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Operating Efficiency of Indian Public Sector Banks in Light of Basel III Norms


Affiliations
1 Faculty in Management, Department of Laws, BPS Women University, Sonipat, Haryana, India
     

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A sound banking system is that system which enjoys the efficiency in operations, strong liquidity position and continuous path of profitable avenues, all these factors foster banks to survive in a competitive environment and walk-in line with the market dynamics. The resilience of the banking sector always remains a major concern. In the wake of global financial crises and frauds, the analysis of the operational and financial performance of banks has gained increased attention over the past few years. The sound financial performance of banks is the key to absorbing the unexpected losses arising on account of the crisis. Moreover, the financial health of banks plays a significant role in implementing financial regulations as the poor financial performance of banks may lead to bankruptcy. Public sector banks are a dominant player who plays significant role in the Indian economy. Thus, the present study intends to examine the operational performance of Indian public-sector banks and investigate the impact of Basel III on the operational efficiency of banks. The study used operational efficiency indicators (NIM, Cost income ratio) of twenty-one Indian public sector banks for a period of ten years (2008-2017). In addition, the study analyzes the risk weighted assets of banks during the implementation of Basel III norms. Conclusively, the study can be useful for bankers, decision-makers and particularly for the investors looking for profitable opportunities in the Indian banking sector. The study recommended that banks with low operational efficiency should focus on improving their financial performance to boost their level of efficiency to comply with Basel norms.

Keywords

Basel III, Capital Regulations, Net Interest Margin, Operational Performance, Indian Public Sector Banks.
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  • Operating Efficiency of Indian Public Sector Banks in Light of Basel III Norms

Abstract Views: 35  |  PDF Views: 0

Authors

Kavita Jangra
Faculty in Management, Department of Laws, BPS Women University, Sonipat, Haryana, India

Abstract


A sound banking system is that system which enjoys the efficiency in operations, strong liquidity position and continuous path of profitable avenues, all these factors foster banks to survive in a competitive environment and walk-in line with the market dynamics. The resilience of the banking sector always remains a major concern. In the wake of global financial crises and frauds, the analysis of the operational and financial performance of banks has gained increased attention over the past few years. The sound financial performance of banks is the key to absorbing the unexpected losses arising on account of the crisis. Moreover, the financial health of banks plays a significant role in implementing financial regulations as the poor financial performance of banks may lead to bankruptcy. Public sector banks are a dominant player who plays significant role in the Indian economy. Thus, the present study intends to examine the operational performance of Indian public-sector banks and investigate the impact of Basel III on the operational efficiency of banks. The study used operational efficiency indicators (NIM, Cost income ratio) of twenty-one Indian public sector banks for a period of ten years (2008-2017). In addition, the study analyzes the risk weighted assets of banks during the implementation of Basel III norms. Conclusively, the study can be useful for bankers, decision-makers and particularly for the investors looking for profitable opportunities in the Indian banking sector. The study recommended that banks with low operational efficiency should focus on improving their financial performance to boost their level of efficiency to comply with Basel norms.

Keywords


Basel III, Capital Regulations, Net Interest Margin, Operational Performance, Indian Public Sector Banks.