A Study of Technical Efficiency of Banks in India Using Dea

Abstract

This study uses DEA approach to estimate the technical efficiency of commercial banks in India over the years 2006-2010. The results indicate that deregulation of banking sector has led to an increase in the efficiency of commercial banks in India. Banks like Allahabad bank, Canara bank, Kotak Mahindra bank, ICICI bank and Yes bank are very efficient and show consistency in their performance. On the other hand, the performance of banks like SBI, PNB and HDFC can be a matter of concern as their efficiency scores are below satisfactory level. The major factor resulting in the poor performance of these two banks is their huge amount of deposits and operating expenses. Also, the excess number of employees is increasing their problems. So, here either these banks possess blocked/non-performing assets or are not able to make a set off between the deposits and advances. Being major banks in the country, they deserve better attention by the regulators and the administrators.The study also shows that performance of private sector banks has been better than public sector banks during the period.