Performance Efficiency of Selected Private Sector Banks in India Using Data Envelopment Analysis

Liberalization of banking sector in India was noticed in early 1990 s when India adopted a new economic policy for the development of nation. The banking reform package was based on the recommendations proposed by the Narasimham Committee Report (1992) that advocated a move to a more market oriented banking system, which would operate in an environment of prudential regulation and transparent accounting, expecting banks to usher overall efficiency, to improve the profitability and overall financial health in the banks. This re energized Indian Banking Sector with rapid economic growth and strong contribution from all sectors of banks – public banks, private banks and foreign banks. The emergence of private sector banks in India has developed tough competition among them in terms of interest rates, wide range of products and services, customer service etc. Research studies focusing on the efficiencies of private sector banks are essential in today, s scenario where the competition is very vulnerable. The study focuses on analyzing the performance efficiencies of selected private sector banks using Data Envelopment Analysis (DEA). DEA was used to analyse the relative efficiency of banks for the year 2012 -13. Cross efficiency matrix was used to identify the most efficient bank.