Banking 'efficiency': Public sector banks beat private peers in new SBI list

June 18, 2024

Synopsis
​​The study evaluates efficiency by examining how effectively banks utilise their resources to produce output at an optimal scale.

According to a study conducted by SBI, India's largest state-owned bank, public sector banks in India demonstrate greater "efficiency" compared to their private sector counterparts, ToI reported on June 18.

The study evaluates efficiency by examining how effectively banks utilise their resources to produce output at an optimal scale.

In terms of individual bank performance over the full sample period from FY06-23, SBI leads the public sector banks with a score of nearly 98%, followed by Union Bank of India at 92.5%.

In the private sector, HDFC Bank ranks highest with a score of nearly 98%, followed by Axis Bank at 94.4%.

The study revealed that public sector banks have generally been more efficient than private banks, except during FY19-23, likely due to mergers and the rationalisation of businesses, branches, and employees.

Despite undergoing numerous structural changes, PSBs have maintained an efficiency level of 82.8%, outperforming all scheduled commercial banks at 81.2%, private banks at 79.6%, and foreign banks at 78.2%.

[The Economic Times]