CHAPTER - 6

PERFORMANCE ANALYSIS OF PRIVATE

SECTOR BANKS IN INDIA
(In First and Second generation reform period-1991-92 to 2003-04)

We have discussed about the performance of public sector banks in the

chapter five with analysis of all the financial performance indicators and
parameters and found that the public sector banks have made significant
progress in First as well as Second generation reform period from the year
1991-92 to 2003-04. Now we will analyse the performance of private sector
banks in India during the above mentioned period and see the comparative
picture of public sector banks and private sector banks.
6.1 INTRODUCTION

This section is devoted to evaluate the performance of domestic private

sector banks during the period 1992-93 to 2002-03 in which reform measures
are under implementation. The same parameters are used to measure the
efficiency and profitability of private sector banks, which are used for Public
Sector Banks.

This section is also divided in to Three Parts, as was done in the

previous Section. Part -I deals with the evolution of domestic private sector
banks in India. Part-II analyses the performance of private sector banks-old
and new-during the study period 1992-93 to 2002-03.and Part-III is devoted to
period-wise analysis of performance of Private Sector Banks in terms of
efficiency and profitability. Grouping of banks is done on the basis of
composite score arrived at through principle component analysis. The list of
Private Sector Banks is as follows:

188

Old Private Sector Banks

1. Bank of Rajasthan Ltd.

2. Catholic Syrian Bank Ltd.
3. City Union Bank Ltd.
4. Dhanalakshmi Bank Ltd.
5 Federal Bank Ltd.
6. ING Vysya Bank Ltd.
7. Jammu and Kashmir Bank Ltd.
8. Karnataka Bank Ltd.
9. Karur Vysya Bank Ltd.
10. Lakshmi Vilas Bank Ltd.
New Private Sector Banks

1. Bank of Punjab Ltd. (since merged with Centurian Bank)

2. Centurian Bank of Punjab (since merged with HDFC Bank)
3. Development Credit Bank Ltd.
4.HDFC Bank Ltd.
5.ICICI Bank Ltd.
6.IndusInd Bank Ltd.
7.Kotak Mahindra Bank Ltd.
8.Axis Bank (earlier UTI Bank)
9. Yes Bank Ltd.

189

6.2 PRIVATE SECTOR BANKS-EVOLUTION

Historically, the private sector banks played a crucial role in the growth
of joint stock banking in India. The first half of the 20th century witnessed
phenomenal growth of private sector banks. As a result in 1951, there were
566 private banks of which 474 were non-scheduled and 92 scheduled
classified on the basis of their capital size. The role of private sector banking
started declining when the Government of India entered banking business
with the establishment of State Bank of India in 1955 and subsequently two
rounds of bank nationalization one in July 1969 (14 major banks), another in
April 1980 (take over of 6 banks). Consequently, the presence of public sector
banks has increased.

At present, there are 32 private banks comprising of 24 old banks,

which existed prior to 1993-94 and eight new private banks, which were
established during 1993-94 and onwards after the RBI announced guidelines
in January 1993 for establishment of new banks in private sector following the
recommendations of Narasimham Committee-I (1991). Compared to New
private sector banks, the old banks are smaller in size. For example, at end
March 2000, the average net worth of the 24 Old Private Banks (OPBs) was
Rs.179.67 Crore per OPB compared to that of the New Private Bank (NPB) at
Rs. 479.88 Crore per NPB. The OPBs are essentially regional in character
although some of them have scattered presence in areas other than in and
around the areas of their origin. The number of branches of the NPBs was
999 at end March 2003, while those of OPBs 3491. The NPBs are extremely
cautious in expanding their branch network and business because their
managers, mostly drawn from the public sector banks, know very well the ills
of unbridled expansion of branches by public sector banks in the postnationalization era.

The Narasimham Committee-I, that

advocated competition in the

banking industry, made unequivocal recommendation to allow private and

foreign banks into the industry. Acting on the recommendations of the
committee, the RBI laid down guidelines for the establishment of the private
190

sector banks on January 1993. The guidelines prescribed that the private
banks should be established as public limited companies under the Indian
Companies Act: 1956. The paid-up capital shall not be less than Rs. 100
Crore. The new guidelines issued in 2001 raised the minimum paid-up capital
to Rs. 200 Crore, which shall be enhanced to Rs. 300 Crore within three
years after the commencement of business. The promoters' share shall not
be less than 40 per cent and the voting right of a shareholder shall not exceed
10 per cent. The new banks should avoid shortcomings such as unfair preemption, concentration of credit, cross-holding of industrial groups, etc. Those
banks which intent to establish main office in a center where no banking is
having such office is to be preferred. These banks are required to observe
priority sector lending targets as applicable to other domestic banks. The
guidelines aim at ensuring that the new entrants are ab initio financially viable
and technologically up-to-date. While granting approvals for OPBs, one of the
considerations before the RBI was that the new banks would start functioning
in a professional manner giving clear signals to the effect that would improve
the image of commercial banking system and give confidence to the
depositing public.

Accordingly, nine banks were set-up in private sector including some by

development financial institutions. Prominent among them are ICICI Bank,
GTB, HDFC and IDBI bank. Another interesting development was merger of
some banks. Bareily Corporation Ltd merged with Bank of Baroda in 1999,
Times Bank merged with HDFC Bank in 1996, Bank of Madura Ltd merged
with ICICI bank in 2001 and Nedungadi Bank Ltd merged with Punjab
National Bank in 2003. With regard to branch expansion, banks attaining
capital adequacy norms and prudential accounting standards can set up new
branches without the prior approval of RBI. Banks have the freedom to
rationalize their existing branch network by relocating branches, opening of
specialized branches, spinning off business, setting up of controlling offices,
etc.

In terms of size, there are Goliaths and Davies among the banks. On one
extreme, there is the omnipresent big bank like the SBI (Public Sector Bank)
191

with 9017 branches. On other extreme, there is the small private sector bank;
the Ganesh Bank of Kurundwad Ltd. located in an obscure town in
Maharashtra operating with only 30 branches. The youngest bank is the
United Bank of India established in 1950. It has been struggling to improve its
market share. The Benares State Bank Ltd. is the oldest. bank established in
1871 in the holy city of Varanasi. It remained smaller in size compared to the
youngest NPBs. The Bharat Overseas Bank Ltd, which came into being in
1973 is the only private bank having a branch abroad. Between the two
extremes, there are 21 banks, which are regional in character and operate
with different levels of efficiency.

The New Private Sector Banks started publishing balance sheets since
1995-96. In that year the share of OPBs in total assets was 6.2 per cent while
that ofNPBs was 1.4 per cent. The NPBs had improved their market share to
5.3 per cent by 1999-2000 at the cost of PSBs. The share of private sector
banks in the total number of branches in 1992-93 was only 8.33 percent. In
2002-03, the share of private sector banks in total bank branches is 8.75 per
cent. Table 6.1 shows the trend in the number of branches of PBs , during the
period 1992-93 to 2003.

The Table 6.1 reveals that the number of branches of old private sector
banks which increased up to 1997-98, showed a fluctuating trend since then.
There has been a little more than 10-fold increase in the number of branches
of NPBs representing an average growth rate of 45.46 per cent.

Table 6.1
Trend in Number of Branches of Private Banks: 1992-2003
Year

OPBs

NPBs

PBs

1992-93
1993-94

3867
3993

3867
3993

1994-95

(3.26)
4087

(3.28)
4087

1995-96

(2.35)
4233

82

(2.35)
4315
192

(3.57)

(-)

(5.58)

1996-97

4336
(2.43)

137
(67.07)

4473
(3.66)

1997-98

4437,'
(2.33)"

227
(65,69)

4684
(4.72)

1998-99

4154
(-6.38)
4237
(2.00)
4266
(0.68)
4323

1999-2000
2000-01
2001-02
2002-03
Average

(1.34)
391
(-1 .25)
(-1.25)

345
(51.98)
460
(33.33)
836
(81.74)
988
(18.18)
990
(0.20)
(45.46)

4499
(-3.95)
4697
(4.40)
510
(8.62)
5311
(4.10)
4481
(-15.63)
(2.50)

Note : Figures in parentheses indicate Growth rate over previous years.

Source: Compiled from various issues of Statistical Tables and Data Base
published by IBA, Mumbai.

Table 6.2 shows the number of employees OPBs and NPBs

during the study period.

Table 6.2
Trends in Number of Employees in PBs during 1992-2003
Year

OPBs

1992-93

53,705

1993-94

(-)
54,124
(0.78)

NPBs
-

PBs
53,705

(-)
54,124
(0.78)

1994-95

54,849
(1.34)

54,849
(1.34)

1995-96

57,241
(4.36)

1620
(-)

58,861
(7.31)

1996-97

57,941
(1.22)

2719
(67.84)

60,660
(3.06)

1997-98

58,636
(1.20)

3705
(36.26)

62,341
(2.77)
193

1998-99

55,458
(-5.42)

5,232
(41.21)

60,717
(-2.61)

1999-2000

55,181
(-0.50)

7,344
(40.34)

6,525
(2.98)

2000-01

55,083
(-0.18)

12,480
(69.93)

67,563
(8.06)

2001-02

54,894
(-0.34)
47,089
(-14.22)
(-1.18)

18,202
(45.85)
18,766
(3.10)
(39.22)

73,096
(8.19)
65,855
(-9.91)
(2.20)

2002-03
Average

Note : Figures in parentheses indicate Growth rate over previous years.

Source: Compiled from various issues of Statistical Tables and Data Base
published by IBA, Mumbai.

The table 6.2 reveals that,there had been year-to-year variation in the number
of employees of OPBs, the highest number was found in 1997-98 and the
lowest in the concluding year of the study period. On the whole it appears that
these banks had not been able to slash down the number of employees. The
employees of NPBs had increased from 1620 in 1995-96 to 18,766 in 2002-03
with an annual average 39.22, growth rate of 38.81 per cent.

Table 6.3
Trends on Net Profit of PBs : 1992-93 to 2002-03
Year
1992-93
1993-94
1994-95
1995-96
1996-97

OPBs
61

NPBs

PBs

--

61

(-)
130
(113.11)
359
(176.15)
377
(5.01)
406

165
(-)
279

(-)
130
(113.11)
359
(176.15)
543
(51.25)
685

(7.69)

(69.04)

(26.15)

---

194

1997-98

442
(8.87)

397
(42.29)

840
(22.63)

1998-99

302
(-31.67)

369
(-7.05)

671
(-20.12)

1999-2000

597
(97.68)

569
(54.20)

1167
(73.92)

2000-01

516
(-13.57)
1004
(94.57)
1233
(22.80)

639
(12.30)
707
(10.64)
1726
(144.13)

1155
(-1.04)
1711
(48.13)
2959
(72.94)

(46.51)

(56.31)

2001-02
2002-03
Average

(48.06))

Note : Figures in parentheses indicate Growth rate over previous years.

Source: Compiled from various issues of Statistical Tables and Data Base
published by IBA, Mumbai.
Table 6.3 represents the net profits made by OPBs and NPBs in
different years during the period under study. The data relating to profits of
OPBs showed a fluctuating trend. The net profits have started increasing from
the third years till 1997-98. The year 1998-99 was a bad year for OPBs. The
last two years appear to be excellent years as these banks made high level of
profits, which they never earned previously. The profit of OPBs is increasing
at an average annual growth rate of 48.06 percent. In the case of NPBs the
data of net profit show continuous increase with annual average growth rate
of 46.51 per cent.

6.3 F OREIGN INVESTMENTS

The Government has been pursuing an open door policy and opened
the flood gates for the inflow of foreign capital in the form of FOI, investments
by foreign institutional investors and NRI's in the banking sector too. Foreign
investments in private banks from all sources (FOI, FIl, NRI) , which was
limited to 49 per cent of the capital but now raised to 74 percentfacilitating
setting up of subsidiaries of foreign banks and attracting investment in private
195

sector banks. The new private sector banks are allowed to raise capital
contribution from foreign institutional investors up to 20 per cent and from
NRIs up to 40 percent of their share capital. Promoters stake in Indian banks
is currently limited to 49 per cent. While issuing licenses the RBI has
instructed those promoters of private banks who held a higher holding than
the prescribed limit to divest their stake and bring it down to 49 per cent.
Indian promoters argue that such discrimination may make Indian private
banks vulnerable to take-over by foreign banks. It is hoped that the limit to
Indian promoters holding will be raised to 74 per cent as is done for FOI. The
guidelines issued by RBI in this regard are:
(a ) At all times a minimum of 26 per cent of the paid up capital of
private banks has to be held by residents,
(b) Holdings of a single entity or a group of related entities is cashed at
10 per cent,
(c) FIIs are at present permitted to invest up to 10% each in a bank
with a cap of 24 per cent for all FIIs put together. This can however be raised
to 49 per cent with the approval of the board general body concerned.

The increase in foreign investments limit in private banks will have

serious repercussions to Indian interests. It will enable foreign partners to
increase their stake and acquire management control over Indian banks. Of
course presently there is a cap on voting rights of any person to 10 per cent in
private sector, irrespective of his shareholdings. It means that even if an entity
holds more than 10 per cent stake in a bank, its voting rights are capped to
just 10 per cent in private sector. But there is a proposal to amend the
Banking Regulation Act to remove this cap. With direct foreign investment up
to 74 per cent, the so-called Indian private sector banks may opt collaboration
or joint venture which will become Joint sector institutions between Indian
investor and foreign investors. If the cap on voting right is removed, the
foreign investors will surely obtain management control over Indian banks.

The Indian Banks with low capital adequacy ratio will have the option to
raise capital from overseas investors. Presently, Indian banks, which can offer
stake to foreign investors, are lnduslnd Bank, Bank of Punjab. Banks like ING
196

Vysya and Centurion Bank may further increase the stake of foreign investors.

6.4 PERFORMANCE EVALUATION OF PRIVATE SECTOR BANKS

The performance of 16 Old Private Banks (OPBs) and 8 New Private

Banks (NPBs) is evaluated during the reform period. The 8 new private banks
as has already been stated, came into existence after 1992-93 and the
financial results of these banks are published from 1995-96. Hence, their
performance analysis rebates to the period 1995-96 to 2002-03. Only 16 old
private sector banks are considered for the analysis, leaving those banks,
which are merged with others, Bank of Mathura Ltd. (2001), Bareily
Corporation Bank Ltd. (1999), The Banaras State Bank Ltd. (2002), The
Nedungadi Bank Ltd. (2003) and those banks whose total assets are less
than Rs. 100 Crore. The New Private Banks which are included for evaluation
are Bank of Punjab Ltd., Centurion Bank Ltd., Global Trust Bank Ltd., HOFC
Bank Ltd., ICICI Bank Ltd., OBI Bank Ltd., Industrial Bank Ltd' and UTI Bank
Ltd.(now AXIS Bank Ltd ).

A. The parameters elected for evaluation of efficiency of PBs are:

1)

Business per Branch,

2)

Operating expenses per Branch,

3)

Profit per Branch,

4)

Business per Employee,

5)

Establishment expenses per Employee, and

6)

Profit per Employee

B.

The parameter selected for profitability analysis are:

1)

Return on Assets,

2)

Return on Equity,

3)

Net interest Margin as a percentage of working funds,

4)

Non-Interest Income as a percentage of Total Income, and

5)

Credit-Deposit Ratio.
197

EFFICIENCY INDICES
(A) EFFICIENCY AT BRANCH LEVEL

6.4.1. BUSINESS PER BRANCH

The Business per branch on which normally profitability rests is a

crucial parameter to judge the efficiency of banks. If the business per branch
grows year after year at an increased rate one can assume that the standing
of the bank in the market has been improving. In the Table 6.4 the business
per branch of 24 PBs including eight new private sector banks for the study
period is exhibited. The data for NPBs are available from 1995-96.

When the growth of business per branch of OPBs is taken into

consideration, it is found that the rate of growth was slow in the first two years,
ie. 1992-93 and 1993-94 but picked up in 1994-95 and accelerated from
1997-98. In the last two years of the study period deposit mobilization must be
considered excellent Rs. 2904 lac in 2001-02 and Rs. 4034 lac in 2002-03.
The average business per branch of OPBs for the entire period was Rs.
1794.45 lac and a staggering amount of Rs. 15,579.15 lac for NPBs. The
growth rate of business per branch of OPBs was 15.66 per cent and that of
NPBs was 4.02 per cent.

When business per branch of private sector banks is compared with

that of Public Sector Banks, it is found that PBs are head and shoulder above
PSBs. The lead was taken over by NPBs. The average business per branch
of PBs was Rs. 7417.42 lac while that of PSBs was 1961.18 lac. When
compare the mean values of different PBs, it was found that IIBL (Rs.
31,576.13 lac); GTB (Rs. 18,593.38 lac) and UTI(now Axis) (Rs. 17,598.75
lac) obtained first three ranks with highest business per branch while SBL (Rs.
837.36 lac), CSBL (Rs. 971.20 lac) and DBL (Rs. 1091.45 lac) secured the
least three ranks.

Inter-bank analysis reveals that the growth ,rate among PBs with
198

regard to Business per branch is highest in IDBI (29.56) per cent), PBL (28.39
per cent) and LKBL (19.75 per cent) which occupy the top three ranks while
GTB (-13.58 per cent); UTI (-2.85 per cent) and HDFC (-1.14 per cent) were
in the bottom. Variations in CV are not significant among different PBs with
regard to Business per branch.
6.4.2. OPERATING EXPENSES PER BRANCH
The Operating expenses per branch are shown in Table 6.5. The
average operating expenses per branch of OPBs was Rs. 30.08 lac while that
of NPBs Rs. 225.64 lac. The NPBs have drawn their employees from public
sector banks paying them huge salaries because of their rich experience in
credit appraisal and disbursal. Hence, the operating expenses of NPBs were
higher than those of OPBs. The operating expenses per branch of OPBs was
Rs.16.64 lac in 1992-93 which increased to Rs. 56.05 lac in 2002-03, above
3.5 times. The New private sector banks started with operating expenses per
branch of Rs. 262.67 lac in 1995-96 and it decreased to Rs. 243.40 lac in
2002-03.
When the mean value of operating expenses per branch of PBs is
compared with those of PSBs, it is observed that the expenses of PBs are on
the higher side-Rs. 76.56 lac. It means the operating expenses of PBs are
proportionately higher than those of PSBs as they procured a higher amount
of business per branch than the PSBs.
Inter-bank analysis, on an average with regard to this indicator showed
that CSBL (Rs. 20.~ lac), SBL (Rs. 20.18 lac) OBL (Rs. 19.80 lac); are
occupied top three ranks with lowest operating expenses per branch while
IIBL (Rs. 303.90 lac); GTB (Rs. 278.06 lac) and HDFC (Rs. 237.63 lac) were
in the bottom with highest expenses.
IDBI (-13.49 per cent); followed by GTB (-11.60 per cent) and IIBL (4.39 percent)

have registered lowest growth

rate

indicating better

performance while KBL (22.90 per cent); DBL (14.80 per cent) and KBL
(14.32 per cent) have registered highest growth rate.
There exist marginal differences in C.V. with regard to this indicator,
indicating high stability among the banks.

199

TABLE 6.4
BUSINESS PER BRANCH OF PBS : 1992-03
(Rs. in Lacs)
No Name

1992- 19931994.95 1995.96 1996-97 1997-98 1998-99 19992000 200001

93
94

(1)
(2)
(3)
BOBL 1376.001488.00
CUBL 478.00 583.00
IVBL 1322.001662.00
LKBL 216.00 361.00
TMBL 680.00 91800
BOAL 635.00 790.00
CSBL 465.00 564.00
DBL 253.00 357.00
FBL 757.00 104300
JKBL 987.00 1061.00
KBL 483.00 595.00
KVBL 492.00 712.00
LVBL 344.00 462.00
SBI 451.00 506.00
SIBI 485.00 587.00
UWBI 667.00 848.00
OPBs 630.69 783.63
17 BPI
NA
NA
18 CBI
NA
NA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

(4)
1854.00
759.00
244500
565.00
1207.00
1079.00
648.00
564.00
1246.00
1146.00
753.00
1144.00
783.00
611.00
679.00
1119.00
1037.63
NA
NA

(5)
1969.00
977.00
2043.00
931.00
1304.00
1316.00
808.00
826.00
1646.00
1335.00
1027.00
1096.00
736.00
688.00
786.00
1257.00
1171.56
3327.00
4030.00

(6)
2172.00
1264.00
2197.00
1383.00
1411.00
1489.00
896.00
1130.00
2041.00
1647.00
1294.00
1311.00
868.00
761.00
929.00
1537.00
1395.63
7973.00
8835.00

(7)
(8)
2644.00 2708.00
1597.00 1803.00
2874.00 2491.00
1442.00 1381.00
1711.00 2102.00
1426.00 1461.
1028.00 1092.00
1099.00 1236.00
2107.00 2746.00
2120.00 2415.00
1613.00 1902.00
1655.00 1973.00
1089.00 1078.00
795.00. 869.00
1187.00 1326.00
195J.00 2390.00
1646.13 1810.81
12267.00 5216.00
6538.00 10579.00

(9)
2758.00
1935.00
3014.00
1824.00
2497.00
1603.00
1239.00
1451.00
2599.00
3203.00
2197.00
2389.00
1519.00
1009.00
1628.00
3077.00
2121.38
7107.00
16306.00

(10)
3110.00
2189.00
3304.00
2266.00
2991.00
1745.00
1422.00
1572.00
3036.00
4306.00
2515.00
2849.00
1798.00
1117.00
1919.00
3538.00
2479.81
7127.00
12827.00

200102
(11)
3448.00
2530.00
3355.00
2558.00
337600
1908.00
1550.00
1683.00
3411.00
5048.00
2918.00
3445.00
1916.00
1183.00
2408.00
3136.00
2742.06
5397.00
9068.00

200203
(12)
4180.00
2871.00
3989.00
NA
NA
2238.00
NA
1835.00
4087.00
4997.00
1311000
3956.00
2100.00
1221.00
2676.00
3695.00
3919.62
5035.00
6915.00

19922003
Mean
(13)
2518.82
1544.18
2608.73
1292.70
1819.70
1426.36
971.20
1091.45
2247.18
2569.55
2582.55
1911.09
1153.91
837.36
1328.18
2110.45
1794.45
6681.13
9387.25

CV
(14)
0.34
0.52
0.30
0.61
0.49
0.33
037
0.49
0.46
0.61
1.39
0.59
0.52
0.32
0.56
0.53
0.54
0.40
0.41

GR
(15)
10.01
15.60
8.68
19.75
15.96
9.58
12.30
14.65
13.80
17.68
28.39
17.42
1530
9.58
16.45
1553
15.66
.2.58
5.83
200

19
20
21
22
23
24

GTB
NA
NA
NA 22508.00 37100.0022914.00 9865.00 14949.00 17930.00 11750.00 11721.00 18593.38 0.44 -13.58
HDFC NA
NA
NA 15071.00 13953.00 9200.00 7572.00 10712.00 12439.00 14309.00
NA 11893.71 0.24
-1.14
ICICI NA
NA
NA 12536.00 8741.00 11385.00 14878.00 16695.00 6594.00 22101.00 22746.00 14459.50 0.40 10.35
IDBI
NA
NA
NA 3350.00 14300.0015812.00 14712.00
NA
NA
NA
NA 12043.50 0.48 29.56
IIBI
NA
NA
NA 28144.00 27894.0032019.00 29538.00 37850.00 35916.00 34935.00 26313.00 31576.13 0.13
1.60
UTI
NA
NA
NA 21200.00 18392.0018163.00 14889.00 18831.00 16178.00 15891.00 17246.00 17598.75 0.11
-2.85
NPBs NA
NA
NA 13770.75 17148.5016037.25 13406.13 17492.86 15573.00 16208.71 14996.00 15579.15 0.09
4.02
PBs 630.69 783.63 1037.63 5371.29 6646.58 6443.17 5675.92 6799.65 6464.70 6840.61 7417.42 4919.21 0.55 14.18
Source: Complied. from various relevant issues of Statistical Tables and Data Base on Indian Banking published by IBA, Mumbai.

201

TABLE 6.5
OPERATING EXPENSES PER BRANCH PBS : 1992-03
(Rs. in Lacs)
No Name
(1)
BOBL
CUBL
IVBL
LKBL
TMBL
BOAL
CSBL
DBL
FBL
JKBL
KBL
KVBL
LVBL
SBI
SIBI
UWBI
OPBs
17 BPI
18 CBI
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

1992- 19931994.95 1995.96 1996-97 1997-98 1998-99 19992000 200001 200102 200203
93
94
(2)
30.00
10.59
18.33
59.70
16.26
15.71
11.26
7.03
12.98
13.40
10.62
11.95
10.40
12.72
11.04
14.21
16.64
NA
NA

(3)
34.00
13.04
21.84
7.46
18.05
17.44
12.35
8.33
14.94
15.06
11.79
14.29
11.96
13.48
12.34
16.06
15.15
NA
NA

(4)
38.46
12.50
25.39
10.14
22.30
22.26
14.61
10.61
21.41
21.73
15.79
17.24
14.74
14.04
15.02
19.80
18.50
NA
NA

(5)
43.64
17.35
30.15
14.08
26.62
24.83
17.52
15.00
29.17
21.63
18.58
24.31
20.42
19.34
18.00
27.00
22.98
80.00
110.00

(6)
39.14
Q.60
33.24
17.51
30.92
30.20
20.65
16.78
29.91
25.93
23.42
26.79
23.09
18.47
18.35
31.29
25.39
161.67
110.20

(7)
43.61
23.75
35.49
24.05
32.27
32.38
21.69
18.99
34.85
29.53
25.94
32.79
24.33
19.52
20.73
32.18
28.26
254.93
104.38

(8)
45.07
28.57
38.87
24.00
38.19
39.22
22.91
20.13
37.91
34.45
27.22
34.65
27.94
20.65'
24.93
37.38
31.38
84.00
339.39

(9)
44.74
28.44
46.68
25.33
42.04
41.29
?8.17
22.67
43.81
39.60
30.26
41.95
31.71
22.83
30.85
42.66
35.19
120.00
297.14

(10)
53.25
29.82
48.54
32.50
43.75
42.72
28.52
27.15
42,58
44.59
29.94
47.57
31.10
26.09
30.91
46.67.
37.86
143.75
289.80

(11)
56.96
31.36
69.62
41.76
52.76
46.77
31.34
33.33
46.36
61.10
36.69
50.71
33.18
27.17
31.84
44.30
43.45
120.65
280.70

(12)
59.49
32.52
89.76
NA
NA
47.32
NA
37.74
52.86
57:05
151.61
48.60
33.33
27.72
36.06
54.55
56.05
116.82
266.67

19922003
Mean
(13)
44.40
22.59
41.63
27.67
32.32
32.74
20.91
19.80
33.34
33.10
34.71
31.90
23.84
20.18
22.73
33.28
30.08
135.23
224.79

CV
GR
(14)
(15)
0.21 5.97
0.36 10.67
0.52 14.32
0.57 2.75
0.37 12.04
0.35 10.51
0.34 11.00
0.50 14.80
0.39 11.61
0.48 14.14
1.14 22.90
0.44 13.20
0.36 10.78
0.27 7.93
0.38 11.30
0.40 11.81
0.41 12.07
0.41 -2.16
0.44 13.04
202

19
20
21
22
23
24

GTB
NA
HDFC NA
ICICI
NA
IDBI
NA
IIBI
NA
UTI
NA
NPBs
NA
PBs 16.64

NA
NA
NA
NA
NA
NA
NA
15.15

NA
NA
NA
NA
NA
NA
NA
18.50

233.33
400.00
245.45
450.00
311.11
271.43
262.67
102.87

666.88
281.20
184.05
309.57
311.94
222.50
281.00
110.60

323.95
190.03
174.58
197.35
360.67
165.67
221.45
92.65

149.21
156.14
150.91
207.69
334.62
145.71
195.96
86.24

196.83
154.95
188.89
161.54
333.33
132.65
198.17
89.52

248.48
236.64
94.37
100.98
321.88
150.00
198.24
91.32

202.38
244.44
173.74
190.67
235.00
186.49
204.26
97.06

203.45
NA
451.12
212.37
222.64
230.71
243.40
121.62

278.06
237.63
207.89
228.77
303.90
188.15
225.64
76.56

0.59
0.36
0.51
0.47
0.16
0.26
0.15
0.52

.11.60
-8.88
6.79
.13.49
-4.39
-3.32
-3.09
12.42

Source: The same as Table 6.4.

NA = NOT AVAILABLE

203

6.4.3. PROFIT PER BRANCH.

The data relating to profit per branch for the study period are presented in
Table 6.6. Barring two old private sector banks and two new private sector banks, all
the other banks throughout the period have made profits per branch. Among the
OPBs, BORI made losses per branch in two consecutive years 1997-98 and 1998-99
and UWBL for one year ie 2001-02. Among the NPBs, CBL for two years 2001-02
and 2002-03 and GTB in 2002-03, sustained losses per branch.

By 2002-03, the health of GTB deteriorated so badly that RBI declared

moratorium in 2004 and subsequently it was merged with OBOC. There is no
consistency in profit per branch year after year during the study period. The average
profit per branch OPBs was Rs. 12.76 lac and that of NPBs was Rs. 135.85 lac. It
may be observed that business per branch, operating expenses per branch and a
profit per branch is higher for NPBs compared to those of OPBs.

An insight reveals that average profit per branch of NPBs like IIBL (Rs. 265.65
lac), GTB (Rs. 193.78 lac) and HDFC (Rs. 190.84 lac) have posted higher profits
when compared with OPBs. The OPBs-SBL (Rs. 2.68 lac); CSBL (Rs. 3.41 lac) and
BORL (Rs. 3.50 lac) have earned lowest profit per branch.

Contrary to this trend, when we look into the growth rate of different PBs, it is
found that OPBs have an edge over NPBs. OPBs-KBL (30.19 per cent), JKBL (28.90
per cent); CSBL (24.93 per cent) have registered a higher growth rates when
compared with NPBs like CBL (-105.03 per cent), GTB (-52.35 per cent); and IIBL (20.75 per cent) which have posted a lower growth rates.

Inter-Bank comparison of co-efficient of variation reveals that there exists loge

variation on profit per branch of PBs. Hence, stability in earning profits vary widely
from bank to bank and from year to year as well.

204

TABLE 6.6
PROFIT PER BRANCH OF PRIVATE BANKS: 1992-03
(Rs. in Lacs)
No Name

1992- 19931994.95 1995.96 1996-97 1997-98 1998-99 19992000 200001 200102 200203
93
94

(1)
(2)
BOBL 2.00
CUBL 2.35
IVBL 6.67
LKBL 2.99
TMBL 5.69
BOAL 2.14 0
CSBL 0.87
DBL
0.78
FBL
2.36
JKBL 1.31
KBL
2.56
KVBL 3.14
LVBL 1.73
SBI
0.58
SIBI
0.65
UWBI 1.05
OPBs 2.30
17 BPI
NA
18 CBI
NA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

(3)
8.00
2.17
9.81
2.99
7.5:9
5.34
1.59
0.76
5.17
4.17
2.86
6.55
2.17
1.12
3.48
2.07
4.11
NA
NA

(4)
11.54
6.25
31.27
5.80
412.23
17.67
1.50
3.03
12.11
5.11
4.56
13.22
9.47
1.12
4.50
5.08
9.03
NA
NA

(5)
18.18
10.20
31.64
9.86
17.27
15.99
NA
3.57
12.50
5.64
8.45
17.68
5.24
1.66
1.43
7.00
11.09
86.67
1.00

(6)
17.24
11.00
19.08
8.33
23.94
1.01
1.44
5.52
12.20
7.69
13.40
18.65
9.50
2.73
2.29
10.84
10.30
146.67
80.00

(7)
18.03
11.00
21.11"
5.41
26.76
.29.14
2.52
2.72
12.66
15.06
19.21
22.11
1.10
2.19
5.93
16.43
9.57
213.33
62.50

(8)
15.49
11.43
8.31
1.33
24.31
.21.90
NA
2.68
0.75
21.85
12.43
18.32
7.35
2.17
1.66
17.29
8.23
64.00
63.64

(9)
1.32
18.35
11.67
8.00
26.11
3.87
2.46
7.33
11.39
29.70
11.82
34.63
12.68
2.72
7.16
25.69
0.43
60.00
97.14

(10)
23.37
18.42
10.34
6.25
31.25
10.36
3.87
4.64
14.84
45.41
12.71
34.95
12.92
3.26
11.02
-7.11
14.78
54.69
14.29

(11)
29.11
23.73
18.55
21.98
33.74
12.90
13.03
6.54
19.90
67.89
25.49
51.66
14.22
5.43
16.32
11.40
23.24
39.13
-164.91

(12)
36.71
26.83
23.18
NA
NA
20.24
NA
9.43
25.00
74.45
118.28
58.41
15.74
6.52
18.41
12.12
34.26
29.91
-41.67

19922003
Mean
(13)
16.45
12.88
17.42
7.29
20.88.
3.50
3.41
4.27
11.72
25.30
21.07
25.39
8.37
2.68
6.62
9.26
12.76
86.80
26.37

CV
(14)
0.65
0.63
0.51
0.80
0.47
4.51
1.17
0.64
0.61
1.04
1.56
0.70
0.63
0.68
0.92
0.97
0.71
0.72
3.43 -

GR
(15)
14.28
18.47
0.17
14.53
14.89
13.44
24.93
16.15
12.97
28.90
30.19
19.89
15.28
18.64
23.40
9.83
18.26
-19.41
105.03
205

19
20
21
22
23
24

GTB
HDFC
ICICI
IDBI
IIBI
UTI
NPBs
PBs

NA
NA
NA
NA
NA
NA
NA
2.30

NA
NA
NA
NA
NA
NA
NA
4.11

NA
NA
NA
NA
NA
NA
NA
9.03

333.33
285.71
154.55
50.00
511.11
157.14
209.81
80.21

712.50
273.33
181.82
57.14
405.56
125.00
247.75
89.45

363.64
190.91
151.52
'117.65
433.33
70.83
200.46
73.20

112.70
143.86
143.55
119.23
142.31
88.57
109.73
43.54

173.02
108.11
129.63
156.41
207.41
104.08
129.48
52.11

121.21
160.31
45.35
35.85
128.13
100.00
82.48
37.35

47.62 -313.79
173.68.
NA
72.07' 270.40
69.33
73.20
127.50 169.81
120.72 137.14
60.64
46.43
35.71
38.52

193.78
190.84
143.61
84.85
265.65
112.94
135.85
42.32

1.52 -52.35
0.35 -12.07
O.46 154.55
0.49
0.21
0.59 -20.75
0.24 .0.62
0.55 21.01
0.71
6.40

Source: The same as Table 6.4

NA = NOT AVAILABLE

206

EFFICIENCY AT EMPLOYEE LEVEL

6.4.4 BUSINESS PER EMPLOYEE -

Business per employee in the domestic private sector banks, on an average,

rose from Rs. 43.18 lac per annum in 1992-93 to Rs. 257.15 lac in 2002-03 (Table
6.7). It particularly started ballooning up from the year 1994-95 onwards. It recorded
nearly five-fold increase during the period under study registering 15.50 per cent
growth rate.

The phenomenal growth in business of PBs can be attributed to two factors.

Firstly, due to liberalization, technological explosion and computer revolution, the
turnover of PBs picked up. Secondly, the rate of growth in the number of employees
in these banks registered a fall (Table 4.32) in the era of financial reforms.

Inter-group analysis reveals that NPBs are much ahead of OPBs in the race.
When the mean values of first 11-year period are observed, NPBs registered Rs.
891.78 lac business per employee while OPBs posted only Rs. 133.21 lac. But
growth rate of OPBs (15.50 per cent) was far better than NPBs (1.44 per cent)
during the period under study.

An analysis of the mean values of different banks for the entire period
reveals that IIBL (Rs. 1827.91 lac); UTI (Rs. 1014.73 lac), and GTB (Rs. 873.13 lac)
were at the top while SBL (Rs. 72.6 lac) CSBL (Rs. 85.79 lac) and BORL (Rs. 99.75
lac) were in the bottom. It shows that NPBs are at the top of list when compared to
OPBs. In contrast to that OPBs secured better ranks in growth rates-SIBL (19.14
per cent); KBL (17.42 percent) .and UWBL (17.21 per cent) which secured top three
ranks while BPL (-8.26 per cent) CBL (-4.50 per cent) and IIBL (-1.59 per cent),
which obtained the least, three ranks.

When compared with PSBs, the mean value of business per employee of
PBs is much higher at Rs. 311.14 lac than that of PSBs Rs. 107.03 lac. It is further
observed that the variations in CV are not significant. Hence, business per
employee of different PBs is stable during the period under study.

207

TABLE 6.7
BUSINESS PER EMPLOYEE OF PRIVATE BANKS : 1992-03
(Rs. in Lacs)
No Name
(1)
BOBL
CUBL
IVBL
LKBL
TMBL
BOAL
CSBL
DBL
FBL
JKBL
KBL
KVBL
LVBL
SBI
SIBI
UWBI
OPBs
17 BPI
18 CBI
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

1992-93
(2)
61.59
37.77
76.12
33.33
51.76
38.99
35.09
29.43
47.42
60.05
39.44
39.27
33.46
32.11
36.67
38.34
43.18
NA
NA

19931996- 19971994.951995.96
1998-99 19992000 200001 200102 200203
94
97
98
(3)
74.10
47.64
98.20
54.38
70.82
NA
45.83
42.09
64.90
65.81
50.03
56.10
46.15
36.86
45.41
48.36
56.45
NA
NA

(4)
90.43
62.25
147.66
73.58
87.35
68.16
54.17
65.21
77.90
71.14
61.61
89.85
78.51
45.35
55.79
65.28
74.64
NA
NA

(5)
101.50
79.29
123.65
118.46
93.12
84.18
69.05
101.49
102.81
77.44
83.47
84.71
73.50
52.87
70.55
78:91
87.19
441.59
403.00

(6)
(7)
119.21 172..15
95.04 116.13
138.19 133.78
143.72 146.36
97.19 118.55
99.22 98.15
77.91 88.25
133.71 126.92
124.75 179.98
96.03 123.75
108.88 133.15
103.48 137.38
86.96 121.89
60.16 64.02
84.64 111.51
92.94 119.01
103.88 124.44
1058.411628.32
1104.38 843.55

(8)
194.44
138.68
151.06
139.06
142.05
102.15
96.83
134.38
201.92
150.22
163.63
149.46.
125.19
72.03
126.50
148.84
139.78
493.94
549.76

(9)
211.08
155.99
187.49
188.43
182.75
114.41
111.96
159.14
163.82
206.12
187.12
178.89
161.30
86.09
157.83
198.08
165.66
712.02
803.80

(10)
239.74
184.54
220.71
218;4'3
217.84
125.75
132.77
184.89
198.31
246.23
218.00
205.50
194.11
97.26
190.88
237.71
194.54
646.95
765.53

(11)
260.17
219.32
241.35
246.35
246.99
138.16
146.05
200.55
225.22
297.69
251.42
253.75
209.11
105.32
247.46
213.59
218.91
533.30
535.65

(12)
320.89
250.78
297.83
NA
NA
178.75
NA
223.60
276.10
318.98
282.22
298.84
228.69
110.86
294.76
260.64
257.15
465.20
439.05

19922003
Mean
(13)
167.75
126.13
165.09
136.21
130.84
99.75
85.79
127.40
151.19
164.77
143.54
145.20
123.53
72.61
129.27
136.52
133.25
747.47
680.59

CV
(14)
0.5077
0.5606
0.3988
0.5092
0.4988
0.3853
0.4285
0.4990
0.4837
0.5843
0.5826
0.5673
0.5416'
0.3768
0.6597
0.5839
0.5202
0.5463
0.3521

GR
(15)
15.08
16.69
11.24
16.48
15.89
11.76
14.06
14.84
14.10
16.88
17.42
16.71
16.11
11.29
19.14
17.21
15.50
-8.26
-4.50
208

19 GTB
20 HDFC
21 ICICI
22 IDBI
23 IIBI
24 UTI
NPBs
PBs

NA
NA
NA
NA
NA
NA
NA
43.18

NA
NA
NA
NA
NA
NA
NA
56.45

NA
NA
'.NA
NA
NA
NA
NA
74.64

865.71 691.84 947.56 830.88

402.67 407.20 460.00 438.62
464.31 432.13 623.05 920.47
248.15 553.04 812.08 912.89
1848.91 2000.401915.67 1511.81
764.95 814.39 1058.01 1000.19
679.91 882.72 1036.03 832.32
284.76 363.49 428.30 370.63

1002.98
593.61
1006.18
923.77
1992.79
1248.58
1035.47
455.59

1008.87 861.20
592.33 653.87
521.24 1024.07
737.59 689.82
1978.141893.50
1174.091024.93
928.09 902.04
439.06 446.62

776.03
NA
955.52
712.80
1482.04
1032.72
837.62
460.32

873.13
506.90
743.37
698.77
1827.91
1014.73
891.78
311.19

0.1263
0.2039
0.3459
0.3133
0.1154
0.1603
0.41
0.5483

0.78
8.86
9.90
6.35
-1.59
4.13
1.44
14.89

Source: The same as Table 6.4.

NA=NOT AVAILABLE

209

TABLE 6.8
ESTABLISHMENT EXPENSES PER EMPLOYEE OF PBS : 1992-03
(Rs. in Lacs)
No Name
(1)
BOBL
CUBL
IVBL
LKBL
TMBL
BOAL
CSBL
DBL
FBL
JKBL
KBL
KVBL
LVBL
SBI
SIBI
UWBI
OPBs
17 BPI
18 CBI
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

1992-93
(2)
0.63
0.56
0.63
0.69
0.68
0.66
0.62
0.64
0.63
0.56
0.66
0.65
0.67
0.66
0.64
0.61
0.64
NA
NA

19931996- 19971994.951995.96
1998-99 19992000 200001 200102 200203
94
97
98
(3)
0.80
0.62
0.71
0.67
0.70
0.73
0.68
0.71
0.68
0.68
0.75
0.70
0.71
0.70
0.69
0.65
0.70
NA
NA

(4)
0.94
0.68
0.82
0.94
0.83
0.94
0.81
0.88
0.92
0.97
0.95
0.90
0.90
0.79
0.89
0.77
0.87
NA
NA

(5)
1.22
0.91
1.12
1.08
1.08
1.04
1.06
1.32
1.16
0.85
1.15
1.11
1.20
1.19
1.20
1.13
1.11
1.77
1.00

(6)
1.14
0.90
1.22
0.87
1.16
1.19
1.13
1.22
1.10
0.97
1.40
1.14
1.30
1.12
1.22
1.22
1.14
3.30
1.49

(7)
1.49
1.02
1.27
1.10
1.27
1.41
1.22
1.36
1.29
1.04
1.55
1.59
1.46
1.21
1.43
1.24
1.31
5.07
1.62

(8)
1.65
1,22
1.41
1.27
1.59
1.87
1.40
1.40
1.44
1.36
1.64
1.54
1.62
1.35
1.69
1.60
1.50
1.33
1.57

(9)
1.72
1.46
1.61
1.47
1.89
2.08
1.88
1.64.'
1.84
.1.43
1.85
1.97
2.00
0.00
2.31
1.96
1.69
1.46
1.55

(10)
1.90
1.55
1.84
1.69
1.96
2.03
2.07
2.18
1.76
1.48
1.76
1.72
1.96
1.80
2.27
2.21
1.89
1.28
1.83

(11)
1.91
1.69
2.71
1.69
2.29
2.20
2.22
2.65
1.94
2.22
2.15
1.85
2.07
1.89
2.27
2.00
2.11
1.40
2.07

(12)
2.04
1.70
3.48
NA
NA
2.47
NA
2.99
2.24
2.22
2.06
2.12
2.17
1.92
2.65
2.63
2.36
1.47
2.65

1992-2003
Mean
(13)
1.40
1.12
1.53
1.15
1.35
1.51
1.31
1.54
1.36
1.25
1.45
1.39
1.46
1.26
1.57
1.46
1.39
2.14
1.72

CV
(14)
0.35
0.38
0.57
0.33
0.42
0.42
0.44
0.50
0.39
0.45
0.35
0.37
0.38
0.47
0.45
0.46
0.41
0.64
0.28

GR
(15)
9.97
11.62
15.70
10.46
13.38
12.58
14.51
14.24
11.73
12.77
10.36
10.79
10.96
8.71
13.38
13.73
12.20
-12.65
10.45
210

19 GTB
20 HDFC
21 ICICI
22 IDBI
23 IIBI
24 UTI
NPBs
PBs

NA
NA
NA
NA
NA
NA
NA
0.64

NA
NA
NA
NA
NA
NA
NA
0.70

NA
NA
NA
NA
NA
NA
NA
0.87

1.28
1.91
1.35
3.70
1.46
2.06
1.82
1.35

1.46
1.98
1.39
1.85
1.69
1.90
1.88
1.39

1.67
2.25
2.03
1.92
2.13
2.01
2.34
1.65

1.74
2.24
2.02
2.63
2.17
2.30
2.00
1.67

1.92
2.45
2.68
2.56
2.34
2.03
2.12
1.84

2.56
2.84
1.16
3.23
2.41
2.45
2.22
2.00

3.14
2.91
1.90
3.31
2.71
296
2.55
2.26

3.20
NA
3.80
3.79
2.98
3.64
3.08
2.61

2.12
2.37
2.04
2.87
2.24
2.42
2.25
1.54

0.35
0.16
0.42
0.26
0.22
0.25
0.18
0.41

13.67
7.60
10.29
4.87
8.94
8.27
6.22
12.32

Source: The same as Table 6.4.

NA = NOT AVAILABLE

211

TABLE 6.9
PROFIT PER EMPLOYEE OF PRIVATE BANKS: 1992-03
(Rs. in Lacs)
No Name
(1)
1 BOBL
2 CUBL
3 IVBL
4 LKBL
5 TMBL
6 BOAL
7 CSBL
8 DBL
9
FBL
10 JKBL
11 KBL
12 KVBL

1992-93
(2)
0.09
0.19
0.38
0.46
0.43
0.13
0.07
0.09
0.15
0.08
0.21
0.25

19931996- 19971994.951995.96
1998-99 19992000 200001 200102 200203
94
97
98
(3)
040
0.18
0.57
045
0.58
033
0.13
0.09
0.32
0.26
0.24
052

(4)
0.56
0.51
1.88
0.75
0.88
1.12
0.13
0.35
0.76
0.32
0.37
1.04

(5)
0.94
0.83
1.92
1.25
1.23
1.04
0-00
0.44
0.78
0.33
0.69
1.37

(6)
0.95
0.82
1.19
0.87
1.65
0.07
.13
0:65
0.75
0.45
1.13
1.47

(7)
1.06
0.80
1.33
0.55
1.85
-2.01
0.22
0.32
0.81
0.88
1.48
1.79

(8)
1.11
0.88
0.50
0.13
1.64
-1.53
0.00
0.29
0.05
1.36
1.07
1.39

(9)
0.10
1.48
0.73
0.88
1.91
0.28
0.23
0.80
0.72
1.91
1.01
2.60

(10) (11)
1.80 2.20
1.56
2.06
0.69
1.33
0.60
2.12
2.28
2.47
0.75
0.93
0.36
1.23
0.55
0.78
0.97
1.31
2.60
4.00
1.10
2.20
2.52
3.80

19922003

Mean
CV
(12)
(13)
(14)
2.82
1.09 0.79
2.34
1.06
0.67
1.73
1.11
0.51
NA
0.81
0.69
NA
1.49
0.46
1.62
0.25
4.47
NA
0.31
1.16
1.15
0.50
0.65
1.69
0.76
0.63
4.75
1.54
1.05
2.55
1.10
0.69
4.41
1.92
0.68

GR
(15)
19.20
19.83
2.69
9.93
14.75
20.15
25.60
15.97
13.24
29.22
18.26
19.23

Source: The same as Table 6.4.

212

Table 6.10
SUMMARY OF DETAILS OF PRIVATE SECTOR BANKS IN INDIA AS ON MARCH 31, 2009
Axis
Bank of
City
Develop. Dhanlak- Federal
HDFC
Particulars
Bank Rajasthan Union Bk. Credit Bk. shmi Bk.
Bank
Bank
No. of Offices
786
458
209
81
181
611
1400
No. of Employees
20624
4075
2452
1942
1402
7570
52687
Business per
Employee (in ` Lakh)
1060
532.93
565.18
379
585.88
750
446
Profit per Employee

ICICI IndusInd
ING
Bank
Bank
Vysya Bk.
1408
182
444
34596
4251
6086
1154

836

606.39

(in ` Lakh)
Interest Income

10.02

2.89

4.98

-4.00

4.10

6.9

4.18

11

3.49

3.03

(in ` Crore)
Other Income
(in ` Crore)
Interest Expended
(in ` Crore)
Operating Expenses

10835

1384

804

645

408

3315

16332

31093

2309

2240

2897

124

124

120

79

516

3291

7604

456

548

7149

998

562

448

287

2000

8911

22726

1850

1590

(in ` Crore)
Return on Assets
CRAR
Net NPA Ratio

2858
1.44
13.69
0.40

315
0.74
11.50
0.73

J & K Karnataka
Bank
Bank
491
452
7627
4947
500
649

242
-1.25
13.30
3.88
Kotak
Mahindra
bank
220
8227
347

113
571
5533
7045
1.21
1.48
1.28
0.98
15.38
20.22
15.69
13.96
0.88
0.3
0.63
2.09
Lakshmi
Catholic
vilas Nainital Ratnakar
Syrian
bank
bank
bank
bank
247
92
84
360
2433
693
566
2676
510
425
373
374

547
0.58
12.33
1.14
South
Indian
bank
519
4523
645.14

772
0.7
11.65
1.23

Particulars
No. of Offices
No. of Employees
Business per

140
1.50
12.69
1.08
Karur
Vyaya
Bank
296
3941
638

Yes bank
118
2671
988.36
213

Employee(in ` Lakh)
Profit per Employee
(in ` Lakh)

5.98

10835

1384

804

645

408

3315

16332

31093

2309

2240

Other Income (in ` Crore)

2897

124

124

120

79

516

3291

7604

456

548

Interest Expended (in ` Crore)

7149

998

562

448

287

2000

8911

22726

1850

1590

Operating Expenses (in ` Crore)

2858
1.44
13.69
0.40

315
0.74
11.50
0.73

140
1.50
12.69
1.08

242
-1.25
13.30
3.88

113
1.21
15.38
0.88

571
1.48
20.22
0.3

5533
1.28
15.69
0.63

7045
0.98
13.96
2.09

547
0.58
12.33
1.14

772
0.7
11.65
1.23

Interest Income (in ` Crore)

Return on Assets
CRAR
Net NPA Ratio
SOURCE: RBI Bulletin

2.07

1.39

4.31

11.38

214

6.4.5. ESTABLISHMENT EXPENSES PER EMPLOYEE

Table 6.8 gives data relating to Establishment expenses per employee.

Establishment expenses per employee of PBs increased from Rs. 0.64 lac in 199293 to Rs. 2.61 lac in 2002-03, an increase of 3 times. There was a gradual increase
in the establishment expenses of different banks during the study period. The
growth rates among these banks are also low because of adoption of latest
technology and higher level of computerization.

An analysis of the growth rates in different private sector banks suggests that
there are wide variations in establishment expenses per employee. In some of the
banks (e.g. CSBL, DBL and GTB) the establishment expenses per employee
registered a higher rate of increase and few other (e.g. BPL, IOBI and HDFC) banks
recorded lower growth rates. CUBL (Rs. 1.12 lac) followed by LKBL (Rs. 1.15 lac),
JKBL (Rs. 1.25 lac) have registered, on an average, the lowest establishment
expenses per annum while IOBI (Rs. 2.87 lac), UTI (Rs. 2.42 lac) and HDFC (Rs.
2.37 lac) posted highest establishment expenses.

A perusal of the data relating to CV reveals that private banks did not show
any significant variations with regard to establishment expenses per employee.
6.4.6.PROFIT PER EMPLOYEE

It is observed from the Table 6.9 that profit per employee of PBs went up on
an average, from Rs. 0.18 lac in 1992-93 to Rs. 2.08 lac in 2002-03. The profit per
employee made a real jump in the year 1994-95, probably because by that time
initial trauma of reforms was almost over and income had started picking up.
Though profit per employee, on an average, increased by more than nine times, yet
it does not exhibit any consistency.

The average profit per employee of NPBs (Rs. 7.67 lac) stood very high than
those of OPBs (Rs. 0.92 lac). In contrast to the mean values, growth rates are much
215

better in OPBs (17.44 per cent) than NPBs (3.13 per cent).

When compared with the nationalized banks, which sustained losses per
employee in a good number of years, the PBs have made profits consistently during
the period. While the average profit per employee of PSBs was Rs. 0.39,lac that of
PBs was Rs. 2.5 lac.

Among the OPBs, only two banks, namely, -BORL and UWBL incurred
losses in some years during the period under
Hypothesis Testing
The performance of public sector banks is not as good as'

private

sector

banks in spite of their age, size and image.

From the above analysis it is proved that the financial reforms have provided the
same space and opportunity to the public sector as well as private sector banks the
private sector banks have shown better performance in terns of all financial
indicators. Thus it can be said that the private sector banks have more positively
responded to the financial reforms process than the public sector banks.
Thus the above hypothesis has been accepted.

The analysis indicates that, the private sector banks in India, have made remarkable
progress after the financial reforms in comparison to the public sector banks. After
making performance analysis of private sector banks in first and second generation
reforms i.e. from 1991-92 to 2003-04, now we will analyse the performance analysis
of both the private sector banks and public sector banks (in third generation reforms
i.e. fro 2004-05 to 2010-11) in next chapter.

216