What is it about?
This paper examines the key drivers of profitability of private sector banks in India. It looks at both micro and macro-economic determinants of private sector bank profitability. A framework is presented that can help optimize private-sector bank profitability in India.
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Why is it important?
The study has implications for key stakeholders of banks. Bank managers can implement robust performance appraisal systems to increase the productivity of their workforce and improve profitability. Investors can identify profitable banks that have diversified their income streams with additional revenue streams such as fee-based income. The Regulators can provide more functional autonomy to profitable banks that have adequately protected themselves against external shocks and lowered their cost of funds through the implementation of robust asset quality, forex, and treasury management practices.
Perspectives
This study examined the influence of some key micro and macro determinants on the profitability of the five largest listed private sector banks in India. Measures of asset quality, productivity, non-interest income, liquidity, and lending were key micro-determinants of private-sector bank profitability in India. Measures of inflation, interest, and exchange rates proved to be macroeconomic determinants of the profitability of these banks. The study has implications for several key stakeholders of these banks.
Dr Rajveer S Rawlin
Christ University
Read the Original
This page is a summary of: Framework to Optimize Profitability of Private Sector Banks in India, July 2023, ACM (Association for Computing Machinery),
DOI: 10.1145/3616712.3616716.
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