Productive Efficiency Mapping of the Indian Banking System Using Data Envelopment Analysis

The Indian banking sector, which the government predominantly controlled, was liberalized in early 1990s. The resultant competitive forces, coupled with more stringent regulatory framework, have created pressure on the banks to perform. Thus, the productive efficiency has become critical for banks’ survival and growth. This paper analyzes the performance of the Indian banking sector, measured and compared through the construct of productive efficiency using the non-parametric frontier methodology, DEA. Inputs and outputs are measured in monetary value and efficiency scores determined for the period 2009-2013. The study reveals that SBI and its group have the highest efficiency, followed by private banks, and the other nationalized banks. The results are consistent over the period, but efficiency differences diminish over period of time.