Productivity Performance of Banking Industry in India: An Inter-sectoral Analysis

Productivity-based analysis for the Indian Banking Sector is in itself an area of enormous significance in this globally viable environment. If banks wish to become superior and competitive entities, they require connecting themselves with efficiency. It is also essential for the sake of a safe and sound financial system in a meticulous economic system. This paper analyses the cross relationship among various components of productivity like earning per employee, business per employee and profit per employee for public, private and foreign sector banks within the Indian Banking Industry using data for five years i. e. the period starting from 2001-02 to 2005-06. A range of statistical tools like averages, ACGR, correlation, regression, and parametric tests have been used to establish, evaluate and quantify the cross-sectional relationship among the variables.■ Ownership characteristics of banks are also incorporated into the analysis to examine productivity across ownership groups. Results show that foreign sector banks are outshining with their performance in all the selected parameters during the period of this study. In terms of ACGR and absolute numbers too, these banks have been on top in all the categories. However the average ACGR, taking all the banks of one sector together, is highest for public sector banks in case of business per employee. It shows that public sector banks are growing with consistent pace and intra group variations are also less than other sectors. Results also show that private and foreign sector banks are showing significant relation between parameters, earnings and profit per employee. Public Sector has shown significant relation between earning and business per employee. Whereas, Foreign banks are giving positive and strong impact of earning per employee on profit per.: Indian Banking Industry, Panel Data Analysis, Correlation, ACGR and Productivit