks before the initiation of reform measures in 1992 didn't
seem to consider profitability as a major performance indicator. With the
implementation of reform measures profitability as a measure come to the
forefront. The year-to-year profits of different group of PSBs are presented in
the Table 5.4.
TABLE 5.4
TRENDS IN NET PROFIT/LOSS OF PSBS (GROUP-WISE) (1992.93 to
2002.03)
Nationalised
Year
SBI
Associate Banks
PSBs
Banks
1992-93
212
68
3573
3293
(%)
(%)
(%)
(%)
1993-94
275
81
4705
4349
(29.72)
(19.12)
(31.68)
(32.07)
1994-95
715
131
269
1116
(160.00)
(61.73)
(105.70)
(125.66)
1995-96
832
38
1165
371
(16.36)
(129.01)
(-533.09)
(133.24)
1996-97
1349
321
1445
3115
(62.14)
(944.70)
(224.00)
(939.60)
1997-98
1861
550
6567
4979
(37.95)
(71.34)
(354.46)
(59.84)
1998-99
1028
438
1788
3254
(44.76)
(20.36)
(-72.77)
(34.65)
199900
2052
428
2437
5116
(99.61)
(2.28)
(36.30)
(57.22)
200001
1604
618
2095
4317
(21.83)
(44.39)
(14.03)
(15.62)
200102
2432
118
4852
8301
(51.62)
(64.72)
(131.60)
(92.29)
200203
3105
1407
7784
12295
(27.67)
(38.21)
(60.43)
(48.11)
Average
(41.85)
(109.26)
(26.10)
(110.70)
As can be seen from the Table 5.4, SBI and Associate Banks barring
104
one year, throughout the period have made profits continuously. The
nationalized banks have sustained huge losses during the first two years, i.e.
1992-93, 1993-94. Since these amounts of losses far exceeded the profits of
SBI and Associate Banks, it resulted in losses for all the PSBs put together.
The nationalized banks have made huge profit of Rs. 6567 Crore in 1997-98
with annual growth rate of 354.46. But the turnaround has actually started in
1996-97. The last two years of the study period have brought bountiful profits
to all the constituents of PSBs group. In 2001-02, the profits of PSBs as a
whole were almost double to the figure of 2000-01 and profits in 2002-03 are
almost equal to the mined profits of the previous two years. In the initial years
of reform period, nationalized banks have sustained losses due to change in
the accounting pattern regarding income recognition and asset classification.
The accumulated bad and doubtful debts have impinged on the profitability of
nationalized banks.
5.9.1.BUSINESSPER BRANCH
As can be seen from the Table 5.13, the percentage changes in mean
values of business per branch of all PSBs are positive in the three periods
indicating improvements in the indicators. SBI and its associate banks have
106
The percentage increase in the mean values of business per branch in periodIII (2000-03) over period-I (1992-95) is considerable and far more satisfactory.
In terms of total business mobilized, the banks, which occupy the first three
places, are ANB, SBOI and COB. The not so well performers are 18, BOB
and PNB.
5.9.2. OPERATING EXPENSES PER BRANCH (PSBS)
profitability of banks. By 1992-93 several banks had accumulated nonperforming assets (NPA's) for which provisions had to be made. The
accumulated losses had also to be written off. Hence in the first four years
of reforms many nationalized banks sustained losses. However, due to their
intrinsic resilience and management savvy, the number of banks incurring
losses is reduced to three by 1996-97. Since then, all public sector banks
got improvement in key financial ratios. But the weak banks (IB, UCO)
continued to make losses per branch except in the last year when they
earned sizeable profits. The Table 5.5 indicates the profit per branch of
PSBs during the first and second part of period under study. From the table
it is evident that 10 nationalized banks made negative profits' per branch in
1992-93, in the next year, the number has increased to 12. The profit per
branch of nationalized banks in the first two years has thus been negative.
The average profit per branch of SBI and its associate banks have
been positive throughout the period (except SBOS in 1995-96). The profit
per branch of SBI increased from Rs. 2.43 lac in 1992-93 to Rs. 34.19 lac in
2002-03. The average profit per branch for the entire period is Rs. 23.28
lac. There has been a large increase in the profits of associate banks from
Rs. 1.77 lac in 1992-93 to Rs. 30.98 lac in 2002-03 and the average profit
per branch of associate banks for the entire period work out to be Rs. 10.73
lac. The growth rate of profit per branch of associate banks is Rs. 24.78 per
cent, which is higher than that of SBI, which is 5.33 per cent.
108
The profit-making banks in orders are COB (Rs. 28.22 lac) OBOC (Rs.
23.50 lac) and SBI (Rs. 23.28 lac). As indicated by the values of CV, there
existed alarming differences with respect to this indicator. So, there is no
stability in earning profit during the period under study.
109
TABLE 5.5
PROFIT PER BRANCH OF PSBS : 1992-2003
(Rs. in Lacs)
No. Name
1.
2.
3.
4.
5.
6.
7.
8.
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
.9.
AB
10. ANB
11. BOB
12.
BOI
13.
BOM
14.
CB
15. CBOI
16. COB
17.
DB
18.
IB
19. IOB
20. OBOC
21. P&SB
1992-93
1992-03
(2)
2.43
1.55
2AJ3 D
0.87
0.78
5.01
1.45
1.30
(3)
3.12
0.95
3.20
1.13
0.38
3.20
1.67
1.41
(4)
(5)
8.09 93.60
1.09 3.49
5.73 6.42
2.56 3.33
0.57 4.82
4.54 7.94
3.79 -61.01
3.25 4.00
(6)
15.18
5.24
65.00
4.57
7.18
84.40
18.68
6.12
(7)
(8)
20.85 11.45
11.73 11.80
11.66 13.10
7.39
8.01
9.07
5.87
20.23 14.19
20.31
6.25
9.55
6.48
(9)
(10)
22.69 17.67
15.25
13.29
14.65
17.08
11.25
15.65
8.09
4.31
18.35
2.27
22.03
3.43
-9.90
- 14.46
(11)
26.77
20.83
25.54
29.83
10.93
32.23
19.95
17.95
(12)
34.19
25.60
33.67
46.84
19.21
43.63
22.46
25.48
Mean
(13)
23.28
10.07
18.03
11.95
6.47
21.45
5.36
9.08
1.77
2.04
3.25
7.60
12.82
14.15
13.79
22.58
30.98
10.73
0.9004
24.78
-5.88
14.70
0.33
13.90
17.39
1.27
12.59
0.89
-8.06
0.51
-57.57
3.80
25.46
.19.95
16.72
2.76
46.01
26.28
5.75
23.25
5.73
.6.24
27.77
6.53
5.49
25.73
4.10
4.54
7.16
2.06
3.61
9.55
2.73
14.84
2.65
0.97
0.74
18.45
1.01
3.65:
2.10
11.89
11.86
18.97
10.30
6.84' 9.94
7.53 3.69
9.85
11.85
4.87
1.48
35.80
40.18
5.38
22.64
.28.54 .19.26
2.81
8.08
30.49
21.78
8.29
1.74
4.18
18.90
20.38
19.82
11.87
30.76
5.23
46.74
0.97
2.36
15.89
3320
3.06
8.63
36.64
28.08
33.26
18.02
42.04
9.82
60.82
10.04
13.53
29.03
46.20
0.53
0.59
13.21
12.90
5.49
0.76
13.40
.0.39
2822
1.05
22.48
.0.69
23.50
3.42 .
13.9392
2.2283
0.6434
3.7490
16.7063
0.8974
24.8419 0.6250
9.3727
.1.3058
33.5701
0.5048
3.8983
307.45
38.23
17.29
83.90
438.94
21.05
589.74
18.57
41.76
.903
-827.91
13.41
83.13
0.93
0.32
3.44
1.12
3.70
8.24 11.11
11.25 14.55
1.14
4.10
11.54 6.50
2.40
'4.89
20.96 24.65
4.59
6.39
.90.76 .26.16
0.22
7.66
24.68 23.84
.18.86 2.84
10.01
6.88
7.17
7.64
89.50
18.20 16.36
14.63
8.00
4.82
4.43
8.78
9.46
5.67
4.72.
28.74 31.12
9.08
9.43.
.20.21 -51.97
8.19
3.92
24.97 25.58
9.14
7.88
CV
(14)
1.0861
0.8322
1.0129
1.1967
0.8519
1.1488
4.4211
0.2855
GR
(15)
5.33
24.02
12.31
30.72
21.16
10.72
56.11
23.34
110
22.
PNB
1.23
2.04 2.32
23.
SB
.43.00 .19.19 -5.87
24. UCO
24.79
.30.40 4.68
25. UBOI
0.59
2.64 5.55
26. UNBOI
21.04
.46.40 .14.79
27.
VB
13.21
0.51 3.95
NB
12.02
15.44 0.87
PSBs
-7.78
10.04 2.55
Source: Reserve Bank Of India.
2.57
1.26
13.15
4.00
17.55
2.99
3.72
0.84
6.32
4.16
-9.76
10.64
.8.55
2.28
4.57
6.96
12.58
5.10
-532
11.98
0.75
2.75
8.00
5.67
9.73
8.56
3.79
7.55
1.13
3.61
5.50
7.10
10.59
12.69
2.10
4.73
2.33
6.33
7.43
11.05
11.96
13.56
1.92
7.55
1.44
8.43
6.40
9.32
14.57
14.34
9.62
15.52
9.13
15.82
14.80
17.90
20.86
19.76
12.11
27.38
23.48
23.37
23.50
26.30
8.15
1.03
.6.01
8.92
-6.37 .
5.17
3.63
6.20
0.8528
17.5725
2.1819
0.8406
2.8918
1.7730
3.0650
1.6902
23.07
469.22
.60.70
19.39
77.55
46.65
84.93
47.91
111
The average business per employee of all PSBs taken together increased
from Rs. 47.84 in 1992-93 to Rs. 215.60 lac in 2002-03an improvement of 4.5 times.
The nationalized banks have been able to improve average business per employee
from Rs. 48.15 lac in 1992-93 to Rs. 221.90 lac- an increase of 4.6 times. It appears
from the data that the nationalized banks have made remarkable progress in the
area of average business per employee. The average business per employee of SBI
increased from Rs. 50.40 lac in 1992-93 to Rs. 207.60 lac in 2002-03. In the case of
associate banks, the average business per employee increased from Rs. 38.31 lac
to Rs. 197.98 lac per annum during the period.
study. Similarly, rate of growth of business per employee of nationalized banks was
higher than those of SBI and Associated Bank.
A bank-wise analysis reveals that OBOC (Rs. 168.64 lac) followed by COB
(Rs. 159.93 lac) and BOB (Rs. 141.41 lac), on an average, made the highest
business per employee during the study period. On the other hand, UCO (Rs. 81.34
lac); SBOM (Rs. 78.70 lac) and SBBJ (Rs. 76.89 lac) secured the lowest business.
Inter-bank comparison, on the basis of growth rate, revealed that ANB (19.65
per cent), DB (18.73 per cent) and SBOI (17.87 per cent) secured first three ranks
and IB (9.83 per cent), BOB (12.62 per cent) and SBOM (14.49 per cent) got bottom
three ranks in list of PSBs. There did not exist any significant variations in co-efficient
of variation.
113
TABLE 5.6
BUSINESS PER EMPLOYEE OF PSBS : 1992-2003
(Rs. in Lacs)
No. Name
1.
2.
3.
4.
5.
6.
7.
8.
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
.9. AB
10. ANB
11. BOB
12. BOI
13.
BOM
14.
CB
15. CBOI
16. COB
17.
DB
18.
IB
19. IOB
20. OBOC
21. P&SB
1992-93
(2)
50.40
31.67
44.60
36.15
34.64
42.00
35.54
41.28
(6)
73.26
55.00
99.90
64.66
61.08
78.66
73.05
77.93
(7)
(8)
85.68 105.85
67.69 77.37
93.06 109.11
77.16 89.66
65.98 74.85
90.34 104.22
79.99 92.00
87.89 97.55
(9)
126.34
91.18
126.29
114.61
88.69
121.22
110.34
118.23
(10)
165.90
115.70
165.16
154.36
119.32
154.12
136.96
147.64
70.47
80.77
89.03
110.36
72.18
66.36
106.42
94.40
62.16
84.43
63.21
103.29
76.27
77.73
81.09
110.01
74.49
85.22
75.10
128.29
116.84
76.85
100.31
74.55
142.02
101.01
84.03
98.76
136.09
88.73
98.88
101.30
142.26
128.04
91.65
111.06
88.81
185.49
22.24
92.02
113.04
169.68
111.52
116.98
136.90
160.80
139.19
115.91
129.23
107.08
208.34
141.58
103.47
127.21
218.23
126.33
141.31
200.93
175.78
190.35
166.44
180.08
127.12
245.03
197.08
135.93
155.75
263.15
169.44
51.21
39.10'
73.26
58.39
30.70
217.17
39.74
45.21
37.16
74.48
51.17
57.16
39.59
(3)
51.46
35.52
52.37
41.88
37.64
50.32
39.43
49.58
53:21
41.76
83.38
60.84
33.23
53.33
40.22
60.54
42.80
69.89
55.98
.65.65
45.45
58.60
47.19
90.88
67.45
43.92
62.54
49.40
89.23
53.16
77.11
66.20
82.49
61.93
65.18
56.09
96.72
79.78
50.26
72.79
56.01
88.52
61.88
77.79
77.55
101.94
69.44
(11)
186.84
131.98
191.64
186.68
136.14
191.13
157.44
172.16
2002-03
166.91
219.86
245.42
225.47
193.61
203.27
172.65
276.93
213.81
156.80
191.67
313.83
182.12
(12)
207.60
151.46
226.20
220.52
146.50
245.55
184.98
269;05
19922003
Mean
(13)
107.09
76.89
111.19
99.39
78.70
109.67
93.01
102.89
CV
GR
(14)
(15)
0.5303
15.31
0.5334
15.62
0.5390
15.61
0.6270 17.8787
0.4984
14.49
0.5826 16.54
0.5297 15.56
0.5205
15.08
95.16 0.5581
194.76. 100.40
250.75 112.30
252.31 141.41
248.23 128.09
225.56 99.12
236.65 116.44
188.98 91.62
314.60 159.93
236.21 107.56
178.23 102.50
222.85 112.84
336.76 168.64
194.80 105.80
16.08
0.4873 14.04
0.6929 19.65
0.4395 12.62
0.5212 15.11
0.6850 19.66
. 0.5506 15.92
0.5675 16.24
0.5748 17.06
0.7172 18.73
0.3647 9.83
0.5015 14.51
0.5934
17.39
0.5245
15.43
114
22.
PNB
46.95 43.73
23.
SB
34.07 36.85
24. UCO
44.63 39.84
25. UBOI
42.02 51.79
26. UNBOI
39.96 41.98
27.
VB
35.70 43.71
NB
48.15 50.96
PSBs
47.84 50.49
Source:Reserve Bank Of India
50.34
42.84
43.65
68.86
48.13
58.29
60.09
58.87
55.85
48.51
48.02
80.64
51.74
58.97
67.52
66.86
108.22
103.70
83.24
150.51
100.16
113.66
126.48
124.93
144.36
124.41
108.42
186.83
121.31
136.24
159.93
159.84
170.23
169.86
155.10
236.92
147.19
176.52
197.29
191.37
115
TABLE 5.7
ESTABLISHMENT EXPENSES PER EMPLOYEE OF PSBS-PERIOD-WISE ANALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
0.94
0.70
0.76
0.76
0.73
0.66
0.77
0.71
0.73
0.72
0.74
0.91
0.86
0.76
0.76
0.76
0.77
0.87
0.78
0.79
0.73
CV
(3)
0.18
0.16
0.16
0.21
0.10
0.19
0.22
0.18
0.16
0.17
0.23
0.19
0.22
0.22
0.18
0.19
0.25
0.22
0.10
0.11
0.19
Mean
(4)
1.55
1.45
1.52
1.46
1.43
1.34
1.55
1.25
1.42
1.28
1.39
1.59
1.52
1.62
1.35
1.47
1.39
1.61
1.45
1.50
1.31
CV
(5)
0.12
0.16
0.23
0.17
0.13
0.10
0.15
0.06
0.14
0.13
0.15
0.16
0.13
0.14
0.17
0.14
0.15
0.15
0.11
0.17
0.14
Mean
(6)
2.66
2.35
2.27
2.41
2.61
2.25
2.11
2.18
2.30
2.47
2.72
2.66
2.72
2.63
2.46
2.76
2.10
3.48
2.58
2.74
2.34
CV
(7)
0.07
0.07
0.07
0.05
0.07
0.07
0.07
0.06
0.06
0.07
0.12
0.06
0.11
0.12
0.05
0.11
0.12
0.13
0.02
0.07
0.10
Percentage Change
II Vs I
(8)
63.96
96.38
99.56
92.11
96.79
102.53
102.17
77.36
94.95
76.50
87.44
75.00
76.36
114.10
77.97
93.86
81.74
85.06
85.47
91.10
80.28
III Vs II
(9)
71.98
62.21
49.67
65.30
82.28
68.58
36.34
73.94
62.59
93.21
94.98
67.65
79.12
62.14
82.92
87.10
50.96
116.36
78.11
82.26
78.63
III Vs I
(10)
181.98
218.55
198.68
217.54
258.72
241.41
175.65
208.49
216.97
241.01
265.47
193.38
215.89
247.14
225.55
262.72
174.35
300.38
230.34
248.31
222.02
116
21.
22.
23.
24.
25.
26.
27.
P&SB
0.82
PNB
0.70
SB
0.82
UCO
0.78
UBOI
0.75
UNBOI
0.79
VB
0.79
NB
0.78
PSBs
0.82
Source:Reserve Bank Of India
0.10
0.18
0.22
0.11
0.17
0.16
0.17
0.18
0.18
1.46
1.38
1.45
1.37
1.48
1.42
1.44
1.44
1.46
0.07
0.16
0.12
0.09
0.12
0.10
0.07
0.14
0.12
3.02
2.42
3.13
2.52
2.68
2.86
2.90
2.65
2.62
0.06
0.05
0.08
0.14
0.01
0.25
0.23
0.04
0.04
79.18
97.14
76.83
76.07
96.89
79.41
81.93
84.26
79.18
106.15
75.60
116.09
83.50
81.49
100.94
100.92
83.60
79.04
269.39
246.19
282.11
223.08
257.33
260.50
265.55
238.30
220.82
117
The average expense per employee of PSBs as a group increased from Rs.
0.71 lac in 1992-93 to Rs. 2.71 lac -an increase of 3.8 times. Similarly, the average
establishment expense of nationalized banks put together increased from Rs. 0.68
lac to Rs. 2.76 lac during the period under study-an increase of four times.
The average establishment expenses of SBI increased from Rs. 0.83 lac to
Rs. 2.72 lac per annum-an increase of 3.3 times. The average establishment
expenses of Associate Banks increased from Rs. 0.63 lac to Rs. 2.33 lac. during the
study period. Inter-group analysis revealed that SBI, on an average, incurred higher
establishment expenses than the nationalized banks and associate banks. For
example, the SBI, on an average, spent Rs. 1.71 lac per employee per annum while
nationalized and associate banks spent Rs. 1.61 lac and Rs. 1.48 lac per annum
respectively. It is further observed that the rate of growth in establishment expenses
per employee of nationalized bank (13.68 per cent) is higher than that of SBI (11.70
per cent) and Associate Banks (12.84 per cent).
118
The growth rate of profitability per employee of nationalized banks and all
PSBs were 70.16 per cent and 42.99 per cent respectively. The growth rate of
Profitability per employee of six out of 19 nationalized banks was also negative. In
the first three to four years of the early period of reforms, large number of banks
sustained losses due to write off of accumulated bad and doubtful debts and higher
provisioning for NPAs. There existed exceptionally high inter-bank variations with
respect to profit per employee.
119
TABLE 5.8
PROFIT PER EMPLOYEE OF PSBS : 1992-2003
(Rs. In Lacs)
No
Name
1992-93 1993-94 1994.95 1995.96 1996-97 1997-98 1998-99 19992000 200001 200102 200203
19922003
CV
(14)
0.6892
0.8914
0.8448
1.2746
0.9379
1.00BI
3.8651
GR
(15)
19.02
26.61
22.73
32.47
22.11
24.50
53.99
19.82
1.
2.
3.
4.
5.
6.
7.
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
(2)
0.09
0.08
0.12
0.05
0.04
0.23
0.06
(3)
0.12
0.05
0.17
0.06
0.02
0.15
0.07
(4)
0.31
0.05
0.32
0.13
0.03
0.21
0.17
(5)
0.36
0.17
0.36
0.18
0.24
0.38
2.86
(6)
0.57
0.27
0.37
0.25
0.36
OA2
0.89
(7)
0.78
0.60
0.68
OAI
OA5
1.09
0.98
(8)
0.43
0.61
0.76
OA5
0.30
0.77
0.31
(9)
0.88
0.81
0.87
0.65
OA2
0.10
1.09
(10)
0.75
0.78
1.13
0.98'
0.26
1.35
0.19
(11)
1.16
1.24
1.68
1.91
0.67
1.97
1.10
(12)
1.49
1.54
2.25
3.06
1.19
2.76
1.26
Mean
(13)
0.63
0.56
0.79
0.74
0.36
0.86
0.30
8.
SBOT
0.06
0.07
0.17
0.20
0.31
OA8
0.32
0.51
0.80
0.10
1.42
0.40
1.0035
9
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB'
OBOC
P&SB
0.09
-OA7
.0.90
0.02
0.06
1.06
0.05
0.74
0.04
0.55
0.03
0.26
0.18
1.56
0.10
1.61
.0.98
0.15
2.05
1.57
0.23
1.30
0.30
0.42
-IA6
1.22
0.27
1.40
0.16
.0.33
0.27
0.39
0.09
.2.34
0.38
1.63
079
0.18
0.05
0.03
0.92
.0.06
0.05
0.03
0.07
OA4
0.51
0.08
OA7
-IA5
1.14
0.33
4.91
0.01
1.32
1.06
0.39
0.28
0.24
0.61
0.68
0.28
0.27
0.30
1.33
O.7
-IA3
0.37
1.33
0.16
0.67
0.57
0.50
0.91
0.70
0.34
0.37
0.35
1.74
0.70
1.12
0.40
1:47
0.53
0.53
0.60
0.61
0.91
0.38
0.32
0.41
0.30
1.89
0.74
2.91
0.19
1.59
0.46
0.76
0.31
0.83
1.07
0.33
0.56
OA3
0.31
2.19
OA4
1.61
0.14
1.94
0.50
0.83
0.19
0.95
0.59
0.57
0.32
0.59
0.10
2A5
2.43
1.97
OA5
1.49
0.13
1.36
OAO
1.58
IAO
1.16
1.03
1.55
OAI
2.85
0.10
0.15
0.94
2.36
0.23
1.90
0.85
3.10
1.92
1.97
1.58
2.14'
0.78
3.88
1.0B
0.86
1.71
3.38
0.04
0.61
0.07
0.52
0.76
0.39
0.04
0'.63
0.23
1.69
0.06
1.30
0.25
1.48
0.18
0.9689 26.11
9.1374 214.63
2.2090 63.35
0.7290 19.62
2.5137 56.54
7.5996 .69348
1.0095 23.95
3.7268 .89.88
0.6719 20.11
1.6106 51.56
1 .2529 6.15
2.8815 71.74
0.6101 16.92
4.1923 92.12
120
22.
23.
24.
25.
26.
27.
PNB
0.06
0.10
SB
1.74.
0.78
UCO
1.24.
1.57
UBOI
0.03
0.15
UNBOI
1.23
2.72
VB
0.71
0.03
0-63
0.81
NB
PSBs
0.38
0.49
Source:Reserve Bank Of India
0.12
0.24
.0.24
0.32
0.87
0.23
005
0.12
0.13
0.05
0.69
0.24
1.04
0.17
0.20
0.04
0.35
0.18
0.52
0.70
0.51
0.13
0.25
0.35
0.72
0.23
0.29
0.81
0.05
0.16
0.45
0.56
0.57
0.40
0.21
0.52
0.07
0.21
0.32
0.37
0.63
0.62
0.12
0.33
0.15
0.37
0.44
0.59
0.80
0.77
0.11
0.55
0.10
0.53
0.41
0.54
0.97
0.98
0.65
1.22
0.66
1.11
1.03
1.10
1.43
1.35
0.83
2.15
1.72
1.68
1.65
1.63
0.51
0.17
0.28
0.64
0.33
0.32
0.27
0.40
0.9101 25.44
5.1994 145.05
2.6075 75.74
0.9457 21.94
3.4981 -94.20
1.9456 52.38
2.5778 70.61
1.5506 42.99
121
TABLE 5.9
RETURN ON ASSETS OF PSBS (1992-2003)
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
S80S
S80T
ASS
AB
ANB
BOB
801
BOM
CB
CBOI
COB
I Period
II Period
III Period
1992-95
1996-99
2000-2003
Mean
(2)
0.34
0.21
0.44
0.23
0.09
0.44
0.25
0.36
0.29
-1.82
-2.06
0.26
-1.71
-3.24
0.45
-2.15
0.56
CV
(3)
0.58
0.38
0.32
0.33
0.45
0.13
0.41
0.55
0.17
-0.88
-0.59
0.96
-1.22
-0.73
0.68
-0.79
0.78
Mean
(4)
0.74
0.78
0.73
0.56
0.69
0.99
0.96
0.53
0.75
0.68
065
0.78
0..86
0.47
0.42
0.50
1.36
CV
(5)
0.38
0.35
0.24
0.17
0.27
0.40
0.56
0.20
0.27
0.28
0.31
0.17
0.12
0.12
0.07
0.17
0.09
Mean
(6)
0.68
0.98
1.00
1.27
0.64
1.32
0.63
0.77
0.97
0.36
1.06
0.74
0.75
0.60
0.90
032
1.41
CV
(7)
0.24
0.20
0.17
0.39
0.58
0.15
0.65
0.16
0.25
0.57
0.49
0.40
0.46
'0.55
0.47
0.69
0.11
Percentage Change
II Vs I
(8)
0.40
0.58
0.29
0.33
0.60
0.55
0.72
0.16
0.46
2.50
2.71
0.52
2.57
3.71
-0.02
2.65
0.81
III Vs II
(9)
-0.06
0.20
0.27
0.71
-0.05
0,33
-0.33
0.24
0.22
-0.31
0.41
-0.04
-0.11
0.13
0.48
-0.18
0.04
III Vs I
(10)
0.34
0.78
0.56
1.04
0.55
088
0.38
0.40
0.68
2.18
3.13
0.48
2.46
3.84
0.45
2.47
0.85
122
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
DB
-0.81
IB
-0.84
IOB
-3.05
OBOC
0.73
P&SB
-2.83
PNB
0.25
SB
-3.14
UCO
-2.78
UBOI
0.35
UNBOI
-4.31
VB
-0.65
NB
-1.13
PSBs
-0.60
Source:Reserve Bank Of India.
-1.35
-1.86
-1.11
0.67
-0.86
0.27
-0.95
-0.70
0.69
-0.63
-2.46
-0.94
-1.22
0.76
-2.32
0.42
1.34
0.49
0.62
0.47
-0.61
1.77
-0.24
0.24
0.44
0.55
0.08
-0.44
0.42
0.11
0.46
0.88
0.30
-0.60
0.84
-2.27
0.06
0.28
0.30
-0.29
-0.13
0.68
1.03
0.10
0.83
0.87
0.41
0.73
0.62
0.78
0.67
0.70
-3.74
-6.21
0.46
0.29
0.70
0.16
0.13
0.62
0.47
0.95
0.34
0.49
0.39
1.58
-1.48
3.48
0.60
3.32
0.37
3.61
2.17
1.42
4.07
089
1.57
1.15
-1.05
2.19
0.26
-0.31
-0.39
0.21
0.40
1.02
-1.04
0.86
0.54
0.23
0.15
0.53
0.71 .
3.73
0.29
2.93
0.58
4.01
3.19
0.38
4.93
1.43
1.80
1.30
123
ROA is defined as net profit divided by average total assets. This ratio
measures a banks profit per currency unit of assets. This is the main indicator of
profitability used in international comparisons and it is one among the guidelines of
RBI for balance sheet analysis of banks. The return on assets of different banks
and different categories of public sector banks is shown in the Table
5.9.(percentage change).
It may be noted that immediately after introduction of reforms, the PSBs have
registered negative returns in the years 1992-93, 1993-94 and 1995-96. It is so
because the practice of booking income on accrual basis came to end with the
introduction of reform measures. However, since 1996-97 the situation has
changed for the better. In the year 1997-98 the return on assets of PSBs said to
0.73 per cent but in the following years, because of net losses registered by some
banks, the ROA fell and in 1999-2000, it stood at 0.57 per cent. The last two years
saw a significant improvement of ROA of PSBs. As per the data provided by the
banks for international settlement (BIS 1999), the ROA of PSBs doesn't compare
unfavorable with banks in certain other countries. There were fluctuations in the
year-to-year percentages but on the last two years it picked up to 0.7 per cent and
0.96 per cent respectively. The average return for the entire period is 0.23 per cent,
which compares very unfavorably with market of interest. The average returns of
the 19 nationalized banks exhibit the same type of behavior as that of PSBs as a
whole. SBI and the Associate banks achieved positive rate of return on assets
throughout the period, when the average return on assets of SBI is 0.60 per cent
124
Similarly, an Inter-banks growth rate reveals that Associate Banks (16.20 per
cent) growth is higher when compared to the growth rates of SBI (8.33 per cent)
and nationalized banks (0.01 per cent). COB (1.69 per cent) followed by OBOC
(1.48 per cent); SBOP (0.86 per cent) on an average recorded the highest ROA
while, IB (1.30 per cent), UNBOI (0.33 per cent) and UCO (0.28 per cent) on an
average, posting negative ROA. When a comparison of growth rates of different
banks is made, BOI (394.87 per cent); BOB (71.96 per cent) and SBOM (19.89 per
cent) are in the top of the PSBs list while ANB (2458.82 per cent), DB (392.86 per
cent) and VB (156.28 percent) were in the bottom. There existed large variations
among :the PSBs with regard to this indicator throughout the study period.
125
TABLE 5.10
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14..
15.
16.
17.
18.
19.
20.
21.
22.
Name
1992-93 1993-94 1994.95 1995.96 1996-97 1997-98 1998-99 19992000 200001 200102 200203
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
P&SB
PNB
(2)
(3)
106.00 58.02
52.38
33.33
100.00 141.18
33.33
44.44
33.33
16.67
120.00 80.00
-50:00 60.00
40.00
45.00
60.18
71.68
-61.27 139.92
153.26 -66.94
2.42
8.93
-70.58 -98.64
.106.49 -88.66
12.50
20.37
209.29 .105.79
5.97
24.11
-61.22
25.27
3.45
.92.43
203.51 32.65
26.92
25.00
.94.20 .47.96
20.21
'20.60
(4)
150.84
38.10
258.82
100.00
25.00
116.00
140.00
105.00
115.93
12.28
10.33
23.75
2.56
-6.13
34.58
6.44
65.18
10.60
2.14 0.75
59.07
1.45
23.63
(5)
175.53
72.22
294.12
66.67
72.22
208.00
-73.25
74.29
-7.90
0.77
2.58
35.36
47.42
1.74
52.16
.5.67
93.75
35.37
204.28
0.22
89.64
23.74
26.37
(6)
256.46
111.11
305.88
94.44
111.11
236.00
22.61
114.29
66.74
25.91
6.09
109.06
121.21
6.28
29.70
8.37
122.55
35.27
.59.48
31.44
93.26
2.83
67.81
(7)
353.80
180.00
570.59
155.56
141.67
572.00
24.84
126.00
107.84
52.23
12.69
156.66
57.21
7.48
35.12
9.70
139.17
50.72
12.56
33.83
108.81
921
236.14
(8)
195.44
184.00
658.82
172.22
94.44
404.00
7.96
86.00
85.88
54.66
25.86
143.20
31.50
15.71
38.93
8.09
160.00
53.14
31.07
16.47
119.17
23.05
175.47
(9)
390.11
240.00
752.94
250.00
133.33
524.00
28.34
132.00
123.14
27.94
34.77
171.09
27.12
27.19
40.83
8.37
193.33
30.43
.17.05
11.98
144.56
25.10
192.45
(10)
304.94
210.00
882.35
355.56
72.22
644.00
4.46
194.00
121.18
16.19
26.89
93.54
39.50
13.60
49.31
2.55
218.33
128.50
10.94
26.07
105.18
5.35
218.87
(11)
462.36
330.00
13241
694.44
183.33
932.0
26.11
242.00
199.61
32.39
44.89
185.71
103.48
43.81
128.20
14.50
215.38
5.31
0.87
51.69
166.32
9.47
265.09
(12)
590.30
406.00
1770.59
1111.11
322.22
1288.00
29.62
342.00
275.88
47.84
100.75..
262.93
174.39
67.07
248.54
2722
290.91
55.07
4.13
93.48
236.79
1.65
397.17
1992-2003
Mean
CV
GR
(13)
(14)
(15)
276.71
0.5855 16.00
168.83
0.7279 20.88
642.25
0.8161 23.00
279.80
1.1987 291190
109.60
0.8000 19.56
465.82
0.8185 22.70
29.15
1.7249 14.20
136.42
0.6654
17.67
110.92 0.6757
15.47
. 4.04 14.4458 315.79
2.18
30.0632 797.76
108.42 0.7781
21.17
39.56
1.9923
46.28
1.67
30.9806 824.42
62.75
1.0939 23.79
21.41
3.3445 71.32
138.97 0.6325
18.88
5.54
10.3008 48.38
37.93
1.6581 17.74
2.71
27.9177 640.96
106.79 0. 4.265
16.08
8.25
157
93.51
144.64 0.9173
25.10
126
23.
SB
421.38 35.64
24. UCO
-88.80 .52.75
25. UBOI
7.97
'14.79
26. UNBOI -77.50 106.92
27.
VB
.77.17
2.08
NB
-85.36 48.65
PSBs
-73.19 42.39
Source:Reserve Bank Of India
-8.23
-5.42
31.36
17.64
12.60
1.91
7.60
1.55
1427
23.67
17.04
-9.84
-8.84
2.63
5.19
1026
63.91
-6.66
3.42
11.23
22.46
6.43
4.65
7396
058
4.14
17.07
30.98
41.21
.3.00
47.34
0.83
5.40
13.37
22.59
45.76
1.63
29.88
1.71
20.46
18.46
35.94
49.79
1.46
45.86
1.05
19.78
15.51
29.68
53.18
7.28
92.90
6.57
3922
34.72
55.29
72.88 17.20
34.56
1220
12022 50.17
16.84 18.02
1 04.79 11.35
59.24
2.61
86.73 15.73
8.0145
2.6748
0.6909
2.1387
3.7563
15.1278
2.7869
165.13
68.27
16.54
51.84
91.44
402.40
77.04
127
The average NIM for all PSBs was 2.80 per cent for nationalized banks, it was
2.72 per cent, which is higher than 2.02 per cent in 1992-93. The average for SBI
was 2.89 per cent while that of associate banks was on the higher side at 3.29 per
cent. One peculiar feature is that in the years 1995-96 and 1996-97 for most of the
banks, the Net-Interest margin is more than three per cent. The general conclusion is
the NIM had been on the lower side during the first two years for PSBs.
Net-interest margin as a percentage to working funds, on an average, was
more in Associate Banks (3.29 per cent) when compared to SBI (2.89 per cent) and
nationalized banks (2.72 per cent).
Bank group-wise analysis, on the basis of growth rate revealed that SBI (1.73
per cent) have registered lower negative growth rate with regard to this indicator
when compared to nationalized (2.21 per cent) and Associate Banks (0.30 per cent).
An insight reveals that SBOP (3.64 per cent) followed by SBOI (3.49 per cent)
and SBOM (3.47 per cent) on an average, registered the l1ighest NIM when
compared to IB (1.41 per cent); UNBOI (1.83 per cent) and UCO (1.96 per cent),
which registered hover margins.
The Inter-bank analysis on the basis of growth rates revealed that UNBOI
(13.14 per cent), UCO (7.65 per cent) and AB (6.13 per cent) secured top ranks
whereas CB (2.36 per cent), SBOS (1.79 per cent) and SBIOI (1.73 per cent) got
lower ranks. There exist hardly any significant variations in CV with respect to this
indicator.
5.9.9. NON INTEREST INCOME AS PERCENTAGE OF TOTAL INCOME (PSBS)
Total income of banks comprises of interest income and non-interest income.
Non-interest income consists of:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
TABLE 5.11
NON-INTEREST INCOME AS A PERCENTAGE TO TOTAL INCOME OF PSBS : 1992-2003
(Rs. in Lacs)
No Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14..
15.
16.
17.
18.
19.
20.
21.
22.
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
P&SB
PNB
1992-93
199319961994.951995.96
1997-98 1998-99 19992000 200001 200102 200203
94
97
(2)
(3)
13.08 14.58
13.72
1531
13.60 14.82
12.85. 13.81
12.35 16.35
7.34
8.4
14.81 14.42
11.33 15.04
1203 13.85
10.80 8.34
9.47 11.29
8.46 1665
9.98 12.03
8.72 8.23
11.32 13.00
8:58
9.46
12.35 17.32
8.96
10.61
8.72
10.82
16.98 20.09
7-71.
8.51
9.23
10.89
7.32
13.21
(4)
15.96
1695
16.32
1634
1560
6.48
15.25
14.33
14.19
11.24
15.36
12.84
11.73
9.54
13.57
11.75
15.97
12.01
12.85
11.53
9.87
10.55
11.91
(5)
17.54
15.05
15.28
13.44
15.26
12.00
17.26
13.22
14.33
11.99
10.37
11.67
12.71
9.43
13.68
11.15
14.15
10.74
11.30
7.90
8.95
10.12
9.05
(6)
15.02
14.83
13.27
12.21
12.70
9.22
14.15
12.02
12.51
12.40
11.11
10.87
12.24
8.53
11.76
10.75
11.88
9.80
12.19
9.34
7.70
11.12
11.37
(7)
15.08
16.05
14.13
15.13
13.61
9.44
15065
13.16
1.64
13.56
11.28
11.52
12.84
8.59
13.72
10.74
12.30
13.15
12.13
9.45
8.67
12,02
13.75
(8)
14.67
14.55
13.42
15.24
14.69
11.48
13.17
13.05
13.50
11.59
12.25
10.70
11.12
870
12.46
9.61
13.18
9.30
10.91
9.84
8.50
10.19
10.92
(9)
1385
16.47
15.27
1931
17.01
12.88
14.06
14.40
15.36
12.22
13.45
11.65
14.23
11.20
14.70
10.44
14.45
12.53
12.65
9.60
8.25
12.06
12.38
(10)
12.93
15.88
14.54
18.64
15.75
11.24
12.75
1287
14.31
10.34
9.84
10.93
13.95
11.53
14.04
9.91
13.93
10.39
12.83
9.77
8.85
11.85
11.72
(11)
12.28
18.14
16.00
2364
19.37
14.95
17.07
13.67
17.09
14.48
1303
14.29
16.44
13.34
18.32
11.42
16.41
17.12
17.95
14.34
13.48
15.28
12.82
(12)
15.59
19.12
18.27
23.45
22.09
16.41
19.21
15.92
18.76
16.93
21.58
17.15
21.69
14.74
18.51
9.85
20.20
19.78
17.17
12.98
14.10
19.30
14.31
1992-2003
Mean
(13)
14.60
16.01
14.99
16.73
15.89
10.90
15.25
13.55
14.51
12.17
12.64
12.43
13.54
10.23
14.10
10.33
14.74
12.22
12.68
11.98
9.51
12.06
11.71
CV
(14)
0.1037
0.0998
0.0990
0.2413
0.1801
02833
0.1266
0.0974
0.1343
0.1857
0.2710
0.2116
0.2363
0.2140
0.1668
00917
0.1718
0.2779
0.2126
0.3152
0.2317
0.2364
0.1750
GR
(15)
0.89
2.12
1.40
6.22
3.84
7.43
1.05
1.11
310
3.86
4.19
209
5.69
538
3.97
0.58
1.97
5.81
5.20
3.42
4.63
5.64
2.99
129
23.
SB
10.11
8.46
24. UCO
12.96
7.76
25. UBOI
9.86
9.56
26. UNBOI 6.36
8.01
27.
VB
14.75 12.96
NB
9.88 12.13
PSBs
11.04 12.98
Source:Reserve Bank Of India
9.79
11.51
9.17
10.71
14.74
11.94
13.30
9.43
10.73
8.66
10.66
8.80
10.85
13.13
8.93
8.89
7.95
8.89
7.95
10.55
12.01
11.51
11.75
7.66
9.63
9.15
11.61
12.75
11.58
9.95
8.40
7.33
9.83
10.53
11.96
11.15
11.19
8.27
7.63
8.90
11.71
12.65
9.16
11.57
7.70
7.86
10.33
11.15
11.95
8.74
18.66
11.06
16.22
10.93
14.50
14.10
14.69
17.90
16.08
16.80
17.15
16.68
16.56
10.32
12.08
9.49
10.01
11.41
11.96
12.95
0.1764
0.2803
0.2548
0.3486
0.2654
0.1656
0.1123
2.52
5.30
3.06
6.29
0.61
3.26
1.93
130
Bank-wise analysis showed that the first three ranks are occupied by SBOI
(16.73 per cent); SBBJ (16.01 per cent) and SBOM (15.89 per cent) with regard to
this indicator while UBOI (9.49 per cent), OBOC (9.51 per cent) and UNBOI (10.01
per cent) are in the bottom of the list of PSBs.
131
When we consider the growth rate of different banks SBOP (7.43 per cent),
SBOI (6.22 per cent) and UNBOI (6.29 per cent) were at the top while IOB (3.42 per
cent), SBI (0.89 per cent) and VB (0.61 per cent were at the bottom of the list.
5.9.10. CREDIT - DEPOSIT RATIOS (PSBS)
This ratio indicates the deployment of bank resources by way of loans and
advances. The ratio of 60 per cent is considered as a norm for banks. The CD ratios
for all PSBs during the reform period (1992-93 to 200203) are shown in theTable
5.12.
From the data it is evident that CD ratios of SBI and associate banks are
higher than those of Nationalised banks in all the years. Consequently while the
average CD ratio of nationalized banks was 48.26 per cent, the average CD ratio of
SB! was 54.06 and that of associate banks 54.83 per cent. For most of the years,
the CD ratio of nationalized banks is less than 60. Even in the case of SBI the CD
ratio exceeded 60 per cent only in two years, i.e., 1992-93, 1995-96.
For PSBs as a whole, the CD ratio touched an all time low figure of 46.50 per
cent in the year 1998-99. The rapid increase in investments and deposit ratio since
1992 provides the reason for low credit-deposit ratio of PSBs. These banks are
making
larger
investments
in
zero
risk-weighted
assets
than
statutorily
The inter-bank variations (CV) with regard to this indicator did not exhibit huge
variations.
132
TABLE 5.12
CREDIT-DEPOSIT RATIO OF PSBS : 1992-2003
(Rs. in Lacs)
No Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14..
15.
16.
17.
18.
19.
20.
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
1992-93
(2)
71.92
58.49
57.96
61.86
58.91
60.84
62.56
59.10
59.60
51.43
45.54
56.17
59.16
47.87
48.84
49.26
43.24
47.97
67A5
56.53
51.89
199319961994.951995.96
1997-98 1998-99 19992000 200001 200102 200203
94
97
(3)
54.31
51.78
49.33
58.01
51.34
49.11
53.45
56.28
52.10
44.01
39.11
54.73
50.99
40.32
41.76
37.53
34.56
43.83
56.86
49.42
49.00
(4)
57.01
52.37
59.36
60.79
54.70
52.34
58.54
65.27
57.50
45.90
45.37
56.56
49.87
43.88
48.40
44.24
33.66
49.68
61.81
52.24
52.88
(5)
6206
52.52
63.63
59.65
53.66
53.21
57.68
61.75
57.56
47.45
43.24
56.44
56.66
45.09
49.90
45.07
42.59
52.52
59.13
51.44
53.63
(6)
56.22
5560
55.83
57.45
55.12
52.39
56.26
56.61.
55.57
42.79
41.00
51.39
57.35
42.24
45.84
38.13
45.18
51.44
47.91
45.42
48.60
(7)
56.63
56.10
53.54
56.45
55.19
53.06
60.05
53.57
54.86
42.27
41.62
50.61
55.96
39.64
44.22
40.49
46.01
50.89
47.08
44.84
48.39
(8)
48.72
49.62
SO 2.3
52.63
53.56
54.41
56.94
49.11
51.68
44.46
43.34
47.28
52.67
37.17
46.55
41.76
49.88
54.23
43.85
46.17
45.87
(9)
49.84
48.50
46.54
55.77
56.16
56.71
55.36
50.39
52.38
47.73
38.66
47.57
55.10
39.17
49.06
44.06
54.46
53.57
42.92
47.59
42.21
(10)
46.78
50.05
47.76
51.17
56.34
59.04
53.88
55.28
53.11
47.66
40.58
SO.71
62.26
39.19
47.12
45.36
52.33
48.05
43.49
47.77
44.88
(11)
44.65
50.86
46.40
54.17
57.65
62.23
54.07
55.24
54.38
48.50
52.34
54.47
64.16
43.15
51.74
45.16
58.06
48.99
45.38
47.67
49.70
(12)
46.52
51.18
46.91
56.23
58.37
60.13
51.36
57.59
54.20
49.26
54.66
53.26
66.14
42.88
56.14
45.26
55.37
51.16
45.44
47.54
52.59
19922003
Mean
(13)
54.06
52.46
52.87
56.75
55.55
55.77
56.56
56.36
54.83
46.50
44.13
52.65
57.32
41.87
48.14
43.30
46.85
50.21
51.03
48.78
49.06
CV
(14)
0.1489
0.0587
0.1056
0.0582
0.0406
0.0764
0.0581
0.0869
0.0460
0.0616
0.1171
0.0642
0.0915
0.0744
0.0795
0.0806
0.1728
0.0590
0.1695
0.0705
0.0739
GR
(15)
3.85
1.07
2.23
1.36
0.50
1.27
1.18
1.17
0.75
0.30
1.59
0.95
1.85
0.98
1.35
0.32
4.63
0.66
4.41
1.35
0.79
133
21. P&SB
45.78
22. PNB
54.36
23.
SB
47.68
24. UCO
58.12
25. UBOI
48.18
26. UNBOI 47.51
27.
VB
48.53
NB
53.34
PSBs
58.47
Source: RBI bulletin
42.15
45.00
39.77
49.23
43.74
39.37
42.51
45.77
48.41
46.20
47.01
37.54
47.21
46.29
35.00
40.14
48.00
50.95
47.47
46.75
42.44
43.54
48.52
32.44
40.81
49.28
53.10
43.75
45.66
39.02
38.87
45.83
29.26
36.26
45.57
49.02
41.87
45.61
41.39
38.79
44.57
28.01
39.25
45.33
48.88
43.17
46.71
46.76
38.29
38.80
26.48
38.88
44.95
46.50
45.14
47.54
51.60
41.55
48.25
27.18
42.78
46.74
48.02
43.52
49.96
52.27
46.83
50.18
31.06
45.28
48.34
48.28
44.68
53.60
52.14
47.69
53.74
34.79
42.21
51.17
49.62
44.56
53.06
53.18
50.80
57.02
34.96
35.58
52.32
. 50.89
44.39
48.66
45.80
45.54
47.74
33.28
41.11
48.26
50.19
0.0386
0.0715
0.1303
0.1338
0.1028
0.1854
0.0917
0.0612
0.0651
0.18
0.74
2.93
0.97
1.68
2.8
0.97
0.23
0.24
134
This division into three sub-periods is necessitated for the following reasons.
The implementation of reforms started in the year 1992-93. The first period (199295) is the most difficult period of response and adjustment for banks to reformat
measures. The new guidelines relating to prudential norms of income recognition,
asset classification and capital adequacy had to be implemented by banks afresh.
The impact of these measures was assumed to be felt during the second three year
period (1996-99) which commences with a time lag of one year and with the year in
which data relating to new private sector banks being published. In the year 1998,
the Committee on Banking Sector Reforms (Narasimham II) was constituted to
review the progress of the reform measures so far undertaken and to make fresh
suggestions for improving the performance of banks. Hence, after giving a time lag
of one year, the third period is made to commence from April 1, 1999. By the end of
third period, (March 2000-03), the reform measures assumed to have exerted their
full impact so that one can assess the improvements made by the banking sector in
its efficiency and profitability over the entire period.
Percentage changes in the mean values of select indicators at branch and employee
levels, are calculated for period-II over period-I, period-III over period-II and period-III
over period. This exercise enables us to analyse the percentage changes in the
mean values of indicators period-wise and thereby find out improvements from one
period to the next' in the indicators relating to efficiency and profitability.
comparing the percentage changes in the mean values of each of the six selected
indicators in one period with that of the earlier periods. If the percentage changes in
period II are more than that in period-I and the percentage changes in period-III are
higher than that in period-II, we can conclude that reform measures have
improved the efficiency of banks. The percentage changes in the mean values of
six indicators at the branch and employee level in period-II over period-I, period-III
over period-II and period-III over period-I are shown in the Table 5.13 to Table 5.17.
The percentage increase in the mean values of business per branch in period-III
(2000-03) over period-I (1992-95) is considerable and far more satisfactory. In terms
of total business mobilized, the banks, which occupy the first three places, are ANB,
SBOI and COB. The not so well performers are 18, BOB and PNB.
5.10.2. OPERATING EXPENSES PER BRANCH (PSBS)
When viewed at the average operating expenditure per branch, there is an increase
in it during the three periods.(Table 5-14) The overall increase in the percentage in
the case of all put)s In period-III is 147.68 per cent over the first period. The
136
A close look at the table reveals that the operating expenses per branch of
SBI, Associate banks, Nationalised banks are lower than the respective the mean,
value up to 1997-98. From 1998-99 onwards, they were higher than the averages for
all the groups of banks. It means that in the last five-year period the rate of growth is
higher. The average operating expenditure per branch of all PSBs put together was
Rs. 24.12 lac in 1992-95 period and Rs. 59.74 lac in 2000-03, representing an
increase of almost 2.5 times.It is thus observed that the operating expenses per
branch have increased almost three-fold during the ll-year period. This is perhaps
one of the important reasons for low profitability of nationalized banks.
It appears that by and large the banks with small business per branch (AB,
BOM, UNBOI and DB) incurred the lowest operating expenditure per branch while
the banks whose branches did more business (SBI, CB, BOI and BOB) also incurred
more operating expenses. The co-efficient of variation revealed that hardly any
disparities exist with respect to the aforesaid indicator.
5.10.3. PROFIT PER BRANCH (PSBS)
Coming to profitability indicator, the mean values of profit per branch of three
nationalized banks are negative in period-II indicating thereby that they have made
losses. In period-III, barring the three banks, the average profit per branch of the
remaining PSBs is positive (Table 5.15). It means that in period-III these banks have
been able to wipe out losses and make substantial profits. It is a healthy sign in the
sense that as reform process continued banks have been able to well adjust to new
situation. In period-III, except the Indian Bank, the two other banks also have been
able to make profit along with other banks (except Dena Bank which sustained
losses).
137
138
TABLE 5. 13
BUSINESS PER BRANCH OF PSBS PERIOD-WISE AN ALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
P&SB
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
1385.00
732.67
983.67
813.00
807.33
1084.00
946.67
1015.67
916.67
677 .33
713.67
1509.67
1395.33
580.00
1594.67
740.67
1252.00
648.67
1386.67
1265.33
1388.33
865.67
CV
(3)
0.08
0.13
0.16
0.14
0.17
0.16
0.17
0.20
0.16
0.06
0.11
0.10
0.08
0.15
0.07
0.11
0.31
0.17
0.04
0.12
0.17
0.27
Mean
(4)
2348.67
1135.33
1623.67
1388.00
1337.33
1723.33
1693.67
1743.33
1548.67
1033.67
1218.67
2281.33
2397.67
1095.67
2328.33'
1212.00
2440.67
1307.00
1528.67
2002.67
2336.67
1577.67
CV
(5)
0.18
0.30
0.14
0.15
0.10
0.10
0.10
0.11
0.12
0.15
0.20
0.13
0.14
0.17
0.12
0.15
0.24
0.20
0.07
0.15 .
0.16
0.20
Mean
(6)
4337.33
2233.00
2933.67
2920.00
2187.00
3172.33
2893.33
3172.67
2782.33
1756.33
2705.67
3437.33
3778.67
2252.33
4096.67
2174.00
4447.67
2016.00
2513.00
3282.33
4281.67
2409.00
CV
(7)
0.10
0.13
0.15
0.15
0.09
0.21
0.14
0.17
0.15
0.12
0.08
0.10
0.12
0.14
0.13
0.10
0.12
0.09
0.13
0.15
0.09
0.05
Percentage Change
II Vs I
(8)
69.58
54.96
65.06
70.73
65.65
58.98
78.91
71.64
68.95
52.61
70.76
51.12
71.83
88.91
46.01
63.64
94.94
101.49
10.24
58.27
68.31
82.25
III Vs II
(9)
84.67
96.68
80.68
110.37
63.53
84.08
70.83
81.99
79.66
69.91
122.02
50.67
57.60
105.57
75.95
79.37
82.23
54.25
64.39
63.90
83.24
52.69
III Vs I
(10)
213.16
204.78
198.24
259.16
170.89
192.65
205.63
212.37
203.53
159.30
279.12
127.69
170.81
288.33
156.90
193.52
255.24
210.79
81.23
159.40
208.40
178.28
139
22.
23.
24.
25.
26.
27.
PNB
878.33
SB
926.00
UCO
834.67
UBOI
937.67
UNBOI
738.33
VB
822.00
NB
1008.33
PSBs
1076.33
Source: RBI bulletin
0.03
0.11
0.07
0.24
0.09
0.22
0.11
0.11
1369.00
1500.33
1112.67
1625.67
1178.67
1367.67
1623.33
1759.33
0.14
0.15
0.13
0.13
0.16
0.18
0.15
0.15
2241.00
2461.67
2304.67
3018.00
2018.00
2552.00
2524.67
3119.33
0.13
0.10
0.20
0.15
0.09
0.15
0.34
0.12
55.86
62.02
33.31
73.37
59.64
66.38
60.99
63.46
63.70
64.07
107.13
85.65
71.21
86.60.
55.52
77.30
155.14
165.84
176.12
221.86
113.32
210.46
150.38
189.81
140
TABLE 5. 14
OPERATING EXPENSES PER BRANCH OF PSBS-PERIOD-WISE ANALYSIS
No.
Bank
(1)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
ST
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
P&SB
I Period
IIPeriod
III Period
1992-95
1996-99
2000-2003
Mean
(2)
34.60
20.11
21.08
22.07
20.68
21.66
24.15
19.95
21.14
13.97
19.38
26.33
26.66
16.09
29.22
18.02
22.81
16.67
24.22
25.08
26.41
20.35
CV
(3)
0.17
0.14
0.17
0.17
0.11
0.19
0.15
0.16
0.16
0.18
0.28
.' 0.19
0.18
0.16
0.16
0.14
0.21
0.21
0.11
0.10
0.23
0.18
Mean
(4)
56.78
36.94
32.66
37.96
37.30
34.14
42.22
34.27
36.63
22.85
28.86
41. 72
46.70
29.06
45.61
30.98
39.82
29.00
34.80
41.14
36.86
35.67
CV
(5)
0.14
0.15
0.02
0.14
0.12
0.08
0.13
0.05
0.12
0.07
0.11
0.13
0.09
0.10
0.12
0.14
0.10
0.12
0.08
0.15
0.11
0.08
Mean
(6)
86.10
53.77
49.57
55.43
54.61
51.64
59.09
52.58
53.18
39.76
47.33
59.48
64.45
41.85
69.23
47.17
59.81
44.71
52.99
62.77
56.59
53.02
CV
(7)
0.07
0.06
0.05
0.04
0.05
0.04
0.04
0.05
0.04
0.18
0.14
0.02
0.07
0.06
0.04
0.03
0.14
0.09
0.03
0.05
0.04
0.04
Percentage Change
II Vs I
(8)
64.10
83.68
54.93
71.98
80.37
57.63
74.85
71.80
73.25
63.59
48.94
58.46
75.15
80.59
56.09
71.95
74.55
73.93
43.67
64.00
39.57
75.27
III Vs II
(9)
51.63
45.55
51.78
46.04
46.42
51.26
39.97
53.42
45.17
73.98
64.01
42.59
38.01
43.98
51.77
52.25
50.20
54.18
52.28
52.58
53.54
48.64
III Vs I
(10)
148.83
167.34
135.15
151.17
164.09
138.43
144.73
163.58
151.51
184.61
144.28
125.94
141.72
160.02
136.89
161 .79
162.17
168.17
118.79
150.23
114.30
160.52
141
22.
23.
24.
25.
26.
27.
PNB
19.28
SB
26.61
UCO
19.83
UBOI
19.14
UNBOI
17.26
VB
20.28
NB
21.49
PSBs
24.12
Source: RBI bulletin
0.16
0.18
0.09
0.18
0.13
0.13
0.16
0.16
31.34
40.70
30.54
33.30
28.66
34.35
35.11
39.52
0.13
0.09
0.08
0.10
0.07
0.10
0.11
0.12
48.62
61.11
47.62
49.28
48.31
56.35
53.37
59.74
0.04
0.03
0.08
0.03
0.18
0.15
0.04
0.04
62.57
52.96
54.01
73.97
66.04
69.33
63.35
63.86
55.11
50.14
55.93
47.96
68.53
64.07
52.02
51.15
152.16
129.65
140.14
157.41
179.82
177.83
148.33
147.68
142
TABLE 5. 15
PROFIT PER BRANCH OF PSBS-PERIOD-WISE ANALYSIS
No.
Bank
I Period
II Period
III Period
1992-95
1996-99
2000-2003
1.
2.
3.
4.
5.
6.
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
Mean
(2)
4.55
1.20
3.75
1.52
0.58
4.25
CV
(3)
0.68
0.26
0.47
0.60
0.35
0.22
Mean
(4)
15.83
9.59
29.92
6.66
7.37
19.61
CV
(5)
0.30
0.39
1.02
0.28
0.22
0.98
7.
SBOS
2.30
0.56
15.08
0.51
15.28
8.
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
1.99
2.35
-9.98
11.99
3.42
19.28
-15.76
5.52
-12.86
7.15
-3.88
-8.76
-27.79
9.25
0.55
0.33
0.87
0.54
1.01
1.27
-0.72
0.75
-0.80
0.99
-1.48
-1.88
-1.05
0.87
7.38
10.14
5.83
33.61
15.22
12.39
4.45
8.25
5.09
28.17
8.30
-32.78
6.59
24.80
0.26
0.26
0.36
1.44
0.24
0.31
0.08
0.19
0.10
0.12
0.20
-0.52
0.35
0.04
19.30
22.45
4.97
22.47
19.59
21.01
11.19
28.22
5.51
49.25
-3.88
-1.12
17.67
33.73
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Mean
(6)
26.21
19.91
25.43
30.77
11.48
26.04
Percentage Change
CV
(7)
0.32
0.31
0.33
0.51
0.65
0.82
II Vs I
(8)
248.09
701.39
697.16
337.94
1178.06
361 .92
III Vs II
(9)
65.61
107.58
15.01
362.29
55.74
34.25
III Vs I
(10)
476.47
1563.51
577 .53
1924.56
1891.33
512.78
0.68
554.70
1.33
563.39
0.29
0.38
0.67
0.57
0.46
0.56
0.64
0.54
0.76
0.21
-4.35
-14.84
0.60
0.36
271.64
331.02
158.44
380.42
345.56
164.27
-128.24
49.31
-139.62
293.80
-313.73
274.06
-123.72
168.17
161.35
121.33
14.75
33.16
28.66
69.50
151.54
242.16
8.18
74.82
-146.71
-96.57
168.08
36.01
871.31
853.97
149.82
287.43
473.27
208.94
-171.02
410.86
-142.86
588.44
-0.17
-87.18
-163.58
264.74
143
21.
22.
23.
24.
25.
26.
27.
P&SB
PNB
SB
UCO
UBOI
UNBOI
VB
NB
PSBs
Source: RBI bulletin
-17.40
.1.86
-22.69
-19.96
2.93
-27.41
-2.92
-8.86
-5.09
-0.82
0.30
-0.83
-0.68
0.85
-0.61
-3.11
-0.97
-1.32
6.62
9.54
5.94
-6.29
10.06
-2.22
2.88
6.02
6.58
0.50
0.33
0.39
-0.49
0.23
-2.47
0.23
0.29
0.12
1.78
15.80
15.89
7.88
16.82
11.35
15.87
14.90
17.84
0.71
0.29
0.21
0.67
0.59
0.99
0.47
0.57
0.48
-138.05
412.16
-126.18
-68.48
243.62
-91.89
-198.74
-167.96
-229.21
-73.16
65.53
167.45
-225.33
67.22
-610.49
451.16
147.37
171 .26
-110.21
747.76
-170.03
-139.50
474.60
-141.41
-644.23
-268.11
-450.49
144
when compared to SBI (251.38 per cent) and nationalized banks (263.77 per cent).
Among the SBI associate banks, SBOI (340.78 per cent) and among the nationalized
banks, BOM (442.99 per cent), ANB (424.44 per cent) and DB (386.10 per cent) are
top performers (Table 5.16).
5.10.5. ESTABLISHMENT EXPENSES PER EMPLOYEE (PSBS)
An insight into the data reveals that the Establishment expenses per
employee have increases in the three periods. When expenditure per employee of
PSBs as a group is considered, it is found that the percentage increase in period-II
over I and in III over II is about 79. When percentage change in period-III over
period-II is compared with that of period-II over I, there is deceleration ir the case of
all associate banks and 9 nationalized banks. The percentage increase in staff cost
in the last period, it amount to 220.82. It means that the staff costs have been going
on increasing during the entire period under study.(Table 5.17)
This will have an adverse impact of profitability. The least increase in staff
cost over the period relate to SBOS (175.65 per cent), and SBOH (198.68 per cent)
among the associate banks. Among the nationalized banks, the least percentage in
staff cost took place in COB (174.35) and, BOB (193.38), DB (300.38 per cent) and
SB (282.11 per cent) take first and second places in percentage increase in
expenditure over the entire period.
145
146
TABLE 5.16
BUSINESS PER EMPLOYEE OF PSBS-PERIOD-WISE ANALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
P&SB
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
53.16
35.80
53.54
42.47
39.74
50.55
42.22
51.01
45.43
54.34
42.68
82.51
62.2.3
35:95
54.35
43.12
64.99
44.37
73.83
57.78
68.43
48.99
CV
(3)
0.07
0.12
0.18
0.16
0.16
0.17
0.20
0.21
0.17
0.07
0.10
0.11
0.08
0.20
0.14
0.13
0.34
0.18
0.05
0.13
0.19
0.24
Mean
(4)
88.26
66.95
94.02
77.16
67.30
91.07
81. 68
87.79
80.09
85.43
80.92
125.66
113.09
76.89
98.60
75.52
143.60
66.51
84.59
97.63
138.59
91.58
CV
(5)
0.19
0.16
0.16
0.16
0.10
0.14
0.12
0.11
0.12
0.16
0.22
0.14
0.15
0.19
0.14
0.17
0.29
0.61
0.08
0.16
0.22
0.20
Mean
(6)
186.78
133.05
194.33
187.19
133.99
196.93
159.79
176.28
168.79
167.66
223.85
224.50
221.35
195.20
206.67
162.92
278.85
215.70
156.99
190.09
304.58
182.12
CV
(7)
0.11
0.13
0.16
0.18
0.10
0.23
0.15
0.18
0.17
0.16
0.11
0.19
0.13
0.15
0.14
0.20
0.12
0.09
0.13
0.18
0.12
0.07
Percentage Change
II Vs I
(8)
66.04
87.02
75.61
81.70
69.36
80.16
93.46
72.09
76.28
57.21
89.58
52.30
81.74
113.87
81.43
75.15
120.95
49.88
14.58
. 68.96
102.52
86.94
III Vs II
(9)
111.62
98.74
106.69
142.60
99.08
116.24
95.63
100.80
110.75
96.26
176.63
78.66
95.72
153.88
109.60
115.72
94.19
224.33
85.58
94.70
119.77
98.86
III Vs I
(10)
251.38
271.67
262.97
340.78
237.16
289.58
278.48
245.56
271.50
208.54
424.44
172.10
255.72
442.99
280.27
277 .82
329.05
386.10
112.64
228.97
345.08
271.75
147
22.
23.
24.
25.
26.
27.
PNB
47.01
SB
37.92
UCO
42.71
UBOI
54.22
UNBOI
43.36
VB
45.90
NB
53.07
PSBs
52.40
Source: RBI bulletin
0.07
0.12
0.06
0.25
0.10
0.25
0.12
0.11
178.10
67.87
61.07
109.63
71.42
80.43
91.06
87.19
0.16
0.19
0.15
0:15
0.17
0.19
0.15
0.13
170.44
159.60
150.71
232.36
1 2.2
1f175.09
,,0 193.04
188.94
0.15
0.20
0.27
0.19
0.14
0.22
0.16
0.15
66.15
78.99
43.01
102.18
64.73
75.22
71.60
66.39
118.23
135.14
146.77
111.96
99.96
117.70
111.98
116.70
262.59
320.89
252.90
328.52
229.40
281 .45
263.77
260.57
148
TABLE 5.17
ESTABLISHMENT EXPENSES PER EMPLOYEE OF PSBS-PERIOD-WISE ANALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
P&SB
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
0.94
0.7'
0.76
0.76
0.73
0.66
0.77
0.71
0.73
0.72
0.74
0.91
0.86
0.76
0.76
0.76
0.77
0.87
0.78
0.79
0.73
0.82
CV
(3)
0.18
0.16
0.16
0.21
0.10
0.19
0.22
0.18
0.16
0.17
0.23
0.19
0.22
0.22
0.18
0.19
0.25
0.22
0.10
0.11
0.19
0.10
Mean
(4)
1.55
1.45
1.52
1.46
1.43
1.34
1.55
1.25
1.42
1.28
1.39
1.59
1.52
1.62
1.35
1.47
1.39
1.61
1.45
1.50
1.31
1.46
CV
(5)
0.12
0.16
0.23
0.17
0.13
0.10
0.15
0.06
0.14
0.13
0.15
0.16
0.13
0.14
0.17
0.14
0.15
0.15
0.11
0.17
0.14
0.07
Mean
(6)
2.66
2.35
2.27
2.41
2.61
2.25
2.11
2.18
2.30
2.47
2.72
2.66
2.72
2.63
2.46
2.76
2.10
3.48
2.58
2.74
2.34
3.02
CV
(7)
0.07
0.07
0.07
0.05
0.07
0.07
0.07
0.06
0.06
0.07
0.12
0.06
0.11
0.12
0.05
0.11
0.12
0.13
0.02
0.07
0.10
0.06
Percentage Change
I Vs II
(8)
63.96
96.38
99.56
92.11
96.79
102.53
102.17
77.36
94.95
76.50
87.44
75.00
76.36
114.10
77.97
93.86
81.74
85.06
85.47
91.10
80.28
79.18
III Vs II
(9)
71.98
62.21
49.67
65.30
82.28
68.58
36.34
73.94
62.59
93.21
94.98
67.65
79.12
62.14
82.92
87.10
50.96
116.36
78.11
82.26
78.63
106.15
III Vs I
(10)
181.98
218.55
198.68
217.54
258.72
241.41
175.65
208.49
216.97
241.01
265.47
193.38
215.89
247.14
225.55
262.72
174.35
300.38
230.34
248.31
222.02
269.39
149
22.
23.
24.
25.
26.
27.
PNB
0.70
SB
0.82
UCO
0.78
UBOI
0.75
UNBOI
0.79
VB
0.79
NB
0.78
PSBs
0.82
Source: RBI bulletin
0.18
0.22
0.11
0.17
0.16
0.17
0.18
0.18
1.38
1.45
1.37
1.48
1.42
1.44
1.44
1.46
0.16
0.12
0.09
0.12
0.10
0.07
0.14
0.12
2.42
3.13
2.52
2.68
2.86
2.90
2.65
2.62
0.05
0.08
0.14
0.01
0.25
0.23
0.04
0.04
97.14
76.83
76.07
96.89
79.41
81.93
84.26
79.18
75.60
116.09
83.50
81.49
100.94
100.92
83.60
79.04
246.19
282.11
223.08
257.33
260.50
265.55
238.30
220.82
150
When profit/loss in period-III over period-I is compared, the losses per employee of
DB and IB experienced percentage increases. The PSBs as a group made
substantial improvements of 536 percentage points in profit per employee in periodIII compared to I. The outstanding achievement is that of employees in associate
banks of SBI who improved their profitability by 354.29 per cent in period-II over
period-I, 157.23 in period-III over period-II and 1068.57 per cent in period-III over
period-I. These banks have shown consistency in improvement in all the indicators in
each sub-period over the preceding period (Table 5.18).
5.11. IMPACT ON PROFITABILITY INDICES (PSBS)
When PSBs a whole are considered, the rate of return on assets in period-II
over period-I improved by 1.15 percentage points. There is an increase in
percentage points of ROA of all PSBs in period-II over I barring CB (-0.02),
IB (-1.48). When ROA in period-III is compared with that in period-II, there is an
improvement of 0.15 percentage points of all PSBs taken together. But this
improvement is less than that in period-II over period-I. The ROA of SBI, SBOM,
AB, BOB, BOI, CBOI, DB, OBOC, P&SB and UBOI have decreased in period-III
compared to those in period-II. When improvements in period-III over period-I is
considered, all the 27 PSBs (including three weak banks) have made improvement
in ROA. The highest increase is found in the case of UNBOI and SB with increase
of more than four percentage points (Table 5.19).
5.11.2. RETURN ON EQUITY (PSBS)
When return on equity (ROE) is taken into consideration, the mean values of
percent of ROE of 13 natioanlised banks in period-I is negative.
151
DB and IB. Against this background the period-wise comparative picture (Table 5.27)
reveals that the ROE in period-II over period-I is positive in the case of all banks,
except two banks SBOS (-64.86 percentage points) and 18 (-5.42 percentage
points). The ROE of SBOH is the highest showing an improvement of 345.10
percentage points indicating thereby that ROE which was negative in period-I has
become positive, in period-II. In period-III compared to period-II, the changes in
percentage points are less than those of period-II over I. This is a usual feature of all
profitability parameters. Obviously, period-III showed improvements over period-I
and the reform measures had full impact.
In the concluding third period over period-I, SBOH (160.78), SBOI (661.11)
and SBI (347.58) have experienced highest increases. The banks which experienced
decline in percentage points of ROE was SBOS (-63.27) alone.(Table 5.20)
Since interest income has been declining due to reform measures, banks had
to take steps to increase non-interest income by enlarging their services. When the
data of Non Interest Income (NII) is viewed in Table 5.22, it appears that NII made
an improvement in period-III compared to period-II considerably. When the total
period is taken into consideration, the improvement is again considerable. But when
we compare the figures in period-II over period-I , there is a decline in NIl of 15
banks.( Table 5.22)
153
TABLE 5. 18
PROFIT PER EMPLOYEE OF PSBS-PERIOD-WISE ANALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
IB
IOB
OBOC
P&SB
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
0.17
0.06
0.20
0.08
0.03
0.20
0.10
0.10
0.12
-0.80
-0.72
0.19
-0.67
-1.66
0..22
-1.22
0..38
-0..26
-0..46
-0.48
0.46
-1.01
CV
(3)
0.69
0.29
0.51
0.54
0.33
0.21
0.61
0.61
0.32
-0.87
-0.54
1.01
-1.77
-0..39
0..75
-0.37
1.0.1
-1.48
-,1.88
-1.35
0.88
-0.82
Mean
(4)
0.59
0.49
0.60
0.37
Q,31o
0.76
0.73
0.37
0.53
0.48
0.45
0.81
0.59
0..31
0..35
0.32
1.65
o.64
-1.83
0..32
1.46
0.38
CV
(5)
0.30
0.39
0.34
0.29
0.20
0.44
0.50
0.26
0.26
0.37
0.42
0.21
0.31
0..10.
0..21
0.09
0..18
0..23
-0..53
0..35
0..0.9
0..51
Mean
(6)
1.13
1.19
1.69
1.98
0.71
2.03
0.85
0.77
1.36
0.48
1.88
1.30
1.23
0..98
1.43
0.43
3.0.6
-0..42
-0..32
1.0.3
2.41
0..13
CV
(7)
0.33
0.32
0.33
0.53
0.66
0.35
0.68
0.85
0.39
0.70
0.59
0.51
0.57
0..65
0..55
0.79
0.24
-4.35
-4.60.
0..61
0..39
0..71
Percentage Change
II Vs I
(8)
242.31
722.22
196.72
362.50
1133.33
286.44
626.67
270.00
354.29
-160.17
-162.79
333.93
-187.13
-118.91
59.0.9
-125.89
338.94
-341.77
295.65
-166.21
220..44
-138.0.8
III Vs II
(9)
91.01
140.54
179.56
436.04
90.99
166.67
16.97
109.01
157.23
-0.69
317.04
60.91
110.23
211.70.
30.7.62
35.79
85.0.8
-165.45
-82.42
222.92
64.69
-65.22
III Vs I
(10)
553.85
1877.78
729.51
2379.17
2255.56
930.51
750.00
673.33
1068.57
-159.75
-361 .86
598.21
-283.17
-158.95
548.48
-135.15
712.39
58.23
-30.43
-313.79
427.74
-113.25
154
22.
23.
24.
25.
26.
27.
PNB
0.09
SB
-0.92
UCO
-1.0.2
UBOI
0.17
UNBOI
-1.61
VB
-0..15
NB
-0..46
PSBs
-0.25
Source: RBI bulletin
0.33
-0.83
-0..68
0..87
-0..61
-3.30.
-0..98
-1.30
0.55
0.27
-0.34
0.68
-0.13
0.17
0.34
0.43
0..34
0..43
-0..47
0.22
-2.53
0.24
0.30
0.27
1.17
1.03
0..53
1.31
0..83
1.11
1.03
1.09
0..31
0..28
0..71
0..61
1.0.0.
0..52
0.60
0.50
485.71
-129.35
-66.56
306.00
-91.91
-211.11
-173.38
-270.67
95.12
282.72
-255.88
93.10
-735.90.
564.0.0.
202.94
155.47
10.42.86
-212.32
-152.13
684.00
-151.45
-837.78
-322.30
-536.00
155
TABLE 5. 19
RETURN ON ASSETS OF PSBS-PERIOD-WISE ANALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
0.34
0.21
0.44
0.23
0.09
0.44
0.25
0.36
0.29
-1.82
-2.06
0.26
-1.71
-3.24
0.45
-2.15
0.56
-0.81
CV
(3)
0.58
0.38
0.32
0.33
0.45
0.13
0.41
0.55
0.17
-0.88
-0.59
0.96
-1.22
-0.73
0.68
-0.79
0.78
-1.35
Mean
(4)
0.74
0.78
0.73
0.56
0.69
0.99
0.96
0.53
0.75
0.68
065
0.78
0..86
0.47
0.42
0.50
1.36
0.76
CV
(5)
0.38
0.35
0.24
0.17
0.27
0.40
0.56
0.20
0.27
0.28
0.31
0.17
0.12
0.12
0.07
0.17
0.09
0.08
Mean
(6)
0.68
0.98
1.00
1.27
0.64
1.32
0.63
0.77
0.97
0.36
1.06
0.74
0.75
0.60
0.90
032
1.41
-0.29
CV
(7)
0.24
0.20
0.17
0.39
0.58
0.15
0.65
0.16
0.25
0.57
0.49
0.40
0.46
0.55
0.47
0.69
0.11
-3.74
Percentage Change
II Vs I
(8)
0.40
0.58
0.29
0.33
0.60
0.55
0.72
0.16
0.46
2.50
2.71
0.52
2.57
3.71
-0.02
2.65
0.81
1.58
III Vs II
(9)
-0.06
0.20
0.27
0.71
-0.05
0,33
-0.33
0.24
0.22
-0.31
0.41
-0.04
-0.11
0.13
0.48
-0.18
0.04
-1.05
III Vs I
(10)
0.34
0.78
0.56
1.04
0.55
088
0.38
0.40
0.68
2.18
3.13
0.48
2.46
3.84
0.45
2.47
0.85
0.53
156
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
IB
-0.84
IOB
-3.05
OBOC
0.73
P&SB
-2.83
PNB
0.25
SB
-3.14
UCO
-2.78
UBOI
0.35
UNBOI
-4.31
VB
-0.65
NB
-1.13
PSBs
-0.60
Source: RBI bulletin
-1.86
-1.11
0.67
-0.86
0.27
-0.95
-0.70
0.69
-0.63
-2.46
-0.94
-1.22
-2.32
0.42
1.34
0.49
0.62
0.47
-0.61
1.77
-0.24
0.24
0.44
0.55
-0.44
0.42
0.11
0.46
0.88
0.30
-0.60
0.84
-2.27
0.06
0.28
0.30
-0.13
0.68
1.03
0.10
0.83
0.87
0.41
0.73
0.62
0.78
0.67
0.70
-6.21
0.46
0.29
0.70
0.16
0.13
0.62
0.47
0.95
0.34
0.49
0.39
-1.48
3.48
0.60
3.32
0.37
3.61
2.17
1.42
4.07
089
1.57
1.15
2.19
0.26
-0.31
-0.39
0.21
0.40
1.02
-1.04
0.86
0.54
0.23
0.15
0.71
3.73
0.29
2.93
0.58
4.01
3.19
0.38
4.93
1.43
1.80
1.30
157
TABLE 5. 20
RETURN ON EQUITY OF PSBS-PERIOD-WISE ANALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
104.95
41.27
166.67
59.26
25.00 0
105.,j3
83.33
63.33
82.60
-71.16
-76.84
11.70
-55.55
-67.09
22.48
-102.88
31.75
-25.30
CV
(3)
0.44
0.24
0.49
0.60
0.33
0.21
0.59
0.57
0.36
-0.90
-0.94
0.93
-0.94
-0.80
0.50
-1.05
0.96
-1.42
Mean
(4)
268.57
158.37
511.76
140.74
115.74
404.00
18.47
108.76
86.82
44.26
14.88
136.30
69.98
9.82
34.58
8.72
140.57
46.38
CV
(5)
0.30
0.26
0.36
0.29
0.21
0.42
0.50
0.19
0.24
0.36
0.68
0.18
0.66
0.52
0.13
0.10
0.13
0.21
Mean
(6)
452.53
315.33
1327.45
720.37
192.59
954.67
20.06
259.33
198.89
32.14
57.51
180.73
105.79
41.49
142.02
14.76
241.54
-22.71
CV
(7)
0.32
0.31
0.33
0.53
0.65
0.34
0.68
0.29
0.39
0.49
0.67
0.47
0.64
0.65
0.71
0.84
0.18
-4.18
Percentage Change
II Vs I
(8)
163.61
117.10
345.10
81.48
90.74
298.67
-64.86
45.43
4.22
115.42
91.73
124.60
125.53
76.91
12.10
111.60
108.82
71.67
III Vs II
(9)
183.97
156.96
815.69
579.63
76.85
550.67
1.59
150.57
112.07
-12.12
42.63
44.42
35.81
31.67
107.43
6.04
100.97
-69.08
III Vs I
(10)
347.58
274.06
1160.78
661.11
167.59
849.33
-63.27
196.00
116.29
103.30
134.35
169.02
161.34
1 08.58
119.53
117.64
209.79
2.59
158
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
IB
-28.95
IOB
-78.47
OBOC
37.00
P&SB
-47.87
PNB
21.48
SB
-155.08
UCO
-48.99
UBOI
18.04
UNBOI
-67.35
VB
-20.83
NB
-44.03
PSBs
-36.00
Source: RBI bulletin
-1.90
-1.40
0.52
-0.97.
0.09 '.
-1.49
-0.85
0.67
-0.68
-2.36
-1.00
-1.13
-34.37
27.25
107.08
11.69
159.8'1
17.61
-5.97
61.74
-1.75.
4.32
13.89
25.34
-0.69
0.35
0.12
0.88
0.53
1.16
-0.64
0.22
-2.43
0.23
0.21
0.19
-1.9
.J)78
169.43
5.49
293.71
58.62
14.43
86.32
8.15
54.60
36.49
57.23
-4.00
0.60
0.39
0.71
0.32
0.21
1.22
0.44
0.98
0.82
0.60
0.50
-5.42
105.72
70.08
59.56
138.32
172.70
43.0
43.69
65.60
25.14
57.93
61.34
32.39
29.83
62.35
-6.21
133.91
41.00
20.40
24.59
9.90
50.28
22.59
31.89
26.97
135.55
132.43
53.36
272.23
213.70
-63..42
68.28
75.51
75.42
80.52
93.23
159
TABLE 5. 21
NET INTEREST MARGIN AS % TO WF OF PSBS-PERIOD-WISE ANALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SBOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
2.94
2.88
3.18
3.43
3.12
3.56
3.57
2.65
3.17
1.73
1.85
3.12
2.16
1.94
3.21
1.93
2.86
2.68
CV
(3)
0.11
0.08
0.09
0.14
0.06
0.03
0.12
0.09
0.06
0.24
0.33
0.14
0.18
0.34
0.17
0.26
0.03
0.18
Mean
(4)
3.05
3.41
3.61
4.02
3.91
3.64
3.58
2.77
3.50
2.90
3.09
3.04
2.79
3.48
2.95
3.08
3.27
3.43
CV
(5)
0.12
0.07
0.02
0.06
0.08
0.03
0.02
0.19
0.06
0.05
0.08
0.05
0.07
0.06
0.14
0.03
0.22
0.13
Mean
(6)
2.64
3.16
3.04
2.99
3.26
3.73
2.95
2.68
3.16
3.10
2.75
2.82
2:69
2.79
2.69
3.10
2.87
2.56
CV
(7)
0.01
0.04
0.08
0.07
0.06
0.14
0.01
0.04
0.03
0.05
0.11
0.08
0.03
0.04
0.06
0.07
0.07
0.09
Percentage Change
II Vs I
(8)
0.12
0.52
0.3
0.60
0.79
0.07
0.01
0.12
0.33
1.17
1.24
-0.07
0.63
1.55
-0.26
1.15
0.41
0.75
III Vs II
(9)
-0.41
-0.25
-0.57
-1.03
-0.65
0.09
-0.63
-0.09
-0.34
0.20
-0.34
-0.22
-0.10
-0.69
-0.26
0.02
-0.40
-0.87
III Vs I
(10)
-0.30
0.28
-0.14
-0.43
0.14
0.16
-0.62
0.03
-0.01
1.37
0.90
-0.30
0.53
0.85
-0.52
1.17
0.01
-0.12
160
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
IB
1.76
IOB
1.15
OBOC
3.31
P&SB
1.61
PNB
2.80
SB
2.25
UCO
1.26
UBOI
2.93
UNBOI
0.69
VB
2.46
NB
2.31
PSBs
2.56
Source: RBI bulletin
0.02
0.51
0.15
0.59
0.03
0.26
0.68
0.13
0.32
0.13
0.16
0.12
0.73
2.33
3.46
2.54
3.43
3.26
2.01
3.08
2.10
2.84
2.91
2.96
0.24
0.02
0.12
0.05
0.05
0.14
0.06
0.12
0.30
0.03
0.04
0.06
1.98
2.87
3.16
2:49
3.33
3.62
2.43
3.02
2.67
3.20
2.88
2.83
0.15
0.04
0.11
0.07
0.08
0.06
0.04
0.03
0.11
0.06
0.04
0.03
-1.03
1.18
0.15
0.93
0.63
1.01'
0.75
0.15
1.42
0.39
0.60
0.40
1.24
0.54
-0.30
-0.05
-0.10
0.36
0.42
-0.06
0.56
0.36
-0.03
-0.13
0.22
1.72
-0.15
0.88
0.52
1.37
1.17
0.10
1.98
0.75
0.57
0.27
161
TABLE 5.22
NON-INTEREST INCOME AS % TO TOTAL INCOME OF PSBS-PERIOD-WISE ANALYSIS
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Bank
(1)
SBI
SBBJ
SBOH
SBOI
SBOM
SBOP
SSOS
SBOT
ASS
AB
ANB
BOB
BOI
BOM
CB
CBOI
COB
DB
I Period
II Period
III Period
1992-95
1996-99
20002003
Mean
(2)
14.54
15.33
14.91
14.33
14.77
7.43
14.83
13.57
13.36
10.13
12.04
12.65
11.25
8.83
12.63
9.93
15.21
10.53
CV
(3)
0.10
0.11
0.09
0.13
0.14
0.13
0.03
0.15
0.09
0.15
0.25
0.32
0.10
0.07
0.09
0.16
0.17
0.15
Mean
(4)
14.92
15.14
13.61
14.19
13.67
10.05
14.32
12.74
13.22
12.52
11.55
11.03
12.07
8.61
12.65
10.37
12.45
10.75
CV
(5)
0.01
0.05
0.03
0.12
0.07
0.12
0.09
0.05
0.05
0.08
0.05
0.04
0.07
0.01
0.08
0.06
0.05
0.19
Mean
(6)
13.60
17.71
16.27
21.91
19.07
14.20
16.34
14.15
16.72'
13.92
14.82
14.12
17.36
13.20
16.96
10.39
16.85
15.76
CV
(7)
0.13
0.09
0.12
0.13
0.17
0.19
0.20
0.11
0.13
0.24
0.41
0.22
0.23
0.12
0.15
0.09
0.19
0.31
Percentage Change
II Vs I
(8)
0.38
-0.18
-1.31
-0.14
-1.10
2.61
-0.50
-0.82
-0.14
2.39
-0.49
-1.62
0.82
0.22
0.02
0.44
-2.76
0.22
III Vs II
(9)
-1.32
2.57
2.66
7.72
5.40
4.15
2.02
1.41
3.50
1.40
3.27
3.09
5.29
4.60
4.31
0.03
4.39
5.01
III Vs I
(10)
-0.94
2.39
1.36
7.58
4.30
6.77
2.02
1.41
3.36
3.79
2.78
1.47
6.11
4.37
4.33
0.46
1.63
5.24
162
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
IB
10.80
IOB
16.20
OBOC
8.70
P&SB
10.22
PNB
10.81
SB
9.45
UCO
10.74
UBOI
9.53
UNBOI
8.36
VB
14.15
NB
11.32
PSBs
12.44
Source: RBI bulletin
0.19
0.27
0.13
0.09
0.29
0.09
0.25
0.04
0.26
0.07
0.11
0.10
11.74
9.54
8.29
11.11
12.0;
10.67
10.20
8.00
8.62
8.98
10.90
12.24
0.06
0.03
0.06
0.08
0.13
0.14
0.14
0.05
0.14
0.11
0.06
0.04
15.98
12.36
12.14
15.48
12.95
10.86
16.04
11.61
13.63
12.80
14.11
14.20
0.17
0.19
0.24
0.24
0.10
0.31
0.24
0.36
0.37
0.29
0.20
0.16
0.95
-6.66
-0.41
0.89
1.20
1.22
-0.55
-1.53
0.26
-5.17
-0.42
-0.20
4.24
2.82
3.85
4.37
0.94
0.19
5.85
3.61
5.01
3.83
3.21
1.96
5.19
-3.84
3.45
5.25
2.14
1.41
5.30
2.08
5.27
-1.35
2.79
1.76
163
TABLE 5.23
CREDIT DEPOSIT RATIO AS % TO TOTAL INCOME OF PSBS-PERIOD-WISE ANALYSIS
No.
Bank
(1)
1.
SBI
2.
SBBJ
3.
SBOH
4.
SBOI
5.
SBOM
6.
SBOP
7. SBOS
8.
SBOT
ASS
9.
AB
10.
ANB
11.
BOB
12.
BOI
13.
BOM
14.
CB
15.
CBOI
16.
COB
17.
DB
I Period
II Period
III Period
1992-95
1996-99
2000-2003
Mean
(2)
61.08
54.21
55.56
60.23
54.98
54.10
58.18
60.22
E6.40
47.11
43.34
55.82
53.35
44.02
46.33
43.68
37.15
47.16
CV
(3)
0.16
0.07
0.10
0.03
0.07
0.11
0.08
0.08
0.07
0.08
0.08
0.02
0.10
0.09
0.09
0.13
0.14
0.06
Mean
(4)
53.86
53.84
53.20
55.51
54.62
53.29
58.42
51.34
54.11
43.17
41.99
49.76
55.40
39.68
45.54
40.13
47.02
52.19
CV
(5)
0.08
0.07
0.05
0.05
0.02
0.02.
0.03
0.06
0.04
0.03
0.03
0.04
0.04
0.06
0.03
0.05
0.05
0.03
Mean
(6)
45.98
50.70
47.70
53.86
57.45
60.47
53.10
56.04
53.90
48.47
49.19
52.81
. 64.19
41.74
51.67
45.26
55.25
49.40
CV
(7)
0.03
0.01
0.02
0.05
0.02
0.03
0.03
0.02
0.01
0.02
0.15
0.04
0.03
0.05
0.09
0.00
0.05
0.03
Percentage Change
II Vs I
(8)
-7.22
-0.37
-2.36
-4.72
-0.36
-0.81
0.23
-8.88
-2.29
-3.94
-1.35
-6.06
2.05
-4.34
-0.80
-3.55
9.87
5.03
III Vs II
(9)
-7.87
-3.14
-5.50
-1.65
2.83
7.18
-5.31
4.70
-0.21
5.30
7.21
3.05
8.79
2.06
6.13
5.13
8.23
-2.79
III Vs I
(10)
-15.10
-3.52
-7.86
-6.37
2.47
6.37
-5.08
-4.18
-2.50
1.36
5.85
-3.01
10.84
-2.28
5.33
1.58
18.10
2.24
164
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
IB
62.04
IOB
52.73
OBOC
51.26
P&SB
44.71
PNB
48.79
SB
41.66
UCO
51.52
UBOI
46.07
UNBOI
40.63
VB
43.73
NB
49.04
PSBs
52.61
Source: RBI bulletin
0.09
0.07
0.04
0.05
0.10
0.13
0.11
0.05
0.16
0.10
0.08
0.10
46.28
45.48
47.62
42.93
45.99
42.39
38.65
43.07
27.92
38.13
45.28
48.13
0.05
0.01
0.03
0.02
0.01
0.09
0.01
0.09
0.05
0.04
0.01
0.03
44.77
47.66
49.06
44.25
52.21
52.53
48.44
53.65
33.60
41.02
50.61
49.60
0.02
0.00
0.08
0.01
0.04
0.01
0.04
0.06
0.07
0.12
0.04
0.03
-15.76
-7.25
-3.64
-1. 78
-2.80
0.73
-12.87
-3.00
-12.7"1
-5.60
-3.75
-4.48
-1.51
2.18
1.44
1.32
6.21
10.14
9.79
10.58
5.69
2.89
5.33
1.46
-17.0
-5.07
-2.20
-0.46
3.42
10.87
-3.08
7.58
-7.02
-2.70
1.57
-3.01
165
5.12.PERIOD-WISE
ANALYSIS)
GROUPING
OF
PSB's(PRINCIPLECOMPONENT
will
also
improved/deteriorated
enable
their
to
identify
those
banks,
which
performance/efficiency/profitability,
in
have
each
succeeding period.
To present the final outcome of the statistical analysis, composite score
is calculated combining all the efficiency and profitability parameters using
again the principal component analysis. Here also banks are grouped into
three categories high performers (A), average performers and (B)
low
performers (C) on the basis of ranks obtained by them as per the composite
score. Again, attempt is made to trace the movement of banks in between the
three grades from one group to another group in each of the succeeding
periods.
(i)
Six banks-BOB, OBOC, COB, BOI, SBOH and SBOI have remained
166
on the basis of composite score in 'AA' grade in both periods I and II,
In other words, these banks are considered as high performers in both
the sub-period.
(ii)
(iii)
Six banks-SB, DB, UCO, CBOI, UNBOI and SOM have remained in 'C
grade in both the sub-periods. It indicates that these banks secured
ranks above 19 on the basis of composite score of the six efficiency
indicators in both the sub-period and branded as low performers.
considered as average performers on the basis of composite score in
both the sub-periods as they secure 'B' grade in both the sub-periods
with ranks ranging between 10 and 18.
(iv)
SBI and CB secured' AB' grade in the two sub-periods which indicate
that these banks secured 2 and 4 ranks respectively in period-I and
subsequently moved down to 13 and 14 in the next period.
(v)
About ANB, which occupied 22nd ranks in the period-I has remarkably
improved its position to 4th in sub period-II. Whereas IB, which was
ranked as 6th in period-I slipped down its position to 27th.
167
B Grade
(10-18 ranks)
A Grade
(1-9 rank)
TABLE 5.24
Mobility of PSBs According to Efficiency during 1992-95 to
1996-99 (I & II Periods)
I Period 1992II-Period (1996-99)
95
A Grade
B Grade
C Grade
1992-95
(1-9 ranks)
(10-18 ranks)
(19-27 ranks)
BOB (I.1 & II.6)
SBI (I.2 & II.13)
IB (I.6 & II.27)
OBOC (I.3 & II.2) CB (I.4 & II.10)
COB (I.5 & II.1)
BOI (I.7 & II.9)
SBOH(I.8 &II.5)
SBOP(I.9 & II.3
UBOI (I.12 & II.8) SBOS (I.10 & II.14) VB (I.16 & II.21)
SBOT(I.13 & II.7) IOB (I.11 & II.16)
SBOM (I.17 & II.19)
SBOI (I.14 & II.18)
PNB (I.15 & II.12)
SBBJ (I.18 & II.17)
SB (I.19 & II.25)
DB (I.20 & II.22)
UCO(I.23 & II.26)
CBOI (I.25 & II.20)
UNBOI (I.26 & II.25)
SOM (I.27 & II.24)
Note: Roman letters indicates periods and normal number indicates ranks in
different periods.
Source: Compiled from RBI Bulletin.
C Grade
(19-27 ranks)
(i)
168
remained in ' A' grade in both the sub-periods II and III. It indicates that
these banks secured ranks below 9 in both the sub-periods and they
are considered as high performers in efficiency.
(ii)
(iii)
CBOI, VB, DB, SB, UNBQI and IB have remained in 'C' grade in both
the sub-periods. These banks secured ranks above 18 and hence
branded as low performers.
(iv)
(v)
Another finding is that BOB, UBOI and BOI, which secured better
ranks-6th, 8th and 9th respectively in period-I! slipped down in their
positions and reached 15th, 11th and 17th ranks in the sub-period-III.
169
TABLE 5.25
Mobility of PSBs According to Efficiency during
1996.99 to 2000.03 (II & III Periods)
B Grade
(10-18 ranks)
A Grade
(1-9 ranks)
II
Period1996-99
III-Period (2000-03)
A Grade
(1-9 ranks)
COB (II.1 & III.1)
OBOC (II.2 & III.2)
B Grade
(10-18 ranks)
BOB (II.6 & III.15)
UBOI (II.8 & III.11)
C Grade
(19-27 ranks)
P&SB(II.5 &III.26)
C Grade
(19-27 ranks)
TABLE 5.26
Mobility of PSBs According to Profitability Indices during
1992-95 To 1996.99 (I &II Periods)
B Grade
(10-18 ranks)
A Grade
(1-9 ranks)
I-Period(199295
A Grade
II-Period(1996-99)
B Grade
C Grade
(1-9 ranks)
(10-18 ranks)
(19-27 ranks)
C Grade
(19-27 ranks)
Note: Roman letters indicates periods and normal number indicates ranks in
different periods.
Source: Compiled from RBI Bulletin.
171
(i)
(ii) Three banks, namely, BOB, SBB], and BOI are considered as average
performers in both the sub periods as they occupied ranks between 10
to 18 and secured 'B' grade in period-II and I.
(iii) AB, P&SB, UCO, UNBOI and IOB are branded as low performers in
period-II and I. Also because they secured ranks above 18 and
occupied C grade in both the periods.
(v) Another notable feature is that SBOS, PNB and SBI, which were in the
A grade during 1992-95 slipped down in their position and moved to 'B'
grade during 1996-99.
(vi) Similarly, the performance of CB which was considered high during the
first period, unfortunately, failed to retain or improve its performance
and miserably fell in to the C grade in period-II.
172
(i)
(ii)
(ii) BOB, SBOS, ANB, and BOI, were in the 'BB' grade in both the
periods, as they secured ranks between 10 to 18,So they are
treated as average performers in profitability in both the subperiods.
(iii)
(iv)
(v)
A notable feature is that UBOI which secured rank one in the subperiod-II slipped down to 10th in the next period.
(vi)
Similarly, BOM and DB with 6th and 8th ranks respectively in the
period-II, have miserably moved down to 22nd and 26th ranks in
the sub-period-III.
173
(vii)
TABLE 5.27
Mobility of PSBs According to Profitability Indices during
1996-99
to 2000-03 (II & III Periods)
B Grade
(I0-18 ranks)
A Grade
(1-9 ranks)
II Period
1996-95
A Grade
III-Period (2000-03)
B Grade
C Grade
(1-9 ranks)
(10-18 ranks)
(19-27 ranks)
C Grade
(I9-27 ranks)
Note: Roman letters indicates periods and normal number indicates ranks in
different periods.
Source: Compiled from RBI Bulletin.
174
To get the final picture, grouping of banks is carried out on the basis of
ranks obtained by combining all the eleven (6 efficiency indices and 5
profitability indices) efficiency and profitability indices in each sub-period and
by assigning weights through principle component analysis. By this process
the movement from one group to another can be traced on the basis of overall
performance during the three sub-periods 1992-95, 1996-99 and 2000-03.
The final picture of the statistical analysis made so far can be presented.
176
TABLE 5.28
Mobility of PSBs According to Aggregated Weighted Index
during 1992-95 to 1996-99 (I & II Periods)
1996-99
B Grade
(1-9 ranks)
A Grade
(10-18 ranks)
A Grade
1992-95
(1-9 ranks)
SBOP (I.1 & II.3)
OBOC (I.2 & II.2)
SBOH (I.3 & II04)
UBOI (I.4 & II.1)
SBOI (I.7 & II.9)
COB (I.11 & II.5)
SBOM (I.13 & II.7)
C Grade
(19-27 ranks)
II-Period (1996-99)
B Grade
(10-18 ranks)
SBOS (I.5 & 11.12)
C Grade
(19-27 ranks)
CB (I.7 & II.22)
Note: Roman letters indicates periods and normal number indicates ranks in
different periods.
Source: Compiled from RBI Bulletin.
(i)
An analysis of the Table 5.28 reveals that SBOH, SBOP, SBOS and
OBOC have remained in the' A' grade in sub-period-I and II. Hence,
they are considered as high performers in efficiency as well as in
profitability during the period 1992-95 and 1996-99.
(ii)
An insight into the data reveals that SBI, DB and AB were in the same
group / grade 'B' in both the periods by securing ranks between 10 and
18. So, these banks were branded as B grade.
177
(iii)
Low performers in the sub-period-I and II as per the data in table are
CBOI, UCO, lOB, P&SB, SB and UNBOI, as they secured ranks above
19 placed in C grade/ group in both the periods.
(iv)
A notable feature is that COB, PNB, UBOI and BOB, which were
found in grade B, have improved their grade to A in the second period.
Similarly, ANB which was in 20th rank during 1992-95 has remarkably
improved its position to 6th during 1996-99.
(v)
Another peculiar feature is that SBOI, SBOT, SBB] and SBOM, which
were in grade' A' and considered as high performers moved down to
grade 'B' during the next period. Similarly, CB with 9th rank in the subperiod-l slipped down. to 20th ranks in the second period.
Analysis of this data in the table reveals that OBOC, SBOP, COB,
SBOH and PNB are considered high performers. These banks were
found in A grade with ranks below 9 in sub-period-II and III.
(ii)
(iii)
An analysis of the data in sub-period-II and III reveal that CBOI, P&SB,
lOB, UNBOI, UCO and IS were found in least C grade in both the sub178
TABLE 5.29
Mobility of PSBs According to Aggregated Weighted Index
during 1996-99 to 2000-03 (II & III Periods)
B Grade
(10-18 ranks)
A Grade
(1-9 ranks)
II- Period
1996-97
A Grade
III-Period (2000-03)
B Grade
C Grade
(1-9 ranks)
(10-18 ranks)
(19-27 ranks)
After the second generation reforms, ,the efficiency of all banks measured on
different parameters. All main banks divided in to Five Groups namely i)
Nationalized banks ii) SBI & Its Associates iii) Old Pvt. Sector Banks iv) New
Pvt. Sector Banks and v) Foreign Banks. In order to measure efficiency and
impact of reforms at the branch and employees level, the following
parameters are employed: (1) Business per Branch, (2) Operating expenses
per Branch, (3) Profit per Branch, (4) Business per Employee, (5)
Establishment expenses per Employee, and (6) Profit per Employee. The
study thus measures efficiency of a bank at the level of operational units, ie.,
branch and employee, The efficiency of each branch and employee in terms
of averages of indicators can be compared to assess the relative performance
of different banks and bank groups.
a). BRANCH LEVEL EFFICIENCY
5.13.1. BUSINESS PER BRANCH
As financial intermediaries banks mobilize savings in the form of various
types of deposits and utilize such funds for granting loans and advances. The
total business of the bank may be estimated by adding advances to deposits.
In the present analysis, the total business is taken as one of the indicators to
measure efficiency. As a matter of fact banks render agency and general
utility and in modern times they have been undertaking Para-banking
180
TABLE-5.30
BUSINESS PER BRANCH OF ALL BANKS
Years
1999-20002152
2000-01 2478
2001-02 2446
2002-03 1295
2003-04 3612
2004-05 4242
Average 2704.17
S.D
1058.07
C.V (%039.13
2860
3411
3793
4260
6196
7454
6662.17
1782.07
38.22
(Rs. in Crores)
Old Pvt.
New Pvt.
Foreign
Sector banks Sector Banks Banks
2255
2633
2904
4035
3891
4149
3311
812.63
24.54
14989
11131
16673
20733
20766
21656
17659.17
4144.05
23.47
54800
62272
70929
69025
67787
114768
73263.17
21155.42
28.88
From the above table on an average the per branch business is lower in
Nationalized
compare to New pvt. Sector banks & Foreign banks. It was only Rs. 2704.17
Cr. in case of Nationalized
sector bank and Rs.7326317 Cr.In Foreign banks. In this parameter foreign
banks have lions share among all Indian bank groups.Hence the new private
Sector in India has led the way in this regards because of the better use of
technology and other infrastructure.
TABLE 5.31
EXPENSES PER BRANCH OF ALL BANKS
( Rs. In Crores)
Years
Nationaliz
SBI & its Old Pvt.
New Pvt.
Foreign
ed
AssociatesSector banksSector BanksBanks
Banks
1999-2000
166 232
182
747
5985
2000-01
189 274
200
820
6502
2001-02
206 304
234
934
6883
2002-03
217 326
288
1905
5866
2003-04
224 338
239
1450
5129
2004-05
230 346
230
1159
7824
Average 205.34 303.38
228.74
1169.06
6364.72
S.D
23.99 43.43
36.52
441.82
931.51
C.V (%0 11.68 14.32
15.97
37.80
14.64
Source:Performance highlights of1999 to 2005.IBA Mumbai.
5.13.3.
For Indian public sector banks, the profits per branch were in the range of
Rs.6.39 to 41.08 cr. during the study period. Among the Indian
banks
displayed the highest profits per branch that lie between Rs.19.09 to 174.34
cr. But overall, foreign banks show excellent results in this parameter. The
profitability per branch was in the range of Rs.623.56 to 1405.67cr. On an
inter-temporal basis, per branch profits have been increasing gradually in the
Indian banking sector.
The growth in branch profits for Indian banks is attributable to the overall
increase in profitability in the banking industry. In the case of the foreign peer
group, profitability per branch shows a small increase over the period covered
by this study. Hence, on an average, branch profitability of foreign banks is
higher than that of
and New Pvt. Sector Banks. But, we can also say that New Pvt. Sector Banks
is quite active and competing with foreign banks.(Table 5.32)
182
TABLE-5.32
PROFITABILITY PER BRANCH OF ALL BANKS
(Rs. in Crores)
Years
Nationalized SBI & its
Old Pvt.
New Pvt. Foreign
Banks
Associates Sector banks Sector BanksBanks
1999-2000
7.43
19.67
14.30
123.70
623.56
2000-01
6.39
16.39
14.24
76.44
637.06
2001-02
14.80
25.37
24.17
83.91
897.33
2002-03
23.50
33.12
35.32
174.34
1032.39
2003-04
32.70
41.08
61.12
123.96
1029.27
2004-05
27.98
41.06
71.87
19.09
1405.67
Average
18.80
29.48
36.84
100.24
937.55
S.D
10.92
10.61
24.49
52.96
292.25
C.V (%0
58.19
35.99
66.48
52.83
31.17
Source:Performance highlights of1999 to 2005.IBA Mumbai.
Foreign banks. The average per employee business is the highest in New
Pvt. Sector Banks i.e Rs.905.83 crores and Foreign Banks has an average of
Rs.901.50 crores in the study period.
Thus, deposits mobilization and advances per employee are higher in New
Pvt. Sector Banks Foreign Banks. These bank groups are providing a better
interest on deposits and lower interest on advances; their market policies are
quite effective as compared to Indian public sector banks.
183
TABLE-5.33
BUSINESS PER EMPLOYEE OF ALL BANKS
Years
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
Average
S.D
C.V (%0
Nationalized
Banks
126
160
197
222
256
308
211.50
65.59
31.06
(Rs. In Crores)
Old Pvt.
New Pvt.
Foreign
Sector banks Sector Banks Banks
171
938
699
202
749
817
227
906
958
299
1094
1014
317
873
981
355
875
940
261.83
905.83
901.50
72.32
112.31
119.83
27.62
12.40
13.29
expenses per employee incurred by foreign banks, having Rs.79.84 crores per
employee. The New Pvt. Sector Banks & Foreign Banks pays higher and attractive
salary to the efficient employees; they also provide better facilities and incentives to
their employees. Due to this reason, per employee expenses are higher even return
per employee is much higher as compared to their counterparts.
TABLE 5.34
EXPENSES PER EMPLOYEE : ALL BANKS
(Rs. in Crores)
Years
Nationalized SBI & its
Old Pvt.
New Pvt.
Foreign
Banks
Associates Sector banks Sector Banks Banks
1999-2000 9.76
9.93
13.80
44.76
76.33
2000-01
12.22
12.83
15.35
55.26
85.26
2001-02
14.30
14.55
18.34
50.76
92.99
2002-03
15.20
15.62
21.33
100.51
26.17
2003-04
15.85
16.48
19.88
60.9
74.21
2004-05
16.68
17.19
19.73
46.79
64.10
Average
14.00
14.43
18.07
59.83
79.84
S.D
2.58
2.69
2.91
20.77
10.34
C.V (%0 18.43
18.64
16.10
34.72
12.95
Source:Performance highlights of1999 to 2005.IBA Mumbai.
184
Overall, we may conclude that among the Indian bank groups, new private sector
banks had shown excellent growth in their efficiency and this group is competing
with foreign banks in terms of many parameters of efficiency. Number of factors
are contributing in their excellent efficiency performance like work culture,
dedication,
loyalty,
technology,
better
facilities,
new
products/services,
185
Years
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
Average
S.D
C.V (%0
TABLE 5.35
PROFITABILITY PER EMPLOYEE OF ALL BANKS
( Rs. In Crores )
Nationalized SBI & its
Old Pvt.
New Pvt.
Foreign
Banks
Associates Sector banks Sector Banks Banks
0.44
0.85
1.08
7.75
8.07
0.41
0.77
1.09
5.14
8.35
0.65
1.21
1.89
4.56
12.12
1.65
1.59
2.62
9.20
15.17
2.32
2.00
5.09
5.20
14.89
2.03
2.04
6.15
0.77
11.52
1.26
1.42
2.98
5.44
11.68
0.85
0.55
2.15
2.91
3.06
67.46
38.73
72.15
53.49
26.20
5.14. CONCLUSION
Thus the above analysis indicates that the public sector banks in India
have made significant progress after some changes of the liberalization and
reforms. After studying the performance of public sector banks, we will study
the performance of private sector banks in the forthcoming chapter.
187