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Abstract
The reforms of 1991 and 1998 have helped improve the performance, profitability and efficiency of the Indian banking system. Prior studies have shown the effectiveness of the reforms on Indian banks in helping improve total factor productivity, efficiency and profitability among other things. Much less has been done to examine how the banking industry of India has fared compared to other countries in recent years. In addition, there is insufficient published research on the performance of the public and private banks in the wake of the financial crisis, which is a true litmus test. Th e purpose of this paper is to analyze the growth of the banking sector of India, from 2011-2015. The analysis is conducted in two parts: (a) examination of the performance of consolidated operations of private and public banks in India in the last ten years and (b) comparison of the performance of the Indian banking sector share price performance to the banking sectors and overall market indices of other developedand developing countries over the last 2011-2015.
Key words: public sector banks (PSBs), private sector banks (PVBs) and foreign banks (FBs), external commercial borrowings (ECBs)
1. Introduction
The Indian banking System has undergone a change after the nationalization of the Banks in 1969/1980. Both the NarasimhamCommittess (1991 and 1998) had emphatically stressed to enhance the efficiency and viability of the Indian Banking System. The Banking Sector reforms had transformed the Banking System through operational flexibility, functional autonomy and leveraging technology thereby improving efficiency, productivity and profitability of the system.
With the introduction of Financial Sector Reforms, Indian Banks have emancipated from regulated regime to a deregulate competitive environment. Banks were earlier subjected to strict regulations with respect to deposit and lending rates, disbursement of credit, expansion of branches etc. profitability was not considered as an important parameter for performance of the Banks on account of imposition of social responsibility.
The Banking Sector Reforms have brought in a metamorphosis in functioning of the Banks. Increased competition reduced barrier to entry, total deregulation of interest rates, increased functional autonomy etc. were the key components of reforms which has enhanced efficiency, innovation, growth in productivity and incentive for improvement. The outcome of reform measures predominantly where decline in market share of...