Financial Analysis of Public & Private Sector Banks In India .

Abstract

The banking sector's performance and profitability are key factors in enhancing a country's economic stability and growth. Countless research efforts have explored the financial efficiency, profitability, and operational effectiveness of banks utilizing diverse analytical methods like fundamental analysis, ratio analysis, the CAMELS framework, and panel data models. Previous studies indicate that public and private sector banks in India demonstrate differing performance trends because of variations in ownership structure, management effectiveness, risk management, and competitive forces. Research comparing banks in the public and private sectors indicates that private sector banks typically excel over public sector banks in terms of profitability, liquidity, and operational efficiency, whereas public sector banks encounter difficulties concerning asset quality and non-performing assets. Studies on financial liberalization show that heightened competition has lowered intermediation expenses but has also placed strain on bank profitability. Furthermore, research from merger analyses shows that advancements in operational performance are mainly attributed to better asset utilization instead of increased margins. CAMELS evaluations and NPA analyses highlight the significance of robust risk management, strategic capital allocation, and effective cost management in maintaining profitability. The examined literature highlights the importance of financial ratios, ownership structure, regulatory changes, and managerial effectiveness in influencing bank performance, offering essential guidance for policymakers, investors, and bank leaders in developing strategies for enhanced financial sustainability and competitive advantage.