Productive efficiency of the indian nationalized banks -A data envelopment analysis (2008–12)

Nationalized Banks in India play an important role in the process of economic development. The productive efficiency of 19 Indian Public Sector Banks for the period 2008 to 2012 is analyzed. Data Envelopment Analysis is used to compute for radial Technical Efficiency, whereas Malmquist Index is used to calculate Technical Efficiency Change, Technological Change, Pure Technical Efficiency Change, Scale Efficiency Change and Total Factor Productivity Change scores. Public Sector Banks were found to be inefficient in terms of Technical Efficiency as these banks were did not fare well in using their Deposits and Operating expenses for generating revenue pertaining to Advances, Net Interest Income and Other Income. All the Nationalized Banks showed improvement in Total Factor Productivity Change except the Allahabad Bank, Dena Bank, Indian Bank, Punjab and Sind Bank and the Punjab National Bank. The overall Total Factor Productivity Change of Nationalized Banks improved by 0.8 percent. The recapitalization of Public Sector Banks by the Central Government and mobilization of funds from the stock market were the main factors contributing to the growth in Total Factor Productivity Change.