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Chapter-Ii Review of Literature
Chapter-Ii Review of Literature
REVIEW OF LITERATURE
Remarkable and rapid transformation has taken place in financial and
banking sector in the liberalized and post reform period. As outcome of these,
significant studies were undertaken and significant body of literature has
evolved on the subject. It explores the performance of financial institutions.
The main motive of studies, in general, is to analyze the efficiency and
productivity of banking systems. Such studies and analysis are important from
the policy standpoint. Success or Failure of policy initiatives are identified by
policymakers, researchers and academicians. Framing and Formulating
appropriate policies enables banks to function in a better way and which may
be reflected in safety and soundness of the financing system. Banks play an
important role in the financial markets of developing economy and it is very
important to evaluate whether banks operate efficiently or not.
Banking developments greatly contributed to economic development of
the country. A positive relationship between financial sector development and
economic growth was established by economists in various empirical studies.
(Goldsmith 1969, King and Levine 1993, Levine 1999, Khan and Senhadji,
2000). In pre-reform period, the commercial banks and other financial
institutions were operating in stable environment with little or absence of
competition. But in the reform period remarkable changes took place in
banking industry. During liberalised era, banking industry entered new phase
and became globally competitive. It has to fulfill both social and national
objectives. In wake of these changes it is necessary to study the performance
of the banks. State Bank of India, being the oldest and largest commercial
bank of the country, contributed remarkably to the development of Indian
banking industry. Therefore it is essential to study the performance of State
Bank of India and its associates in the changed and competitive environment.
As per the topic of the research An Analysis of Performance of SBI and its
associate banks an attempt has been made to study the different studies in
this field to assess the performance of banks in India.
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Birla Institute of Scientific Research, "Banks Since Nationalisation", Economic Research Division,
Allied Publishers, News Delhi, 1981.
Malhotra R N, Banking Enter a New Phase, The Journal of the Institute of Bankers, Special
Number: Bank Economists Conference, Vol. 57, No. 2, April-June 1986, pages. 94-103.
Robert M, Profitability in Public Sector Banks in India Thesis Abstract, The Journal of Institute
of Public Enterprises, Vol. 14(4), 1991, pages. 315-321.
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Singh Jagwant, Indian Banking Industry- Growth and Trends in Productivity, Deep and Deep
Publications, New Delhi, 1993.
Agarwal R N, Analysis of Profitability of Public Sector Banks: A Case for Financial Sector
Reforms, Journal of Income and Wealth, Vol. 15, No. 2, 1993, pages. 123-131.
Zacharias Thomas, Performance effectiveness of Nationalized Banks- A case stydy of Syndicate
Bank, Ph.D thesis, Cochin University, Kochi, Finance India, Vol. XIV, March, 1997, pages 187192.
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that Syndicate Bank got 5th position in capital adequacy and quality of assets,
15th in profitability, 14th position in social banking, 8th in growth, 7th in
productivity and 15th position in customer service among the nationalized
banks. Further, he found that five nationalized banks showed low health
performance, seven low priority performance and eleven low efficiency
performance in comparison with Syndicate Bank.
Das Abhiman (1997) 7 in paper examines the efficiency of Indian
banking. Overall efficiency is decomposed into allocative and technical
efficiency. Technical efficiency is further decomposed into pure technical
efficiency and scale efficiency. Comparison of the efficiency of banks prior to
and after deregulation is done. A non-parametric frontier methodology has
been utilised to derive several efficiency measures for public sector banks in
India for the years 1970, 1978, 1984, 1990 and 1996. The results indicate that
the State Bank of India and its Associates are more efficient than the
nationalised banks.
Shajahan K M (1998)8 in paper seeks to analyze the trends in priority
sector bank lending. It was held that in the pre-nationalisation period the
crucial sectors were neglected. Lending to priority sectors became as an
essential component of national agenda after bank nationalisation. Banking
sector reforms had negative impact on lending to priority sectors. The
percentage of credit channelled to priority sectors of the economy has been
on the decline. As a result of RBI guideline that 40 percent of net bank credit
should be provided for the priority sectors of the economy, there was shortfall
in priority sector credit in individual states.
Das Abhiman (1999) 9 evaluates the inter-bank performance of Public
sector banks during the reform period. It made use of sequential
decomposition model for profitability analysis. This study was carried out for a
period of three years i.e. 1992, 1995, 1998 in order to study the changing
pattern of profitability of public sector banks at various points of time in the
reform period. Variables used for the profitability decomposition model are
7
Das Abhiman, Technical, Allocative and Scale Efficiency of Public Sector Banks in India, RBI
Occasional Papers Vol. 18, No. 2 & 3, Special Issue, June-September, 1997.
Shajahan K M, Priority Sector Bank Lending- Some Important Issues, Economic & Political
Weekly, October 17-24, 1998.
Das Abhiman Profitability of Public Sector Banks: A Decomposition Model, Reserve Bank of
India Occasional Papers, Vol. 20, No. 1, Summer, 1999, pages 55-81.
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working fund, operating profit, spread and burden. Public Sector banks have
recorded a reduction in the burden of raising working funds in the post reform
period. Profitability indicated relatively high degree of variability. Banks need
to concentrate on improving customer services to become more profitable and
efficient.
Athma Prashanta (2000) 10 made an attempt to evaluate the
performance of Public Sector Commercial banks with special emphasis on
State Bank of Hyderabad. The period of the study for evaluation of
performance is from 1980 to 1993-94. Trends in deposits, various
components of profits, trends in Asset Structure of SBH are analyzed. It
evaluated the level of customer satisfaction and compared the performance of
SBH with other PSBs, Associate Banks of SBI and SBI. Statistical techniques
like ratios, percentages, compound annual rate growth and averages are
computed for the purpose of meaningful comparison and analysis. A
comparison of SBH performance in respect of resource mobilization with other
banks showed that the average growth of deposits of SBH is higher than any
other bank group. Profits of SBH showed an increasing trend a more than
proportionate increase in spread than in burden. Finally, majority of the
customers have given a very positive opinion about the various statements
relating to counter service offered by SBH.
Altunbas Yener, Evans Lynne & Molyneux Philip (2001) 11 in paper
attempts to find whether the ownership structure of banks influence their
economic behaviour. A variety of models are used for evaluating cost and
profit efficiencies as well as the impact of technical progress for private
commercial, public savings and mutual cooperative banks operating in the
German banking market between 1989 and 1996. Intermediation approach is
used for the definition of inputs and outputs. Inefficiency measures are
estimated using the stochastic frontier approach and distribution free
approaches. The stochastic approach labels a bank as inefficient if its costs
are higher or profits lower. It is concluded that there is little evidence to
10
11
Athma Prashanta, Performance of Public Sector Commercial Banks- A Case Study of State Bank
of Hyderabad, Finance India, Indian Institute of Finance, Vol. 14, No. 1, March 2000, pages. 183186.
Altunbas Yener, Lynne Evans, Philip Molyneux, Bank Ownership and Efficiency, Journal of
Money, Credit and Banking, Vol. 33, No. 4, November 2001.
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suggest that privately owned banks are more efficient than their mutual and
public sector counterparts in German banking market.
Dasgupta Debajyoti (2001) 12 in paper attempts to analyse impact of
reforms on the profitability of the Indian Public Sector Banks. The study has
selected six banks i.e. State Bank of India, Canara Bank, Punjab National
Bank, Syndicate Bank, Vijaya Bank, Corporation Bank. Time period for the
study is 1985-86 to 1996-97. The study made use of two key parameters Net
Profit and Net Worth. It was observed that two banks with lowest owner equity
that Vijaya Bank and Corporation Bank have attained better results. Except
State Bank of India all other banks along with Public sector banks as a whole
recorded a negative growth in profitability. The year 1996-97 was considered
year of recovery. Higher owner equity has helped the State Bank of India to
yield good result whereas bigger size in case of Canara Bank has helped the
bank to achieve better result.
Saha Gurudas (2001) 13 in study analyses the major financial
parameters of Public and Private Sector Banks and highlights the strategic
importance of banking cost determination and cost management. Public
sector banks are unable to compete private sector banks due to poor
governance. The financial performance of public sector banks is the lowest
whereas that of SBI group is better in all ratios. SBI group have registered a
higher growth in all the business parameters as compared to Nationalised
banks but in the revenue parameters they are below nationalised banks, all
private banks and foreign banks. It is indicated that public sector banks are
losing its market share to private sector banks and foreign banks.
Janaki J (2001)14 highlighted that due to extensive liberalisation
banking system has to face both internal and external competitive pressures.
The task before the Indian banking in the new millennium is to transform its
12
13
14
Dasgupta Debajyoti Profitability of Indian public sector banks in the light of liberalisation of
Indian economy- An overview, The Management Accountant, Vol. 36, No. 9, September 2001,
pages 693-699.
Saha Gurudas, Financials of Indian Banking Industry and the Competitive Viability of the Public
Sector Banks, The Management Accountant, Vol. 36, No. 5, May 2001, pages. 373-386.
Janaki J, Impact of Liberalization on Banking, in S. Gurusamy (ed.) Banking in the New
Millennium: Issues, Challenges and Strategies, Kanishka Publishers, New Delhi, 2001, pages.
109-117.
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15
16
Subrahmani & Raghav, Operational Efficiency of Banks in S. Gurusamy (ed.) Banking in the
New Millennium- Issues, Challenges and Strategies, Kanishka Publishers, New Delhi, 2001.
Das Abhiman Risk and Productivity Change of Public Sector Banks, Economic & Political
Weekly, February 2, 2002.
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19
Chaudhari Saumitra Some Issues of Growth and Profitability in Indian Public Sector Banks,
Economic & Political Weekly, June, 2002.
Mathur K B L Public Sector Banks in India- Should They Be Privatised, Economic & Political
Weekly, June 8, Vol. XXXVII, No. 23, 2002.
Nagar Nirupma & Mishra Jitendra Kumar Non-Performing Assets of Commercial Banks- A Case
Study of State Bank of Indore, Madhya Pradesh Journal of Social Sciences, Vol. 7, No.1, 2002,
pages. 102-112.
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brought down to a significantly low level. The State Bank of Indore shows a
declining trend of its NPAs on a year by year basis but it is the result of
recovery and not because of assessment capacity. Incidence of NPAs can be
tackled through better selection of borrowers, more scientific credit appraisal
and supervision.
Aparna T (2002) 20 in article highlights the fact that SBI is the largest
and oldest public sector bank of India. Due to greater competitive pressures
and changes in Indian Economy it has felt the need to revitalize and
restructure itself. SBI is planning for technology upgradation. In order to
increase its income it has shifted its focus from traditional banking to retail
finance and housing finance. It is State Bank of India and its associates that
have developed banking habit in the country. The financial performance of
banks has been satisfactory over a period of time. Total income, operating
profit and Net interest income showed a rising trend. SBI has the largest
holdings of government securities. SBI has computerised 80% of its business
operations and has highest number of ATMs in the country. Housing finance
is the new thrust of SBI. SBI targeted to bring down its NPAs. SBI should
continue its revitalising and reorienting process so that it can keep its flag
flying high even amidst cut throat competition.
Ram Mohan TT (2002) 21 in his paper evaluated the performance of
PSBs since deregulation in absolute and relative terms and attempts to
understand the factors underlying their improved performance. In India due to
regulatory norms, government-owned banks have minimal exposures to risk
assets such as real estate and stock market. Restructuring in banking backed
by the required capital has produced healthy results. It was observed that the
efficiency of the banking system as a whole measured by declining spreads
has improved. The performance of public sector banks has improved both in
absolute and relative terms.
Bhide MG, Prasad A, Ghosh Saibal (2002)22 The paper presents in
brief the highlights of the important aspects of financial sector reform and the
20
21
22
Aparna T, State Bank of India: Flying High, Chartered Financial Analyst, Vol. 8, Issue. 9,
September 2002, pages. 60-61.
Ram Mohan TT, Deregulation and Performance of Public Sector Banks, Economic & Political
Weekly, Vol. XXXVII, No. 5, February 2, 2002, pages. 393-397.
Bhide MG, Prasad A, Ghosh Saibal, Banking Sector Reforms: A Critical Overview, Economic &
Political Weekly, Vol. XXXVII, No. 5, February 2, 2002, pages. 399-408.
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weaknesses and some of the crucial issues faced by the banking system at
the present juncture. The paper concludes that implementation of banking
sector reforms had achievements as well as pitfalls. It is important to strike a
balance and find a middle path between the over zeal for intervention and
ability of banking system to self rectify its deficiencies. Banking authorities are
under constant challenge of identifying newer risks and strengthening the
banking sector to keep pace with changes in technology.
Pandey Rajendra & Bandyopadhyaya Sanjiban (2003) 23 in paper
attempts to ascertain the factors affecting the profitability of performance of
PSBs on the basis of Break Even Analysis. In this study the cost-volume-profit
analysis helps in determining the optimum level of banks performance. The
study covers all the 27 public sector banks of India. Time period of the study
is from 1990-2000. It is observed that performance of all the banks together is
poor which is supported by negative profitability performance during four out
of ten years. Results of multiple regression analysis, suggests that the
profitability is influenced by operating cost, interest earned, interest paid and
other income. It is suggested that in order to improve margin of safety profit
earning bank must reduce operating cost and losing bank must reduce the
burden of interest payment.
Singh Kunal (2003) 24 This article highlights the fact that due to
competitive pressures the largest public sector bank that is State Bank of
India is entering into businesses like credit cards, insurance, brokerage, gold
etc. It has also focused on the most profitable home loan business. It is
entering retail business by employing new and innovative schemes. SBI is
one of the most profitable banks in India. Net Profits, Operating Profits, Net
Interest Income, Advances, Average resources deployed in treasury
operations, average deposits has shown an interesting trend over a period of
time. SBI is also planning to introduce special Prime Lending Rate (PLR) for
housing loans. SBI has introduced schemes for Doctor, Teacher and Justice
under which they would be provided loans at a cheaper rate. SBI has tied up
23
24
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with Maruti Udyog Ltd for financing cars at cheaper rates. SBI is also selling
life-insurance and health care products.
Rao Srinivasa K S & Prasad Chowdari (2003)25 The paper makes
the survey on banks over a period of time and compared Indian public sector
banks among themselves as a closed model and later with other banks as an
open model using various statistical techniques like cluster analysis. Cluster
analysis was done in case of closed model in order to compare 27 public
sector banks among themselves. Similarly, cluster analysis was done in case
of open model to compare PSBs with private sector banks and foreign banks.
In case of closed model, 8 out 0f 27 banks were graded as best banks. In
open model out of 86 banks 11 are considered best banks.
Chellasamy P & Sumathi N (2004) 26 depicted the real picture of
Indian banking. Indian banking has become highly proactive and dynamic
entity. This transformation occurred due to liberalization and economic
reforms initiated in nineties. The nationalized banks continue to dominate the
Indian banking arena. State Bank of India is the largest bank in India in terms
of profits, assets, deposits, branches and employees. It is concluded that
Indian banking industry is currently in a transition phase. Indian banks are not
only keen to tap the domestic market but also to compete in the global market
place. New foreign banks have been equally keen to gain a foothold in the
Indian market.
Sisodiya Amit Singh & Rao N Janardhan (2004) 27 in article
highlighted the performance of SBI. SBI is largest Public Sector Bank in India.
It has business in retail and wholesale market and provides products like
credit cards, insurance, gold etc. The bank has wide network of rural, semi
urban, urban and metropolitan branches. Its major business areas are
corporate banking, International banking, Domestic banking, Associate Bank
divisions for looking after the working of these banks. Credit division is formed
for monitoring the overall credit finance, corporate development and
25
26
27
Rao Srinivasa K S & Prasad Chowdari, Can Public Sector Banks Compete with Foreign/Private
Banks? A Statistical Analysis, Paper submitted to the International Conference on Business &
Finance to be held during 15-16, December 2003 at ICFAI Business School, Hyderabad.
Chellasamy P & Sumathi N Role of Banking System in India, Journal of Global Economy, Vol.
2, No. 4, December, 2004, pages 289-295.
Sisodiya Amit Singh & Rao N Janardhan, Spotlight: State Bank of India, Chartered Financial
Analyst, Vol. 10, No. 11, 2004.
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Inspection. State Bank of India has the largest ATM network in India. It is
expanding its business in foreign countries also.
Ram Mohan TT & C Ray Subhash (2004) 28 in paper attempts to
compare performance among three categories of banks- Public, Private and
Foreign. The study made use of physical quantities of inputs and outputs. It
compared the revenue maximisation efficiency of banks during 1992-2000.
Data Envelopment Analysis is used in order to make comparisons. It is
concluded that public sector banks performed significantly better than private
sector banks. Superior performance of public sector banks is due to higher
technical efficiency rather than higher allocative efficiency. Because of its
size, State Bank of India is found to efficient on all counts in VRS model.
Using financial measures of performance, it is found that there is convergence
in performance between public and private sector banks in the post-reform
era.
Sooden Meenakshi & Bali (2004) 29 has stressed that the public sector
banks should give emphasize on both economic and social profits in a
desirable mix to make themselves a strong pillar of modern development
framework. They analyzed the profitability of the public sector banks in both
pre and post reform period for the year 1982 to 2000. In late 1990s economic
profitability of public sector banks started improving and priority sector lending
started falling. It led to erosion of social profitability in public sector banks.
Singh Bhupinder Pal (2004)30 The objective of the present study is to
analyse the impact of banking reforms on technical efficiency of public sector
banks, to find interbank variation in technical efficiency, to find impact of
banking sector reforms on the total factor productivity growth of the Indian
public sector banks. Time period for the study is taken from 1987-2003. Data
Envelopment Analysis and DEA- Malmquist Product Index have been used. It
is concluded that banking sector reforms had a favourable impact on
productive efficiency of Indian Public Sector Banks.
28
29
30
Ram Mohan TT & C Ray Subhash, Comparing Performance of Public and Private Sector BanksA Revenue Maximisation Efficiency Approach, Economic & Political Weekly, March 20, 2004.
Sooden Meenakshi & Bali, Profitability in Public Sector Banks in India in the pre and post reform
period, India Management Studies Journal, Vol. 8, No. 2, October 2004, pages. 69-80.
Singh Bhupinder Pal, Banking Reforms and Productive Efficiency of Indian Public Sector
Banks, Dissertation, Master of Philosophy in Economics, Punjabi University, Patiala, 2004.
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32
33
Prasad A. & Ghosh Saibal Competition in Indian Banking IMF Working Paper, WP/05/141,
July, 2005.
Patnaik U C & Patnaik Manoj, Profitability in Public Sector Banks, Sonali Publications, New
Delhi, 2005.
Chakrabarti Rajesh & Chawla Gaurav, Money and Finance-Banking Efficiency in India since the
Reforms- An Assessment, Money and Finance, Vol. 2, Issue, 22-23, 2005.
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34
35
Mohan Rakesh Address delivered at the 21st Annual General Meeting and conference of the
Pakistan Society of Development Economists at Islambad in December, 2005.
Sahu Bihari Gagan & Rajasekhar D, Banking Sector Reform and Credit Flow to Indian
Agriculture, Economic & Political Weekly, Vol. XL, No. 53, Dec-Jan, 2005-06, pages. 5550-5559
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37
38
development
process
of
underdeveloped
countries.
Banking
Kumar Parmod, Banking Sector Efficiency in Globalised Economy, Deep and Deep
Publications, New Delhi, 2006.
Samanta Amitava, Impact of NPA on Working of Commercial Banks in India, Journal of
Economic and Social Development, Vol.11, No.1, 2006, pages 87-95.
Bhasin Niti, Banking Developments in India 1947 to 2007 Growth, Reforms and Outlook, New
Century Publications, New Delhi. 2006.
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40
41
Sensaram Rudra, Are foreign banks always the best? Comparison of state-owned, private and
foreign banks in India, Economic Modelling, Vol. 23, Issue. 4, July 2006, pages. 717-735.
Varadi, Kumar Vijay, Kumar Pradeep & Boppana Nagarjuna, Measurement of Efficiency of
Banks in India, MRPA Paper No. 17350, posted 17, September 2009, Online at http:// mpra.ub.unimuenchen.de/17350 , 2006.
Sharma Neeraj Performance of Punjab National Bank in Competitive Environment: A Case Study
of Haryana, Ph.D Thesis, Punjabi University, Patiala, 2006.
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evaluate the overall performance of PNB in Haryana state for the period 19932004. These variables are: Branches, Deposits, Advances, Priority Sector
Advances, C-D ratio. Arithmetic Mean, Standard deviation, Coefficient of
variation, Correlation coefficient, simple and trend growth rate are used for
analysing the data. It is suggested that multi pronged approach should be
adopted by the banks to raise capital from domestic as well as foreign
markets. Research efforts should be so directed so that these are meant for
understanding the need based problems faced by the people living in rural
and urban areas.
Rao Ramachandra, Das Abhiman, Singh Kumar Arvind (2006)42 in
paper examines the trends in sectoral allocation of bank credit to the SSI in
comparison to non-SSI sector in the post reform period. The paper also
makes an attempt to understand variations in bank credit to the SSI sector
across bank groups and also the influence of the size and performance of
banks on credit to the SSI sector. The study covers 97 Scheduled commercial
banks. These banks are also classified into three size classes based on the
total assets as on March 31, 2003. Time period of the study is from 1992 to
2003. It is believed that the working capital support extended by commercial
banks to small-scale industry is far from adequate. Share of SSI in total
priority sector advances of all scheduled commercial banks has been falling
consistently. The results indicate that the high incidence of bad loans arising
out of SSI advances could be one of the reasons for the declining share of
SSI loans of the commercial banks.
Mittal R.K & Dhingra Sanjay (2007)43 in paper evaluates the impact
of computerisation on the performance of Indian banks in terms of their
profitability and productivity. Data Envelopment analysis is used to study the
impact of computerisation on Indian banks productivity and profitability.
Results show that ICICI Bank is found to be efficient in all indicators. Only two
public sector banks, Oriental Bank of Commerce and Corporation Bank were
in top ten. The output of DEA indicates that private banks are much better
than public banks in productivity and profitability indicators.
42
43
Rao Ramachandra KS, Das Abhiman, Singh Arvind Kumar, Commercial Bank Lending to SmallScale Industry, Economic & Political Weekly, Vol. XLI, No. 11 March 2006, pages. 1025-1033.
Mittal R K & Dhingra Sanjay Assessing the impact of computerization on productivity and
profitability of Indian banks- An Application of Data Envelopment Analysis, Delhi Business
Review, Vol. 8, No. 1, January- June, 2007.
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productivity
growth
compared
to
their
foreign
counterparts.
45
46
Mittal Manish & Dhade Aruna Profitability and Productivity in Indian Banks: A comparative
Study, AIMS International, Vol. 1, No. 2, May 2007, pages. 137-152.
Sufian Fadzlan Productivity Growth in the Malaysian Islamic Banking Industry: A NonParameteric Malmquist Productivity Index Approach, The ICFAI Journal of Industrial
Economics, Vol. IV, No. 1, 2007, pages. 20-36.
Singh Sultan Banking Sector Reforms in India, Kanishka Publishers, New Delhi, 2007.
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48
49
Rangarajan C The Indian Banking System Challenges Ahead, Indian Institute of Banking and
Finance, First R. K. Talwar Memorial Lecture, July 31, 2007.
Gopinath Shyamala Special Features of Financial Sector Reforms in India, Inaugral address by
Smt Shyamala Gopinath, Deputy Governor, RBI delivered at the 18th Annual National Conference
for Forex Association on April 6, 2007 at Bangkok.
Monterio Mohan N.J & Ananthan B R, NPA in Public Sector Banks: Causes and Cures, The
Indian Journal of Commerce, Vol. 60, No. 2, April-June 2007, pages. 1- 11.
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loans turn sticky, possible steps to reduce and control NPAs etc. It is found
that irregular payment was the major cause for an account turning into NPA.
Good pre-sanction scrutiny, effective post-sanction supervision and effective
recovery steps were the measures to control NPAs.
Uppal R K & Kaur Rimpi (2007) 50 in paper describes the necessity of
the banking sector reforms from the angle of national development policy. It
analyzes the impact of reforms on the performance of the banking sector. The
study reveals that the gap in the productivity and profitability of major bank
groups has widened. Performance of banking sector has improved under
reform period but still public sector banks are lagging behind in their
performance when compared with counterparts. The paper concludes how
banking industry can improve its performance and suggests future agenda for
the banking industry particularly to the public sector banks. A strategic action
plan should be initiated for reducing NPAs. Indian banking sector should
develop its own model based on local ethos and cultural backdrop. Public
sector banks should adopt the same strategies as that of private sector and
foreign banks to gain competitive edge.
Kumar Vishal & Savita (2007)51 in present paper attempts to identify
the challenges in Indian banking sector and also suggested strategies for
future. Some of the major challenges faced by the Indian banking industry are
improvement in profitability, technology upgradation, building proper risk
management structure, rural and social banking issues and proper human
resource management. It is concluded that due to changing economic
scenario world wide banks will have to take steps for cost reduction,
technology up-gradation, innovation in services and products, seeking newer
markets and reorientation in attitudes towards the constantly changing
environment.
50
51
Uppal RK & Kaur Rimpi, Banking Sector Reforms: Their Efficacy and Future Agenda in R K
Uppal & Rimpi Kaur (ed.) Banking in the New Millennium: Issues, Challenges and Strategies,
Mahamaya Publishing House, New Delhi, 2007, pages. 1-21.
Kumar Vishal & Savita, Banking in the New Millennium: Challenges and Strategies, in R K
Uppal & Rimpi Kaur (ed.) Banking in the New Millennium:Issues, Challenges and Strategies,
Mahamaya Publishing House, New Delhi,2007, pages. 155-172.
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53
54
Kapoor Seema, Reforms in Indian Banking Sector: Agenda for Future in R K Uppal & Rimpi
Kaur (ed.) Banking in the New Millennium: Issues, Challenges and Strategies, Mahamaya
Publishing House, New Delhi, 2007, pages. 379-394.
Dey SK & Kumar Pradeep, Relevance of Social Lending in Indian Banking in Mohan Prasad
Shrivastava, Pradeep Kumar Pandey, V P Vidyarthi (ed.) Banking Reforms and Globalisation,
APH Publishing Corporation, New Delhi, 2007, pages. 297-304.
Uppal R K Indian Banking in the Globalised World, New Century Publications, New Delhi,
2008.
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55
56
Kalluru Siva Reddy & K Bhat Sham An Empirical Analysis of Profitability Determinants in
Indian Commercial Banks during Post Reform Period, The ICFAI University Journal of Industrial
Economics, Vol. V, No. 4, 2008.
Gupta Sumeet & Verma Renu Comparative Analysis of Financial Performance of Private Sector
Banks in India: Application of CAMEL Model, Journal of Global Economy, Vol. 4, No. 2, AprilJune, 2008, pages 144-158.
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58
59
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income. Banks of foreign origin are ranked on the top on the basis of their
earning quality. Profitability of Scheduled Commercial banks is growing
continuously due to increasing fee-based income and curtailment of operating
expense.
Raju. D N M (2009) 60 The objectives of the study are to appraise the
performance of the bank in regulating NPAs and identification of the problems
faced by the bank and suggests remedial measures to overcome
inefficiencies, shortcomings and bring down NPAs. The study covered SBI
branches operating in Vijayawada zone covering three districts of Coastal
Andhra Pradesh. The financial and operating performance of the SBI was
examined with reference to deposit mobilisation, deployment of credit and
profits. The period covered for the study is 1990-91 to 2000-01. Two
structured questionnaires were administered a) on select employees of SBI
dealing with NPAs and few other senior officers b) on bank officers dealing
with advances. Statistical tools used in the study are percentage, mean, ratio
analysis, correlation, regression and chi-square. The study brings out a
number of suggestions for improving the performance of SBI, strengthening
the recovery position of NPAs, prevention and reduction of NPAs.
Kalluru Siva Reddy & Sham Bhat K (2009) 61 in paper investigates the
effects of foreign banks entry on the operations of public sector banks in India
for the period 1996-2007. Variables employed to mark the intensity of foreign
banks presence that ratio of number of foreign banks to the total number of
banks in the country. Net interest margin to total assets, Non-interest income
to total assets, profits before tax to total assets, overhead expenses to total
assets, non-performing loans to total loans are the variables which measure
the income, profitability and costs of public sector banks. The empirical results
reveal that foreign bank entry usually increases competition in the banking
industry as is evidenced by increasing profitability of banks. It is concluded
that foreign bank entry in the Indian banking system adversely affects the
operations of PSBs.
60
61
Raju D N M Evaluation of the Performance of State Bank of India with special reference to NonPerforming Assets (NPAs), Abstract of Doctoral Dissertation, Finance India, Indian Institute of
Finance, Vol. XXIII, No. 3, September, 2009, pages. 985-989.
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Corporation,
African
Bank
Corporation
and
National
Development Bank are the least efficient ones. It is held that financial
institutions in Botswana should utilise their resources more efficiently to
further improve their efficiency so that they can compete with rest of the world.
Sen Mitali (2010)75 in her empirical work makes an exploratory attempt
to study the liability structure of Indian Commercial Banks. The sample of 82
Indian Commercial Banks is drawn for which consistent data is available over
the period 1995-96 to 2003-04. The major findings of the study are that set of
six critical factors that is profitability, size, liquidity, risk and asset quality, fee
based earnings and efficiency influence the liability structure of commercial
banks. From empirical analysis it can be inferred that banks should
concentrate more on fee based activities.
74
75
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77
78
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Although a lot of work has been carried out for the evaluation of
commercial banks efficiency in the world, but very little work has been carried
to evaluate the performance of public sector bank in India in general and
State Bank of India in particular. This study will try to find out the impact of
banks specific variables on the efficiency of SBI and its associates. So under
present scenario there is dire need to carry out a study to analyze the
performance of SBI and its associate banks to provide answer to all problems
of banking industry.
It can be concluded that for performance analysis, a variety of tools
have been used by the different studies. Review is indicative of the fact that
most of the studies done or too aggregative, if somewhere the disaggregation
have been achieved, the coverage is too small. Analysis of a single bank
group based performance and its relation with economic development is
relatively unexplored area of research. The present work filled this research
gap.
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