Comparing the Expenses and Revenue Efficiencies of Indian Banks in the Public Sector During the Post-Reform Era

Abstract

The chapter examines and contrasts the cost and profit efficiency of India's public system banks (PSBs) after the reforms to the banking system in 1991. Between 1995 and 2017, or from the beginning of the post-liberalization period until the significant State Bank of India merger in 2017, the data was gathered and reviewed. The average profit efficiency (PE) and cost efficiency (CE) ratings were looked at annually for every PSB in India. The distribution and median of efficiency scores in two subperiods were also assessed using non-parametric Friedman's two-way Annova and Wilcoxon signed rank tests. The results demonstrated that PSBs exhibited profit inefficiencies over the selected time. Over the whole period, PE scores are lower than CE scores. Significant differences amongst public sector banks between 1995 and 2022 were also shown by the findings. Moreover, PSBs' PE has been declining since India's 1991 banking sector reform.