PSBs pip pvt peers in productivity

Public sector banks (PSBs) productivity increased significantly during 2008-09 compared to private sector banks.

IDBI Bank has emerged as the most efficient public sector bank in the country having scored over 35 others in two denominators, this study employed to determine the efficiency of public and private sector banks.

Yogesh Agarwal, chairman & MD of IDBI Bank said: ?The financial year 2008-09, when the global economic meltdown affected banks across the world, the IDBI Bank not only withstood the storm, but showed a surge in overall business performance.?

In order to make an analytical comparison between the 36 banks, they have been classified into two groups. The first group comprises 25 public sector banks and the second group includes 11 private sector banks. Three denominators have been used to assess the productivity of the banks-business per employee, profit per employee and deposit per employee.

IDBI Bank stood first with respect to business per employee, deposit per employee and second with respect to profit per employee.The productivity ratios of the bank in terms of business, deposit and profit are Rs 2615 lakh, Rs 1362 lakh and 10 lakh respectively.

The study reveals that 11 private sector banks scored over the 25 PSBs with respect to all the three parameters. If the toppers in the two groups are compared, IDBI Bank scores over the J & K Bank with respect to two denominators namely deposit per employee and business per employee.

The business per employee of the IDBI Bank was Rs 2615 lakh as against Rs 1578 lakh for the J & K Bank and deposit per employee of IDBI Bank was Rs 1362 lakh as against Rs 966 lakh in the J & K Bank.

On the basis of the third parameter-the profit per employee-J & K Bank is ahead with 12 lakh as against Rs 10 lakh for IDBI Bank.

The average business per employee of the 25 PSBs have gone up from Rs 596 lakh in 2007-08 to Rs 731 lakh in 2008-09. The average deposit per employee have also increased from Rs 343 lakh in 2007-08 to Rs 423 lakh in 2008-09.And the average profit per employee increased from Rs 3.75 lakh to Rs 4.72 lakh during the study period.

The most important indicator for assessing the efficiency of a bank is the net profit per employee. On the basis of profit per employee, the top three in 2008-09 were IDBI Bank, Bank of India and Corporation Bank .Thirteen banks exceeded the average profit per employee during 2008-09.

On the other hand, the average business per employee of the 11 private banks have decreased from Rs 941 lakh in 2007-08 to Rs 796 lakh in 2008-09. The average deposit per employee have also decreased from Rs 527 lakh in 2007-08 to Rs 441 lakh in 2008-09. And the average profit per employee decreased from Rs 7.91 lakh to Rs 6.82 lakh in 2008-09. On the basis of profit per employee , the top three in 2008-09 were J & K Bank, ICICI Bank and Axis Bank. Out of eleven private banks, only three banks exceeded the average profit per employee during 2008-09.

From the above analysis one thing is clear that though the ratios are higher for private banks, the efficiency of PSBs have increased significantly during the year 2008-09.