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Abstract
The research examines the role of Indian banks in financial inclusion. Among the sixteen inefficient banks under CCR model, six are also efficient under variable return scale assumption based on Banker Charnes Cooper (BCC) model. Despite these banks' good performance as per their financial statement, they are not so in financial inclusion. For that, the inefficient banks should minimise their input level for the given output. Results indicate that schedule commercial banks in India are utilizing 94.87 per cent of resources to produce desired outputs with respect to financial inclusion. The results further reveal that selected public sector banks operate at 97.48 per cent and private sector banks operate at 92.26 per cent level of efficiency. Their input could be reduced by 2.52 per cent for public sector banks and 7.74 per cent for private sector banks for the same level of output.
Key Words: Financial Inclusion, Data Envelopment Analysis, Public Sector banks, Private Sector banks
JEL Classification: G21, G29.
Without presence of bank branches, there can be no banking access for people. Public sector banks (PSBs) started their journey since before nationalization of banks in 1969. Banks have been nationalized in two phases one in 1969 and another in 1980. Rest of the banks those who are not nationalized termed as old private sector banks (Pvt. SBs). From 1993 again RBI started granting license to Pvt. SBs for expansion of branches in rural areas as well as minimization of population per branch. In the present market these Pvt. SBs captured a major share of banking market which is now called as new Pvt. SBs. Their growth rate of number of branches, number of bank employees, bank deposits and bank credits was much impressive than the PSBs. All these PSBs and Pvt. SBs are playing a major role towards financial inclusion in India by expanding their branches.
Financial inclusion provides formal financial services with improved range, availability and quality for those who are financially excluded. The banks or formal financial institutions provide variety of financial services to their customers, like deposits, withdrawals, loans, payment services, remittance facility and insurance products to lowincome and poor households and their business entities. Regulator started its journey of financial inclusion by nationalization of banks. While institutional innovations...