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. Promoter’s 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

5

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

3

2.07

6

5

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