*Associate Professor, The Business School, University of Kashmir, India
**Research Scholar, Department of Commerce, Bharathiar University, India
Online published on 7 December, 2013.
In the context of recent financial and banking crisis, the vibrant banking sector has been priority for bankers’ world over. It is common perception of all banking experts that vibrant banking system is back bone of country's financial system and on the contrary it is depended on better profitability levels achieved by each bank. Therefore, this study attempts to analyse the main determinants of profitability of public sector banks in India. For this purpose, twenty four ratios covering different dimensions of banking business and those are believed to be main contributors of profitability in case of banks were identified and related with net profit ratio. The paper demonstrated the correlation of various variables with bank profitability through use of statistical tests like Correlation and Multiple Regression Analysis. The spread to total funds, per employee productivity, business per employee, RONW, Operating Expenses to total funds, burden to total funds, other income to total income and provisions & contingencies to total funds have emerged as most dominant variables influencing the bank profitability. However, spread to total funds, per employee productivity and business per employee are contributing 80% of profitability of Public Sector Banks.
Banks, Profitability, Total Funds, Spread, Burden
