Performance Analysis of Banks in India - Pre and Post World Trade Organization (General Agreement on Trade in Services)

Abstract

Under World Trade Organization (WTO), the opening of the Indian banking sector fully to the foreign players will pose a keen competition for the banks in India. Under Commercial presence (Mode 3) of General Agreement on Trade in Services (GATS), foreign banks with branch presence were allowed Foreign Direct Investment (FDI) in private sector banks in 2005. These developments have a tremendous impact on overall functioning of Indian banks and enhancement of competition . The objective of the study was to assign ranks to different bank groups on the basis of their overall performance scores. The study concludes that although foreign banks and new private sector banks (modern) were significantly better  than the public sector banks and old private banks (traditional)but the  traditional banks had improved their performance post WTO. This study will hopefully claim the attention of our policy makers, bankers, corporate executives and other interested parties.

Keywords: GATS, WTO, Indian banking sector, Productivity, Profitability, Efficiency, Composite Index, Intergroup variation