Approach framework

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fe Bureau: Mar 30 2011, 01:55 IST

1. Banks were categorized into public sector banks (‘PSB’), old private sector banks (‘OPSB’), new private sector banks (‘NPSB’) and foreign banks (‘FB’). With the objective of making the comparison more meaningful, banks with five branches or less as at March 31, 2010 and banks with total assets less than Rs. 5,000 crores as at March 31, 2010; were not considered for the rankings.

2. Financial information for the year ending March 31, 2010 relating to each of the banks falling into the aforesaid categories was collected from the data available from Reserve Bank of India. To ensure consistency, only the published information was used.

3. Five different major criteria were identified against which the Indian were to ranked. These criteria are: (i) Efficiency, (ii) Profitability, (iii) Growth, (iv) Credit Quality, and (v) Strength and Soundness. Considering the current banking, industrial and over-all economic scenario, pertinent weights were assigned to each of the major criterion. The rationale for selecting each of the criteria and assignment of their respective weights is discussed in above-mentioned article.

4. Six sub-criterion were selected within each of the aforesaid major criteria, which would cover the various aspects within the aforesaid criteria. Considering the current banking, industrial and over-all economic scenario, pertinent weights were assigned to each of the sub-criterion. These sub-criteria and their respective weights (in brackets) are:

(i) Efficiency (0.15)

(a) Non-Interest Income/Total Assets (0.10)

(b) Business per Employee (0.15)

(d) Operating Expenses/Total Assets (0.15)

(e) Profit per Employee (0.20)

(f) Spread/Total Assets (0.25)

(ii) Profitability (0.20)

(a) Yield on Advances (0.10)

(b) Return on Investments

... contd.

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