Productivity analysis of banking sector
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Productivity Analysis Of Banking Sector. Productivity. Meaning : “Productivity refers to the capacity/efficiency of banks to produce maximum output with the available input resources” Productivity of banks has two facets: Commercial Productivity Social Productivity.

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Productivity Analysis Of Banking Sector

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Productivity analysis of banking sector

Productivity Analysis Of Banking Sector


Productivity

Productivity

Meaning :

“Productivity refers to the capacity/efficiency of banks to produce maximum output with the available input resources”

Productivity of banks has two facets:

  • Commercial Productivity

  • Social Productivity


Productivity measures

Productivity Measures

Branch Productivity (Per Branch Indicators)

It shows how much the bank groups produce at

branch level. It is a tool to measure branch

efficiency.

  • Deposits Per Branch :Max. in Foreign Banks 378.03cr followed by NPSBs 92.32

  • Credit Per Branch : Highest in Foreign Banks 290.75cr followed by NPSBs 65.76cr

  • Business Per Branch : Highest in 668.77cr followed by NPSBs 158.12 cr

  • Total Earnings Per Branch

  • Total Expenditure Per Branch


Number of branches

Number Of Branches


Productivity measures contd

Productivity Measures Contd….

Labor Productivity (Per Employee Indicators)

It is the indicator of long term viability of banks which

shows contribution of an employee over the total output.

This ratio helps in checking whether the bank group is

under or over staffed.

  • Deposits Per Employee : Max. in Foreign Banks 5.32cr followed by NPSBs 4.96cr, poorer in SBI & its Associates 1.31cr.

  • Credit Per Employee : Max. in Foreign Banks 4.09cr, poorer in SBI & its Associates 0.64cr

  • Business Per Employee : Max. in Foreign Banks 9.42cr, poorer in SBI & its Associates 1.96cr


Per employee indicators labor productivity contd

Per Employee Indicators (Labor Productivity) Contd….

  • Total Earnings Per Employee

  • Total Expenditure Per Employee

  • Establishment Expenditure Per Employee

  • Spread Per Employee


Productivity measures contd1

Productivity Measures Contd….

Operational Productivity

It is the measure of financial efficiency which indicates

operational productivity as percentage of total assets.

  • Interest Income As Percentage Of Total Assets : Max. in OPSBs 8.73% followed by Foreign Banks 7.75%.

  • Spread As Percentage Of Total Assets : Max. in Foreign Banks 2.97% followed by Nationalized banks 2.93%.


Operational productivity contd

Operational Productivity Contd….

  • Non-Interest Income As Percentage Of Total Assets : Max. in Foreign Banks 2.72% followed by OPSBs 1.96%

  • Burden As Percentage Of Total Assets : Max. in Foreign Banks 2.26% followed by Nationalized banks 2.13%.

  • Net Profit As Percentage Of Total Assets : Max. in Foreign Banks 1.33% followed by OPSBs banks 1.04%.


Suggestions to improve productivity

Suggestions to improve productivity

  • The PSBs should opt for computerization & IT for their survival & to compete with other new private sector banks and foreign banks along with the objective of social banking.

  • Supervisory and regulatory offices should be made responsible for and accountable for lapses on the part of branches under their control

  • In view of huge establishment costs the VRS should be adopted to void these costs of overstaffing.


Suggestions to improve productivity1

Suggestions to improve productivity

  • Policies and programmes should be revised.

  • Political interference should be eliminated in order to make PSBs more effective.

  • Easy terms for the sanction of priority sector advances should be introduced.

  • More functional autonomy should be given to PSBs.


References

References

  • Saveeta Saggar, Commercial Banks In India

  • R.P.Nainta, Banking System

  • R.K. Uppal, Banking Sector reforms in India


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