Core banking boosts PSBs efficiency

Written by Pradip Kumar Dey | Mumbai | Updated: Jul 15 2011, 08:31am hrs
Productivity at public sector banks increased significantly last year although the profit per employee was higher for private sector banks.

IDBI Bank emerged as the most efficient in a pack of 38 banks, reporting the highest business per employee and also the highest deposit per employee. Among the reasons for public sector (PSU) banks having become more efficient, is the implementation of core banking solutions.

Vaibhav Agrawal, VP Research, banking, Angel Broking, said, PSU banks have become more efficient in terms of improving branch and employee efficiency. Banks with more retail business or more rural branches tend to have poor scores on this parameter, but they generally have the highest Casa (current account and savings account) ratios.

PSU banks have also done well in terms of profit per employee though the trend could reverse in the next couple of years. The average business per employee of the 24 PSU banks has gone up from R9.20 crore in 2009-10 to R11.01 crore in 2010-11, while the average deposit per employee has increased from R5.41 crore in 2009-10 to R6.33 crore in 2010-11. The average profit per employee increased from R5.57 lakh to R6.65 lakh during the study period.

The average business per employee of the 14 private banks increased from R7.74 crore in 2009-10 to R9.05 crore in 2010-11, while the average deposit per employee increased from R4.36 crore to R4.95 crore. The average profit per employee increased from R5.87 lakh to R7.40 lakh in 2010-11.

On the basis of profit per employee, the top three in 2010-11 were Yes Bank, Axis Bank and TN Mercantile Bank. Of the 14 private banks, eight exceeded the average profit per employee during 2010-11.