Financial Performance of New Private Sector Banks in India: An In-depth Study

Abstract

The economic development of any country largely rests on banks. Hence, only the effective banking system could contribute to the process of growth in a positive way. Private banking activities have been in existence since past in the form of money lending and these are the foundation of economic manifestation of the country. But at some point of time, due to crisis and lack of coordination between banking policy and proper control of the authority, the growth of the banking system was almost obstructed. Globalization was another positive step which brought transformation in the then banking system. Especially, there were significant changes in the prevalent products and services of the banks which the customers avail themselves of and in consequence, the banking sector witnessed noteworthy change. In response to the recommendation of the Narasimham Committee, in July 1991 the RBI, 8 banks are set up after fulfilling the formalities, which are known as ‘New Private Sector Banks’ The present study is made to find out the overall performance of the new private sector banks in respect to profit margins and factor responsible for it.

Keywords: New Private Sector Banks, Profitability, Factor Analysis, Post Reform Period