A STUDY ON EFFICIENCY OF INDIAN PUBLIC AND PRIVATE SECTORBANKS

A stable and efficient banking sector is an essential precondition to increase the economic level of a Country. The banking industry plays a key role in the development offinancial needs facilitating to individuals and companies in their business regular operations. These services and operations will have direct impact on bank efficiency. The objective of this paper is to evaluate the efficiency of banks in developing country, India. Input and output variables will influence the efficiency of banks, and it will impact the growth rate of industry and economy. The measurement of efficiency is done using Data Envelopment Analysis with input oriented model and Scale efficiency. DEA is capable of handling multiple inputs and outputs and the source of inefficiency can be analyzed and quantified for every bank evaluated. The aim of this paper is to estimate and compare the efficiency of banks in both Public and Private sectors. The efficiency scores for these two groups of banks, i.e., Public sector banks and Private sector banks are measured. This paper recommends the banks that they equip themselves with abilities to enhance the scale efficiency by considering output and input and continue to obtain efficiency gain and make the Indian banks internationally competitive.