Public Sector Banks Research Articles

A Comparative Study of Non-performing Assets Between Some Public and Private Sector Banks in India

The Indian banking sector is the backbone of the Indian Economy because it reflects the financial and economic condition of the nation. The failure of the banking sector will adversely impact on the other sectors. The earning capacity and profitability are highly affected because of the existence of NPA. There are many research conducted on the topic of non-performing assets of various banks but in this research, we tried to make a comparative study of some public and private sector banks concerned with NPA.

Analysis of public sector banks on the basis of equity research, determinants of banks profitability and nonperforming assets

Analysis of public sector banks on the basis of equity research, determinants of banks profitability and nonperforming assets

STUDY OF RISK MANAGEMENT IN BANKING SECTOR

When it comes to the change of an economy, the function that financial institutions of a country perform is absolutely essential. The financial performance of a bank over the course of its history, as well as its capacity to manage risks such as market risk, credit risk, and liquidity risk, can be used to evaluate the progress that banking institutions have made. In the 1980s, the United States of America first implemented a supervisory framework model known as "CAMEL" in order to ascertain the overall state of the bank. It is possible for the model to serve as an efficient instrument for guidance and management, as it is able to forecast future risks that may have an impact on a bank. The purpose of this study is to evaluate the performance of three "public sector banks" and three "private sector banks" in India using the CAMEL methodology for a period of two years, specifically 2022 and 2023. A bank's financial strength is determined using the CAMEL model, which rates the banks from best to worst based on characteristics such as "capital adequacy, asset quality, management efficiency, earning, and liquidity." characteristics such as these are used to determine the strength of a bank. According to the findings of the study, the State Bank of India, the Central Bank of India, and the IDBI bank are the three banks that perform the best in terms of the CAMEL parameters among public sector banks. Similarly, according to the CAMEL composite index rating, the private sector banks in India that hold the top ranks are ICICI bank, Kotak Mahindra Bank, and HDFC bank. Key Word : CAMEL model evaluates financial health of banks using capital, asset quality, management, earnings, and liquidity.

E-BANKING, ITS GROWTH & FUTURE IN INDIA

Businesses make investments in e-business and the technology that supports it. Applications for e-business, like supply chain management and customer relationship management, boost innovative product and service offers, strong customer relationships, and transaction efficiency and scope economies. Companies find it challenging to turn these advantages into revenues or economic value, though. Many enterprises that have started online have failed to generate profits. According to a 2001 AMR Research Inc. survey, businesses would continue to spend more on e- business even in a recession. At best, though, these investments have yielded a mediocre return. Conventional Banking To conduct standard banking functions including cash withdrawals, fund transfers, and account inquiries, clients must physically visit the bank's branch. However, clients using e-banking can complete these transactions 24/7 from the comfort of their homes or workplaces using desktops or laptops and electronic media. We call this banking—anytime, anyplace. Consumers don't need to wait in line, deal with tellers, deal with constrained banking hours—all they need to do is visit the bank's website to examine their account details and do transactions as needed. The Banking System in India Scheduled and non-scheduled banks were distinguished under the Reserve Bank of India Act, 1934. The Second Schedule of the RBI Act, 1934 lists scheduled banks, which include state co-ops, regional rural banks, and commercial banks (both foreign and Indian). The banks not listed in this schedule are considered non-scheduled. Three types of banks comprise India's organized banking system: co-ops, regional rural banks, and commercial banks. The Reserve Bank of India, the nation's highest monetary and financial body, is in charge of managing the banking sector. Banks for commerce, which have been in place for many years encourage urban savings and make them available to trading and industrial organizations for working capital needs. Commercial banks were divided into public sector banks, sometimes known as nationalized banks, and private sector banks after 1969.

A study of stress Management practices on public and private sector Bank Employees

A study of stress Management practices on public and private sector Bank Employees

Interest subvention for crop loans in India: Win-win or win-lose ?

Interest subsidies on crop loans are a common feature of rural credit markets in developing countries. The objective behind giving interest subsidies is two-fold – increasing access to credit and improving loan repayment rates, and is therefore regarded as a win-win for the borrower and the lender. This study focusses on a policy intervention that provides interest subsidy for crop loans availed under the Kisan Credit Card (KCC) scheme - India's flagship program to provide short-term agricultural credit for farmers. Using a unique dataset from a large public sector bank in India, we evaluate the causal impact of this intervention on both credit access and loan repayment behavior. We also capture the heterogeneous impact of the policy on new and existing borrowers. The results of econometric analysis - a combination of matching and difference-in-difference techniques - show a substantial increase (35%) in new loans, in addition to 20% decrease in the overall loan amount, indicating increased breadth and depth of access. However, contrary to standard economic theories, we observe a reduction in odds of repayment. Further, we find that the interest rate subsidy worsens the repayment rates of existing borrowers too. Our findings underscore the importance of various operational and behavioral aspects of the agricultural lending ecosystem to design win-win credit policies.

Capital Adequacy Ratio — a Panacea for Indian Banks during COVID-19 Pandemic

A stable financial system acts as a catalyst for the economic growth and development of a country. The healthy banking sector is the core of a sustainable economy as banks act as intermediaries between depositors and lenders of money. In the surge of the COVID-19 pandemic, the financial sector witnessed significant transitions in terms of digital transformation. In India, the banking sector has remained resilient throughout the pandemic due to government and regulators’ policy efforts and the maintenance of capital adequacy requirements. Banks have maintained higher capital buffers, better liquidity requirements, and lower leverage, cushions against pandemic shock. In the present paper, the researcher provides a conceptual elucidation of Basel norms, analyzes the component-wise Capital to Risk-Weighted Asset Ratio (CRAR) of Indian Scheduled Commercial Banks (SCBs) and examines the CRAR position of SCBs during the COVID-19 pandemic. The study also evaluated the distribution of SCBs by CRAR and examined the capital ratios of public, private, and foreign sector banks from 2016 to 2022. The ANOVA analysis output revealed a significant difference in the CRAR of public, private, and foreign banks. The study concludes that adequate CAR levels help banks mitigate the risks that arise during pandemic crises and aid them in conducting their banking operations effortlessly. Further, it concludes that public sector banks (PSBs) still lag behind their counterparts in maintaining adequate CRAR, and hence, they need to reduce the accumulation of risk-weighted assets (RWA).

IMPACT OF NPA (NON-PERFORMING ASSETS) ON THE PROFITABILITY PERFORMANCE OF THE SELECTED PUBLIC AND PRIVATE SECTOR BANK

The banking sectors performance is crucial for any economy as it reflects the countrys financial health. Banks play a crucial role in mobilising funds from various sectors of the economy, including both priority and non-priority sectors, to finance diverse economic activities.For many years, the banking industry has faced significant challenges due to unrecovered loans.The presence of Non-Performing Assets (NPAs) has significantly hindered the development and growth of the economy.This study delves into the impact of NPAs on the profitability performance of selected public and private sector banks in India from 2018-19 to 2022-23. Analysing key ratios like Gross NPA, Net NPA, and Return on Assets (ROA), sheds light on the relationship between NPAs and bank performance. The findings highlight higher NPA levels in public sector banks, adversely affecting their profitability. Moreover, a significant correlation between NPAs and profitability underscores the imperative of effective NPA management for enhancing bank profitability. These insights are crucial for bank management, policymakers, and regulators to devise strategies for mitigating NPAs and fortifying the banking sector.

Empowering Financial Inclusion: The Crucial Role of Public Sector Banks in Implementing Pradhan Mantri Jan-Dhan Yojana (PMJDY)

Abstract: The role of public sector banks (PSBs) in advancing the Pradhan Mantri Jan Dhan Yojana (PMJDY) is critical to achieving financial inclusion in India. PSBs play a pivotal role in ensuring the success of PMJDY by facilitating universal access to banking services, empowering individuals with financial knowledge, providing credit and insurance services, promoting digital financial transactions, and contributing to the overall economic development and well-being of marginalized populations. Their proactive involvement and strategic interventions are essential in building a more inclusive and resilient financial ecosystem in India. This paper examines the multifaceted contributions of PSBs towards PMJDY, including account opening initiatives, integration with Direct Benefit Transfer (DBT) schemes, financial literacy programs, promotion of microinsurance and credit facilities, encouragement of digital payments, and robust monitoring and reporting mechanisms

Examining the portfolio carbon footprint of Indian banking system

This paper examines the portfolio carbon footprint of Indian banking system. To this end, we combine the emissions data from India's Biennial Update Reports to UNFCCC and Reserve Bank of India's bank database from 2010 to 2016; apply Network for Greening the Financial System's backward-looking methodology and Partnership for Carbon Accounting Financials Standards in conjunction with Leontief's Input-Output technique to estimate the weighted average carbon intensity (WACI) of bank's loans portfolio at three levels – System level, Bank group level and Spatial level. Our major findings include-first, at system level, the carbon footprint of Indian banks shows a rising trend over the study period with the aggregate WACI of bank loans increasing by 9.4% from 332.5 tCO2e/US$ million in 2010 to 363.7 tCO2e/US$ million in 2016. Second, at the group level, while the financed emissions of public sector banks have plateaued, for private sector banks they have nearly doubled during the study period, suggesting the increased exposure to carbon intensive assets. Third, on the spatial level, top five regions by WACI include Delhi, Maharashtra, Gujarat, Tamil Nadu, and Telangana in descending order.

A STUDY ON ETHICAL PRACTICES OF PUBLIC SECTOR BANKS IN THIRUVANANTHAPURAM DISTRICT

The bank is now a larger and representative institution for the protection of funds and financial of the society. A banker performs many more task than mere regular and conventional banking. As such the role and status of the banker in the modern society has changed significantly. When the banker has acquired a new status and role in the society it should perform the duty in a more diligent and appropriate manner. The performance of the duty has a definite relationship with the kind of ethical practices, values, and system The present study was undertaken the ethical practices of public sector banks in Thiruvananthapuram district. The study mainly focuses on the importance of ethical practices and value building exercise in organizations. The proper functioning of an organization requires various rules and regulations, principles and policies. Due to different type and nature of organizations, the policy formulation and problem solving strategy differs from one organization to other. However, in every work place, the organization adopts a set of rules and policies which are essential for its growth and development. Among various factors, the implementation and adhering to ethical practice and value building is the main foundation for the regulation of organization. Yet, to examine factors as to understand the implication of ethics and value practice in an organization are complex in nature.

Operational efficiency in the presence of undesirable byproducts: an analysis of Indian banking sector under traditional and market-based banking framework

PurposeIn the backdrop of an increase in market-based banking activities, this paper aims to study operational efficiency of Indian banking sector during 2009–2010 through 2017–2018 considering Capital Gain and Gain from Forex Market (as desirable outputs) and Slippage (as undesirable byproducts) simultaneously, along with Advances – a desirable output considered in the traditional banking performance assessment literature. This enables to have an assessment of performance (as captured by the measured efficiency scores) of Indian Banks following an alternative viewpoint about the banking activities. The authors also explain such efficiency scores in terms of bank-specific factors, banking industry competition scenario and interest rate channel.Design/methodology/approachUsing data envelopment analysis (DEA) method, the authors estimate six alternatives but interlinked operational efficiency scores (TES) of the Indian domestic commercial banks. In the second stage, they explain such TES in terms of bank-specific factors, banking industry competition scenario and interest rate channel.FindingsThe authors observe that the private sector banks as a group outperform those under public ownership. Moreover, although the private sector banks could maintain somewhat consistency in their operational efficiency performance over the sample period, public sector banks clearly show a declining tendency. The second stage econometric estimation results show that the priority sector lending has a negative effect on efficiency. Interestingly, the authors get varying results for the relationship between maturity and efficiency score depending on banks’ strategies on stressed assets management. Furthermore, the analyses result that banks are not so efficient in managing relatively larger-volume loans. It is also observed that banks’ efficiency positively depends on the Credit-to-Deposit (CD) ratio. It is found that the overall operational efficiency of the banks to manage their credit risk portfolio improves with a reduction in the lending rate (LR). However, the interaction of lending activities and capital market shows that with the increase in LR, corporate borrowers may switch to capital market to explore for desired funds, which may induce the banking sector to investment in capital markets and create a positive market sentiment.Originality/valueLiterature, although scanty, is there dealing stressed assets of a bank as some undesirable byproducts of its operational and business activities. However, such literature mostly done within the traditional framework of banking business activities and modern market-based business activities are almost absent in the literature. The authors have done it in the present study.

COMPARATIVE FINANCIAL ANALYSIS OF STATE BANK OF INDIA AND HDFC BANK

India's banking sector has come under scrutiny. The cost of finances for banks has increased significantly as the Reserve Bank of India( RBI) raised interest rates to help the falling Indian currency, the Rupee. This may show up as a rise innon-performing means( NPAs) and a drop in profitability. Internal and external factors have an effect on bank profitability. The end of this paper is to compare and estimate the fiscal performance of India's largest public and private sector banks and also to understand their trends of NPAs through secondary data analysis. Both banks' earnings were guided by bank-specific criteria and threat factors. influence fiscal rates of SBI were set up at advanced dereliction threat than HDFC. Productivity measures were the crucial motorists of gains at India's largest private sector bank HDFC but not at SBI. Asset operation effectiveness measures were nearly same of both the banks. NPA rates were much advanced at India's largest public sector bank SBI. The single most important determinant of SBI proved to be the liquidity rates. Two sample T test assuming equal dissonances was also conducted to check if there was significant difference between the NPA rate of SBI and HDFC bank over the last 3 times.

IMPACT OF BANK MERGER ON NSE NIFTY: A CASE STUDY ON MERGING OF BANKS IN 2020

Narasimham Committee in the late 1990s recommended consolidation through a process of merging of strong banks. The Committee recommended the closure of the banks those are weaker in comparison to other banks, instead of merging them. The biggest positive aspect of the merging of banks will lead to the formation of banks of scale. There are a large number of banks which are of very small in size in terms of global standards & their growth is restricted by their inability to expand. India needs more global level banks to face global competitiveness. The recent merging of the banks were aimed at addressing this problem. The announcement of merging of the banks by Finance Minister Nirmala Sitharaman on 30/08/2019, raised the expectation that it would be the most significant event that the country has witnessed since nationalization. The intention to create banks that could compete with the banks of global level & would also serve the needs of a $ 5 trillion economy by 2025. Keeping in view the above intentions, Finance Minister, Nirmala Sitharaman, declared the merging of ten public sector banks into four entities to improve their liquidity, tackling the issues of non performing assets & risk diversification. The present paper aims to explore the impact of the merging of the Banks on NSE Nifty, with respect to Stock returns, Volume of share trading & Volume of share turnover.

The Big Bank Scam: Failure of Corporate Governance

The case deliberates the series of events exposing serious shortcomings in corporate governance and risk management practices of one of India’s oldest and most venerable financial institutions but also cast a glaring spotlight on various unfathomable issues of corporate governance such as weak institutionalisation of whistleblowing mechanism, ethical lapses and regulatory oversight within the banking sector. The case provides an opportunity to understand the key components of corporate governance structure and consequences of poor corporate governance. The case highlights the responsibility of the board of directors and audit committee and discusses the changes required in the corporate governance structure necessary to ensure that such incidents do not take place. The case attempts to unearth the weaknesses in the bank’s internal processes that led to a scam of this magnitude and why it remained ongoing and undetected for several years. We found that there is a need for banks to leverage the latest advancements in technology to upgrade their internal functions and processes and make them more accountable and transparent. Further, it also opens the debate on whether public sector banks and other financial institutions should be guided solely by the profit maximisation motive, or they also meet their social obligations.

Effectiveness of internal auditing from the lens of internal audit factors: empirical findings from the banking sector of Bangladesh

Purpose This study aims to assess the impact of determinants on the effectiveness of internal audit (IA) within the banking industry of Bangladesh. Design/methodology/approach The data was obtained through 152 survey questionnaires from a total of 43 privately owned and six state-owned commercial banks in Bangladesh. The analysis was conducted using structural equation modeling. Findings The findings demonstrate that the independence of internal auditors and the quality of IA substantially impact enhancing the efficiency of IA. On the other hand, the competence of internal auditors and management support in IA functions do not significantly impact the effectiveness of IA. Practical implications The study’s findings may have significant policy implications for the government, regulators, internal auditors, management committees and other stakeholders in establishing programmes to enhance the efficacy of IA as a component of banking audit management reforms. Originality/value This study makes three distinct contributions to the existing literature. Firstly, previous literature focused on the determinants affecting the external audit efficiency of the public companies and banking sectors in Bangladesh (Hasan, 2018; M. M. U. Reza, 2021). In this study, the author enhances the research by presenting empirical findings on the IA effectiveness of banks. Secondly, the author expands the research by incorporating both private and state-owned commercial banks as samples. Thirdly, the study is unique given that it investigates the effectiveness of IA in response to the recent financial scandals in the banking industry of Bangladesh (The Daily Star, 2023).

A Novel Pythagorean Approach Based Sine-Shaped Fuzzy Data Envelopment Analysis Model: An Assessment of Indian Public Sector Banks

A Novel Pythagorean Approach Based Sine-Shaped Fuzzy Data Envelopment Analysis Model: An Assessment of Indian Public Sector Banks

Does the Too-Big-To-Fail status affect depositor’s discipline: a Gaussian mixture model algorithm approach

PurposeThis study empirically demonstrates a contradiction between pillar 3 of Basel norms III and the designation of Systemically Important Banks (SIBs), also known as Too Big to Fail (TBTF). The objective of this study is threefold, which has been approached in a phased manner. The first is to determine the systemic importance of the banks under study; second, to examine if market discipline exists at different levels of systemic importance of banks and lastly, to examine if the strength of market discipline varies at different levels of systemic importance.Design/methodology/approachThis study is based on all the public and private sector banks operating in the Indian banking sector. The Gaussian Mixture Model algorithm has been utilized to classify banks into distinct levels of systemic importance. Thereafter, market discipline has been observed by analyzing depositors' sentiments toward banks' risk (CAMEL indicators). The analysis has been performed by employing the system Generalized Method of Moments (GMM) to estimate models with different dependent variables.FindingsThe findings affirm the existence of market discipline across all levels of systemic importance. However, the strength of market discipline varies with the systemic importance of the banks, with weak market discipline being a negative externality of the SIBs designation.Originality/valueBy employing the Gaussian Mixture Model algorithm to develop a framework for categorizing banks on the basis of their systemic importance, this study is the first to go beyond the conventional method as outlined by the Reserve Bank of India (RBI).

A Comparative Study On Service Quality Between Public And Private Sector Banks With Reference To Coimbatore City

Service quality is the delivery of excellent or superior service relative to customer expectation. It is a focused evaluation that reflects the customer’s perception of the specific dimensions of service. Sometimes, as in the case of a pure service, Service quality may be the most critical determinant of customer satisfaction. Providing quality service would mean the art of identifying customer’s needs and excel in them.

Comprehensive intuitionistic fuzzy network data envelopment analysis incorporating undesirable outputs and shared resources

The economic growth rate is intricately linked to the efficiency and effectiveness of the banking industry. A widely applicable mathematical technique for such assessments is Data Envelopment Analysis (DEA), which evaluates the relative efficiency of Decision-Making Units (DMUs) by comparing their inputs and outputs. Traditional DEA treats DMUs as black boxes, neglecting internal processes that contribute to inefficiencies in individual DMUs. Additionally, it assumes precise values for inputs and outputs that do not apply to real-world problems. This study introduces a comprehensive network series of two-stage DEA, incorporating shared inputs and intermediate measures, undesirable outputs, external inputs and outputs, initial inputs, and terminal outputs. The network two-stage DEA is extended to intuitionistic fuzzy circumstances to address uncertainty. In this extension, a non-linear intuitionistic fuzzy number, namely a parabolic intuitionistic fuzzy number, represents higher-order imprecise datasets. An illustrative example validates the proposed methodology, and comparisons with existing methods are conducted. Moreover, the methodology is applied to assess the efficiency of Indian public sector banks, demonstrating its applicability and showcasing the efficacy of the procedures and algorithms used. Decision-makers can make better choices using optimal efficiency values to gain insights into inputs, intermediate measures, and outputs.•The research study focused on a network two-stage DEA model, incorporating undesirable outputs and shared resources in the presence of uncertainty.•The methodology involves solving the network two-stage DEA model using parabolic intuitionistic fuzzy numbers.•The experimental analysis involves assessing the efficiency of Indian public sector banks.