Determinants of profitability of private sector banks in india

Abstract

Indian banking sector has undergone a sea change after the advent of Liberalisation,Privatization and Globalization polices of Government of India, newlineduring the beginning of nineties. This has resulted inthe implementation of banking sector reforms which rationalized banking system by opening of new generation commercial banks,entry of foreign banks,prudential norms for quality of asset,deregulation of interest rates and launching of banking tribunals. During newlinethe last two decades private sector banks in India have played a significant role in newlinebanking sector in terms of business, profit, network, channels and digital banking. newlineInorder to make use of technology and improve customer service banks have implemented CBS. Banking reforms, competition, growing NPA due to economic slowdown, high investments in technology, Basel Risk Management have affected the profitability of all banks in India. But private sector continues to perform well. Present study analyses the determinants of profitability of private sector banks in India and Impact of profitability after implementation of CBS. Since private sector new and old banks are the two groups in private sector banks in India their profitability and determinants are analyzed. The study focuses on select four banks each from private sector new and old banks in India for fourteen years, 2000-2001 to 2014-2015.The Global banking benchmarkon profitability of commercial newlineBanks,ROA is considered as dependent variable and Bank specific, Industry level and Macro level Independent variables are analyzed in the data analysis to find out variations, relationships andfundamental variables influencing profitability of private commercial banks in India during the period under study newline