Indian Banking Industry Research Articles

Harmonizing Liberation Philosophy: Exploring the Convergence of Marxian Economics and Shariah Banking within the Framework of the Indian Banking System

Abstract: The Indian banking system evolved from an exclusive private enterprise controlled by a few wealthy families and trusts, leaving the majority reliant on high-interest private lenders, perpetuating economic disparity. Nationalization of 21 banks under Indira Gandhi aimed to rectify this, aligning with India's constitutional goal of equitable wealth distribution. However, globalization and privatization reshaped the landscape, emphasizing profit-seeking and catering to the corporate sector and affluent classes. The marginalized rural and small business sectors suffered in this pursuit, evident in neglected rural branch postings. To address this, an ethical foundation merging Marxist economics and Shariah banking principles is proposed, seeking inclusivity and ethical grounding. Shariah principles, rooted in Islamic law, extend beyond religious boundaries, while Marxist values amplify voices of the marginalized. By combining these principles, a more inclusive, morally anchored, and holistic Indian banking system can be envisioned. The priority sector's Non-Performing Assets challenge can be addressed without jeopardizing inclusivity.

Digital Financial Services (DFS) and Productivity of Indian Banking Sector - Empirical Evidence Using Malmquist Productivity Index and Panel Data Regression

Purpose: The aim of this study is to examine the impact of Digital Financial Services (DFS) on the productivity of banking sector in India. Theoretical framework: This research considered various digital banking services offered by bank and how it affects the actual bank performance in terms of productivity, by adopting a two-stage model i.e., Malmquist Productivity Index (MPI) and panel data regression. Design/Methodology/Approach: The empirical study was based on eight-year balanced panel data from 2012 to 2020. The sample of the study consists of forty-four commercial banks from India. This study is completely based on secondary data collected from the website of the database of the Indian economy and the National Payment Corporation of India (NPCI). To achieve the research goals, a two-stage approach has been used. Initially, Malmquist Productivity Index (MPI) was employed to estimate the total factor productivity changes. In the second phase, panel regression analyses were used to study the impact of Digital Financial Services (DFS) on bank productivity. Findings: The findings show that the Digital Financial Services (DFS) variables such as mobile banking, online banking, Automatic Teller Machines (ATM) and Point of Sale (POS) transactions are significantly improved the productivity of the Indian banking industry. Research, Practical & Social implications: The study addresses the issues such as identifications of factors affecting the productivity of banks including Digital Financial Services (DFS). In the world of digital revolution, it analyses whether bank can retain, continue and enhance their performance by offering modern product and services to their customers. Originality/Value: This article has conducted extensive analyses of Digital Financial Services (DFS) and banks' productivity. The authors also provide suggestions for the policymakers for the future implementation of digital banking services.

Prospects and Challenges Faced by Indian Banks During The Implementation of CSR Activities

The purpose of this paper is to investigate what issues and challenges banks face while implementing CSR practices. The methodology employed is a conceptual approach, involving a cross-sectional study that qualitatively analyzes the CSR activities undertaken by Indian public sector banks. As the significance of Corporate Social Responsibility (CSR) has steadily grown, Indian corporate entities have come to recognize that the ultimate objective extends beyond merely generating profits. Instead, it encompasses the cultivation of trust and the development of a sustainable rapport with society. This article centers its attention on examining and evaluating the various facets and hurdles of CSR practices within the Indian banking industry. The practical implications of this research paper are significant. The insights presented can guide organizations in designing CSR programs based on their objectives, proactiveness, activity nature, characteristics, and potential benefits. Additionally, it sheds light on the opportunities and challenges faced by organizations in the context of CSR during a pandemic.

An Analytical Study of Merger of Syndicate Bank with Canara Bank

Most companies employ mergers and acquisitions to improve and retain their market standing. The banking business in India is expanding fast now. The Indian banking sector has seen an increase in the number of mergers and acquisitions in the more recent years. This study throws some lights on the recent merger in Indian banking industries and analyses how the merger between Canara Bank and a syndicate bank affected the acquiring Bank's wealth, profitability, and overall performance after the merger was completed. Mergers and acquisitions have been a relatively recent trend in the Indian banking industry. It paves the way for banks to become industry leaders and provide exceptional returns to their investors.

Comprehensive Analysis of Indian Public Sector Banks Financial Performance Using the TOPSIS Method

The government has recently undertaken the consolidation of multiple public sector banks. The primary motivation for conducting this research is to investigate this consolidation effort. The objective of this article is to identify the factors influencing the performance of public sector banks in India and explore the relationships between these factors and the performance of government-operated banks. Within this article, we will analyze financial data from all public sector commercial banks spanning an 11-year period, from 2009 to 2019. Both the system generalized method of moments (GMM) analysis and canonical correlation analysis (CCA) have been employed to assess the impact of determinants on the evaluation of public sector bank performance. The assessment of performance is carried out using the CAMEL framework, which encompasses Capital Adequacy, Assets Quality, Management Efficiency, Earnings, and Liquidity. It's worth noting that the government has recently undergone the consolidation of several public sector banks, which serves as the impetus for this study. The primary aim of this article is to ascertain the variables that shape the performance of Indian public sector banks and their interconnections. Within this research, we will scrutinize financial data from all public sector commercial banks over an 11-year span, spanning from 2009 to 2019. Both the utilization of the system generalized method of moments (GMM) analysis and canonical correlation analysis (CCA) have been deployed to examine how various determinants influence the evaluation of public sector bank performance. The assessment of performance has been conducted through the utilization of the CAMEL framework, an acronym representing Capital Adequacy, Assets Quality, Management Efficiency, Earnings, and Liquidity. This framework is widely employed for appraising the financial soundness of the Indian banking system. The financial well-being of public sector banks (PSBs) holds paramount importance for several reasons. Primarily, PSBs play a pivotal role in delivering financial services to the general populace, especially in rural and semi-urban regions where private banks may not have a significant presence. Consequently, the accessibility of financial services to a broad segment of the population directly influences their financial stability.

Bank Risk, Bank competition and Monetary Policy in the Indian Banking Industry: A Panel Quantile Regression Approach

Bank Risk, Bank competition and Monetary Policy in the Indian Banking Industry: A Panel Quantile Regression Approach

Mudra Loan Disbursement Among Different Social Groups

Indian banking and financial system work as a catalyst to this growth trajectory. To strengthen the micro business segment, a feather has been added under the aegis of GOI in the year 2015 to the formal lending system in the form of MUDRA. It has been a milepost accomplishment in the financial inclusion panorama. Through this system, the endeavour is to bring all the sectors into mainstream and to make financial services available to all the sectors. MUDRA provides different categories and sub-categories of formal loans at a low rate of interest according to the needs and requirements of startups and other micro enterprise units. MUDRA loans have been instrumental in providing financial support to individuals from various social groups, promoting inclusivity and empowerment. It addresses the lack of access to formal credit for individuals from different social groups, who often face difficulties in obtaining loans from traditional banking institutions due to various reasons such as lack of collateral, low income, or limited credit history. It offers customized loan products designed to cater to the specific needs and requirements of small and micro enterprises. MUDRA Credit is accompanied by various support mechanisms such as capacity building, skill development, and business mentoring. These initiatives help borrowers enhance their entrepreneurial skills, manage their businesses effectively, and improve their chances of success.
 It is important to note that MUDRA loans are not limited to any specific social group. They are available to individuals from all social groups who meet the eligibility criteria. The loans have been designed to cater to the diverse needs and aspirations of entrepreneurs across different social backgrounds, facilitating their access to formal credit and promoting entrepreneurship at the grassroots level. The present study utilizes the secondary data including government reports, surveys, and scholarly articles, and case studies, to provide an in-depth understanding of the sub-categories within the Mudra Yojana framework to assess the effectiveness and inclusivity of the Mudra Yojana in reaching marginalized communities. The study period is six years from 2016-17 to 2021-22. The Shishu category recorded the highest number of accounts i.e., 26,70,67,119 along with highest loan disbursement of Rs. 7,31,706.97 among all the categories. The study shows continuous growth among all the sub-categories (except in OBC in Shishu Loans) in all the Mudra Loans Schemes.

Prediction of Bankruptcy and Impact of Credit Risk Management on Profitability of Commercial Banks in India: A Study

Banking system of a country plays a leading role in its economic development. India is also not isolate from such fact. Indian banking system plays a crucial and impactful role in both Individual and economy progress. Since the huge major flow of money into economy is controlled by banking system in India, the system policies, operational efficiencies are having linear impact on the economic development of the country. The efficiency of the banking industry of the country is the sign of economic development and public commercial banks will have to face the competition of private commercial banks as well. Hence, the present study objective is to predict the solvency condition of Indian public commercial banks and the impact of credit risk management on the profitability of commercial banks in India. To fulfil the objectives of the study, the study has been used the secondary data extracted from annual reports of the top three public commercial banks for the period from 2012 to 2022. The data were analysed using a descriptive statistics and panel data regression model and the bankruptcy is predicted using Altman’s Z Score model. the results found that, public sector Indian commercial banks under the pressure to experience the bankruptcy and there is no significant impact of credit risk management on profitability of commercial banks in India.

Artificial Intelligence: A Revolution in the Banking Industry in India

The banking sector is only one of the many areas that artificial intelligence (AI) has the potential to completely alter. In India, the banking sector has adopted AI at a rapid rate in recent years, resulting in increased productivity, better decision-making, and more customer satisfaction. This study looks at how AI has affected the Indian banking sector, as well as its existing uses, difficulties, and potential. This article demonstrates the potential for AI to transform the financial landscape in India through a thorough study of current developments and case studies, and it establishes the foundation for further research and innovation in this field.

Green Accounting Practices and their Influence on the Performance of Commercial Banks: A Conceptual Analysis

The role of the banking sector in India extends beyond promoting economic growth and ensuring financial stability to include offering secure financial services to the population. However, the rapid growth of the economy has led to various environmental challenges. Consequently, the banking sector now faces a new challenge arising from environmental concerns, specifically financial risks stemming from loan defaults and environmental liabilities caused by borrowers. To ensure their stability, banks must embrace green accounting practices when making lending decisions to address these risks and comply with environmental regulations. Green accounting, also known as environmental accounting or sustainable accounting, is an accounting framework that integrates the economic value of natural resources and environmental impacts into conventional accounting practices. By incorporating environmental considerations into their operations, banks can contribute to the development of a more sustainable economy and meet the increasing demand for environmentally responsible financial services. This research paper focuses on exploring the concept of green accounting, its practices, and its implementation by the banking industry in India. Keywords: Banking sector, Economic growth, financial stability, Environmental challenges, Green accounting practices

Market discipline and the risk‐taking behaviour of banks in India

AbstractAfter the financial crisis, the Indian banking system has accumulated a mountain of bad loans which has crippled the banking sector and halted the credit flow to the industry. Several immediate causes for the bad loan crisis have been pointed out. However, poor market discipline, the ultimate root cause of the bad loan crisis, has not been paid adequate attention. This study seeks to investigate how effectively the market disciplinary forces, captured through information disclosure, interbank deposits, concentration and ownership structure, incentivise the Indian banks to adopt prudential risk management by enhancing their risk‐weighted capital ratio. The findings of the study show that information disclosure and interbank deposits do not induce prudential risk behaviour among banks in India. However, with increasing concentration in the banking sector, a higher level of information disclosure effectively induces banks to maintain higher capital ratios, but inter‐bank deposits do not have any significant effect on bank capital. We also observe that government banks maintain lower capital ratios as compared to private banks indicating government banks' higher expectation of government bailout.

Examine the level of environmental, social and governance disclosure in sustainability report – a study of the Indian banking sector

Purpose Sustainable development (SD) is widely acknowledged as the center around which all development efforts should revolve. Banking is a crucial component of SD, and the adoption of sustainable banking practices by various banking institutions is a powerful catalyst for its achievement. This paper aims to investigate the level of adoption of environmental, social and governance (ESG) indicators in India and the extent to which financial institutions use these strategies. In addition, the banks have been classified according to their sustainable banking performance and showing a relationship between ESG and sustainability. Design/methodology/approach An ESG framework has been developed for the Indian banking system that focuses on the behavior of banks. The evaluation of literature helps to identify the gaps in particular frameworks for analyzing sustainable banking practices in developing nations because of the variation in economic criteria between developed and developing countries. An attempt to construct a common framework for measuring the banking sector’s sustainable efforts has been done in the past. Specifically in India, where the social and environmental dimensions of sustainability are of equal importance to governance indicators, these studies fall short of providing relevant indicators. Multiple financial reports, nonfinancial reports, corporate social responsibility reports and business responsibility reports of this sector were analyzed using content analysis techniques against ESG indicators for sustainability attainment. Findings The result of this study shows that both the sectors are disclosing their environmental indicators more as compared to other dimensions. While the analysis says that private companies are going better than public companies in terms of disclosing their ESG indicators. As compared to the international banking sector, adoption of Global Reporting Initiatives standards, United Nations Environment Programme Financial Initiatives (UNEP FI), Green Credit Policy and Equator Principles (EP) is near to the ground in India. IDFC bank is the only entity that started implementing EP practices and Yes bank also is doing a wonderful implementation of the green policies and is the signatory to UNEP FI. Practical implications The current state of sustainable banking in India is reflected in the implementation of the proposed framework. To better integrate sustainability problems into banking, this study provides helpful information for banks and other stakeholders. In addition, this study corrects the lack of research in the Indian context on sustainable banking. Originality/value To the best of the authors’ knowledge by far, this is one of the prime studies to inspect the degree of ESG disclosure by the Indian banking sector in their sustainability report.

A Fuzzy Graph Theory Approach to the Facility Location Problem: A Case Study in the Indian Banking System

A fuzzy graph G is stated to have a set of trees as its tree cover if all the vertices of G are in their union. The maximum weight tree in the tree cover is assumed to be the cost of a tree cover for a fuzzy graph. For an integer β>0, finding a set of trees to cover all the vertices of a graph with minimum cost and at most β number of spanning trees is known as the β-tree cover problem. Combining the tree-covering concept and facility location problem in a fuzzy environment for solving critical real-life problems in the recent era is a more fruitful approach. This issue strongly inspires us to develop a model with a practical algorithm. This paper provides an algorithm and complexity analysis to determine the number of rooted trees s covering the given fuzzy graph. In addition, a model is constructed with three optimization programming problems in the facility location problem and a tree covering fuzzy graphs. The model includes two types of the facility location problem, simultaneously addressing a variable covering radius and a fixed covering radius. A numerical example is provided to further describe the model, then, in the application part of the paper, the proposed model is applied to solve the real-life problem of maximizing demand saturation by minimizing the number of small denominations in the Indian banking system. This problem involves the data input of different indicators in the banking system along with details of the denominations of banknotes.

A STUDY ON EFFICIENCY OF MERGER AS A TOOL FOR FINANCIAL DISTRESS IN INDIAN PUBLIC SECTOR BANKS

Merger has become an efficient tool to cop up with financial difficulties in all the industries. In past few years Indian banking Industry is going through so many merger and the recent merger which has been taken place is of bank of Baroda, Dena Bank and Vijaya Bank. This study has been conducted to know the effectiveness of Merger to cope up which financial distress in these selected banks in terms of their Non-Performing Assets. The study has two objectives one is to understand the concept of Non-Performing Assets of Indian banks and second is to examine the impact of merger on financial performance of selected Indian public sector banks. For the analysis for factors i.e. Gross NPA, Net NPA, Percentage of Gross NPA, Percentage of Net NPA and Net Profit or Loss have been considered for the period of ten financial years which was divided into before and after merger period as the merger of selected banks was took place in 2019. The results of the study show that there is a significance difference between the before merger performance and after merger performance of the selected banks.

COVID-19 crisis and the efficiency of Indian banks: Have they weathered the storm?

The purpose of this study is to determine whether Indian banks were able to weather the COVID-19 storm. We estimate banks’ deposits-generating and operating efficiencies using a two-stage directional distance function-based network data envelopment analysis (DDF-NDEA) approach and seek to capture the immediate impact of COVID-19 on these efficiency measures by comparing their magnitudes in the pre-pandemic (2014/15–2019/20), just 1-year prior to the pandemic (2019/20), and during the pandemic year (2020/21) periods. The study looks at whether the impact of the COVID-19 pandemic was uniform across ownership types and size classes. The empirical findings suggest that the Indian banking system was resilient and withstood the immediate impact of the COVID-19 pandemic. During the study period, however, the large and medium-sized banks experienced some efficiency losses. By and large, regardless of bank group, banks have shown resilience to the shock of the global health pandemic and improvements in efficiency.

Competition, Consolidation and Convergence in the Indian Banking Industry- A path to $5 trillion economy

Banking is the backbone of any economy as it has a direct bearing on financial and economic development. India is currently $3.469trillion economy. To achieve the target of a $5 trillion economy, policy changes for India must include reforms in the banking sector. Inthe banking industry, competition is crucial for maximizing efficiency. The banking sector is going through unprecedented consolidationefforts through mergers and acquisitions. Financial inclusion is aided by consolidation. This gives banks greater resources with which tolend money make investments and expand their geographical reach. The financial sector's convergence is expanding quite quickly.Financial convergence aids banks in portfolio diversification. Financial Convergence relates to all types of interfaces between financialsuppliers and the demand for all types of financial products and services. In this paper, we have specifically discussed the convergencebetween the banking sector and the insurance sector. This paper highlights various approaches to assessing competition, models ofbancassurance, benefits, and challenges of bancassurance for banks, and the expected value of the bancassurance market by 2027. This paperhas analyzed the changes in various financial ratios like Gross Non-Performing Assets (GNPA), Net Non-Performing Assets (NNPA),Common Equity Tier- 1(CET-1) etc. of Union Bank of India after merger. This paper aims to study how a more competitive,consolidated, and convergent banking industry would contribute to making India a $5 trillion economy.

Indian Post Payment Bank: Financial inclusion revolution in India

The Indian financial system has seen several significant changes since 1991. The banking industry is one of the few that has thrived sinceliberalization, and its success is unquestionably tied to the considerable financial reforms adopted by RBI and the significanttechnological improvements that have occurred over the years. In 2014, the Reserve Bank of India (RBI) broadened the variety of banksoperating inside the Indian financial sector. Payment banks and tiny banks are two names for these modern financial institutions. Themajor objective in creating these banks is to increase financial inclusion in underserved rural communities by increasing access tobanking goods and services. The unbanked and underbanked populations may be able to get access to financial services via paymentbanks, a new kind of financial institution. Expanding the availability of financial services is a top priority for them. In this paper, wediscuss the payment banking infrastructure and the benefits that are expected to accrue from it. The Post Payment Banks of Indianfinancial system will be a great first step in providing access to banking services for underserved populations, especially those who aretransient or from low-income families. Is the Indian Post Payment Bank the second phase of financial inclusion following the PradhanMantri Jan Dhan Yojana?This research aims to fill in some of the gaps in our understanding of payment banks by providing a high-leveloverview of their functioning processes and demonstrating how the idea of payment banks accomplishes two goals at once. All of theinformation in this study comes from secondary sources. As a starting step toward its financial inclusion strategy, it is increasing its digitalpayment infrastructure. The second positive effect is that it promotes a more tech-savvy mindset in the Indian banking industry. Theseresults show promise for increasing financial inclusion and access throughout India, especially in rural areas and with a focus on lowincomepeople and small businesses.Key words: Payment Banks, Financial system, Financial Inclusion, Post Payment Banks,

Influence of Green HRM Practices on Employees' Job Satisfaction in Select Scheduled Bank

Environmental concerns have risen to the top of the priority list for any kind of business, including the banking industry. To alleviate environmental challenges, every sector is now implementing Go Green regulations. Banks are launching green efforts to help the banking industry and humanity grow in the future. The Indian banking industry is now aware that it must have social morals and a green sense of reliability, and as a result, the banking industry is expanding its HRM functions intending to align its practises and policies with sustainability goals that reflect an eco-focus. This study hypothesises that there is no significant relationship between the kind of bank and Green HRM practises and employee job satisfaction. With a sample size of 172, this study was done in chosen scheduled banks. With a sample size of 172, this study was done in chosen scheduled banks. Under the findings, most respondents comprehend the notion of Green HRM and consider it of respondents comprehend the notion of Green HRM and consider it as an appropriate concept. There is a substantial variance in the impact of Green HRM practises on different types of banks and employee job satisfaction for certain criteria. Based on the study, the majority of banks are socially responsible and are pursuing green projects

Co-integrating relation between pay, board governance and performance: evidence from Indian banking

Purpose The purpose of the paper is to explore the long-run impact of board governance and bank performance on executive remuneration. More specifically, the study addresses two objectives. First, the authors investigate the long-run relationship between pay and performance hold for the Indian banking industry. Second, the authors explore the moderating role of the board in explaining the relationship between executive pay and performance. Design/methodology/approach The study uses multivariate panel co-integration approaches, i.e. fully modified and dynamic ordinary least square, to explain the co-integrating relationship between executive pay, governance and performance of Indian banks. The analysis is conducted for the period from 2005 to 2018. Findings The results of co-integration tests reveal a long-run relationship between executive pay, board governance and bank performance. The long-run estimates produce evidence in favour of the dynamic agency theory, suggesting that the implications of asymmetric information can be mitigated by associating the current executive pay with the bank performance in the previous periods. The finding of this study reveals that improvements in the board quality serve as a monitoring tool to constrain excessive pay and moderate the executives’ pay. Furthermore, the interaction of performance and board governance negatively impacts pay, supporting a substitution approach. It implies that setting optimal pay packages for executives necessitates enhanced and efficient board governance practices. Practical implications The study recommends significant policy implications for regulators and the board of directors that executive pay significantly responds to the bank’s performance and good board governance practices in the long run. Originality/value This paper provides novel evidence of long-run pay-performance-governance relation using a panel co-integration approach.

A Study on Financial Performance of Small Finance Banks

Small Finance Banks are a new entrant into the Indian banking system with a differentiated focus on financial inclusion. A preliminary assessment of these banks brings out a rapid growth in their branches and asset base marked by a healthy asset quality and high return on assets. These bank shave been reasonably successful in reaching out to under-served sectors. The study aims at the annual report of the 3 companies (Au small finance bank, Equities finance bank and Ujjivan small finance bank) from 2018 – 2022. The annual reports were extracted from the parent website of the companies itself, after IPO have been issued. To identify financial performance of these banks. The findings of study is good and efficient financial performance needs suggestion like A consistent high ratio is needed for the revenue and operation for getting converted to cash, The depreciation rate is to be modified to manipulate the earnings other ways volatility of the same flagg off risks, Expenses must be written off directly from the balance sheet instead of being routed through profit loss statement this helps in inflating the profit, A high yield depicts proper statement of cash and equivalents. A low ratio is needed to display sub stained capes, The cash generated by the business must be siphoned off to check whether reported earnings or revenue are believable, Faster growth in auditors remuneration with regard to companies operation must raise concerns surrounding auditor‟s objectivity. all this prospects are intact and give rise to a good and efficient financial performance of these banks. Based on this study on financial performance we come to conclusion that all this banks perform financially well.