A Comparative Study on Efficiency of Selected Public Sector Banks in India

The study was conducted to compare the efficiency levels of selected 12 public sector banks (PSBs) in India. Public sector banks are banks with more than 50% shares owned by the government. Data for seven years was compiled from the annual reports of these banks for computation of the efficiency ratios for the analysis. The ratios were grouped into management and employee efficiencies. The management efficiency ratios included net interest margin, non-interest income margin, and operating profit to total assets. The employee efficiency ratios on the other hand includes profit per employee, business per employee, wages to total expenses, and wages to total income.The results from the ANOVA analysis of the management efficiency measures indicated that all the 12 selected PSBs banks have unequal efficiency levels. The results from the ANOVA analysis of the employee efficiency measures also indicated that all banks have unequal level of employee efficiency with the exception of wages to income ratio, which was equal among the banks. It was therefore recommended, that public sector banks in India must improve upon both management and employee efficiencies of their respective banks in order to increase productivity and for that matter profitability