Analysis of Financial Ratios for Measuring Performance of Indian Public Sector Banks

Banks, as the critical part of financial system, play an important role in contributing to a country's economic development. If the banking industry does not perform well, the effect to the economy could be huge and broad. So there is a great need to investigate those factors which have impact on performance level of banking sector as whole. First and foremost factor under consideration comes to be all financial ratios liquidity, credit, capital, operating expenses, return on equity(ROE), return on investment(ROI) etc for analyzing the impact on performance level. Bankers from public sector banks accorded more importance to these ratios (measures) of liquidity as compared to those from private sector banks. Financial ratios enable us to identify unique bank strengths and weaknesses, which in itself inform bank profitability, liquidity and credit quality. An efficient banking system is recognized as basic requirement for the economic development of any economy as it has a great impact on the growth of the every organization and also economic growth of the country. The present study is conducted to analyze those financial ratios which play much significant role during performance measurement of Indian public sector banks. And also to find the best and worst practices associated with banking sector to increase the performance ratio.