Financial Performance of Indian Banks in Post Liberalization Era: a study of Public and Private Banks

Abstract

Enhancing efficiency and performance of Public Sector Banks (PSBs) is a key objective of economic reforms in many countries including India. It is believed that private ownership helps improve efficiency and performance. Accordingly, the Indian government started diluting its equity in PSBs from early 1990s in a phased manner. It has to be analyzed whether the partial privatization of Indian banks had really helped them in improving their efficiency and performance. The main objective of the present research work is to study the financial performance of Public and Private Sector Banks in Post Liberalization era of SBI and ICICI Bank using CAMEL model. The hypotheses to be tested in the present research are Financial performance of Private Sector Bank is better than newlinePublic Sector Banks in Post Liberalization Era and quotthe Financial performance of Private Sector Banks is better than Public Sector Banks through CAMEL model ratioquot. The sample selection for the research work consist of one Public Sector Bank namely State Bank of India (SBI) and one the Private Sector Bank i.e. Industrial Credit and Investment Corporation of India (ICICI) Bank. The purpose of selecting these banks was that they are the top bank with regard to investment, advances, deposits and assets.