Examining the off Balance Sheet Exposure and Efficiency of Indian Commercial Banks – A DEA Approach

2020 ◽  
Vol 6 (02) ◽  
pp. 60-72
Author(s):  
Kompalli Sasi Kumar
Keyword(s):  
Private Sector ◽  
Returns To Scale ◽  
Allocative Efficiency ◽  
Balance Sheet ◽  
Cost Savings ◽  
Public And Private ◽  
Financial Variables ◽  
Proxy Variables ◽  
Public And Private Sector ◽  
Constant Returns To Scale

The study examined the exposure and efficiency of select public and private sector banks towards off balance sheet items by applying Data Envelopment Analysis (DEA) on the key financial performance ratios of banks. The study covered a period of 5 years ranging from 2013 to 2017 and conducted a year wise analysis. The study selected 20 different type of variables (financial variables) for building Input –Output Model to test DEA for examining efficiency. These variables are acting as proxy variables for indicating the effect of Off balance sheet exposures on the financial health of the business. These variables are extracted from the financial statements of respective banks on a year on year basis and required adjustments are done. The study investigated the Off balance sheet exposures in the areas of Foreign Exchange Transactions, Guarantees, Acceptance and Endorsements etc., The proxy variables, so identified for the study are employed for understanding various efficiencies of banks like scale efficiencies involve Constant Returns to Scale (CRS), Variable Returns to Scale (VRS) and average efficiencies like Technical Efficiency (TE), Cost Efficiency (CE), Allocative Efficiency (AE). The study find out that throughout the study period, the select banks exhibited constant returns to scale, except CUB and AXIS Bank in the first year of study (2013) displayed increasing returns to scale due to heavy exposures. In the category of efficiency parameters, AXIS Bank and CUB are displaying lower efficiencies in the segment of private sector banks and Andhra Bank and OBC exhibiting lower efficiencies in the segment of public sector banks. Here lower efficiencies with references to cost savings aspects and output generation, this may be due to their scale of operations in the industry. The study concluded that large banks are exhibiting highest efficiencies than compared to small banks operating in the industry. This is definitely an area for further research to the industry and researchers to examine the direct effect of Off balance sheet transactions (IFRS amendments in this direction only), so that credit risk can be reduced considerably in the business. So that business houses can take up calculated risk in the international markets.

scholarly journals Liquidity and Off-Balance Sheet Items: A Comparative Study of Public and Private Sector Banks in India

2017 ◽  
Vol 8 (1) ◽  
pp. 47 ◽  
Author(s):  
N. Pushkala ◽  
J. Mahamayi ◽  
K. A. Venkatesh
Keyword(s):  
Private Sector ◽  
Banking Sector ◽  
Balance Sheet ◽  
Vital Role ◽  
Public And Private ◽  
Banking Business ◽  
Public And Private Sector ◽  
The Impact ◽  
Reserve Ratio ◽  
Of Greece

Liquidity is the life-line of every business. Banking business’ liquidity was the bone of contention during the economic crisis of Greece and the downfall of Finance Behemoth like Lehman Brothers. Banking Sector-Illiquidity was the epicentre of such crisis. Globally, the Off-Balance Sheet Exposure played a vital role in managing liquidity and solvency issues of commercial banks. This research paper explores the concepts, aspects, analysis of liquidity and the impact of Off-Balance Sheet Items on Liquidity and Solvency. Furthermore, this paper focuses on the liquidity aspects of Public and Private Sector banks towards scrutinizing whether the ownership has any influence on the liquidity and solvency aspects of the banking structure, under the backdrop of Off-Balance Sheet Exposure. Besides, it looks into the unpredictability of RBI’s policies on liquidity like Cash Reserve Ratio, Statutory Liquidity Ratio etc.

scholarly journals Financial Efficacy of Selected Public and Private Sector Banks in India

2013 ◽  
Vol 2 (2) ◽  
pp. 26-31
Author(s):  
S Ayyappan ◽  
M SakthiVadivel
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Public And Private ◽  
The Public ◽  
Financial Variables ◽  
Public Sector Banks ◽  
Number Of Factors ◽  
Private And Public ◽  
Public Banks ◽  
Public And Private Sector

The banks in India have over 67,000 branches located across the country. All these are classified into two major categories, nonscheduled banks and scheduled banks. Scheduled banks includes commercial banks and the co-operative banks. The public sector banks are accountable for more than 78 percent of total banking industry in India. Even though private sector banks came later into the market, due to their customer servicing and easy banking features they are also competing equally with already existing public sector banks. so it is very essential to analyze how their financial performance is influenced by number of factors which willfurther suggest them where they need to concentrate more. in this article we have analyzed the correlation between return on total assets and other financial variables of selected private and public banks in India.

scholarly journals Priority Sector Lending by Public and Private Sector Banks in India

2020 ◽  
Vol 4 (10) ◽  
pp. 127-134
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Small And Medium Enterprises ◽  
Balance Sheet ◽  
Bank Credit ◽  
Inclusive Growth ◽  
Public And Private ◽  
Public Sector Banks ◽  
Public And Private Sector ◽  
Medium Enterprises

Priority Lending is critical to the inclusive growth in India. The credit distribution to the priority sectors is vital in ensuring that the economic growth is even and percolates down to all levels in the economy. RBI made it mandatory to the Scheduled Commercial Banks (SCB) in India for providing credit delivery to critical sectors identified as part of priority sector. RBI mandated all the banks should achieve the targets and sub targets of priority sector lending as minimum percent of Adjusted Net Bank Credit (ANBC) or Off - Balance sheet Exposure (OBE) whichever is higher. This paper aims at understanding the credit delivery to Priority Sector by Public Sector Banks (PSBs), Private Sector Banks (PrSBs), analyze the ability of the banks to meet the targets and sub targets as Agriculture Advances, Micro, Small and Medium Enterprises Advances and Weaker Sections Advances and whether these banks are meeting the recommendations of the RBI in providing credit to different sub segments of priority sector especially, Agriculture, MSMEs and Weaker sections. Ratios were calculated to check the proportion of these priority advances in the total advances, the percentage of priority in the ANBC. The statistical tools are used to check the significant variation of priority lending by these banks. Public Sector banks are proved that they are dominant partners in this strategy for sustainability of financial inclusion through lending to all the target and sub targets as per the RBI norms. Major portion of PrSBs lending is towards MSMEs while PSB were targeting more on agriculture and weaker sections.

Corporate Social Reporting Practices In India

2018 ◽  
Vol 8 (1) ◽  
Author(s):  
Dr Vipin Bihari Srivastava ◽  
Dr Manoj Kumar Mishra ◽  
Dr Wogari Negari
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Social Information ◽  
Social Reporting ◽  
Annual Reports ◽  
Public And Private ◽  
Reporting Practices ◽  
Corporate Social Reporting ◽  
Public And Private Sector ◽  
Corporate Social

"This paper aims to examine the extent of corporate social reporting practices in the annual reports of companies in India and to ascertain the differences if any, between public sector and private sector companies and to investigate what were the determinants of corporate social reporting . The study intends to answer the research questions which include: a) what variables could represent a Conceptual Model of Corporate Social Reporting consists of dependent variables and Independent variables? b) What are the factors of Corporate Social Reporting (COSOR) and how valid and reliable are these factors? c) What is the degree of COSOR by factors in public and private sector companies? d) What are the determinants of COSOR? What is the level of their influence on COSOR? A sample of 120 listed companies of National Stock Exchange of India was chosen and they were stratified in to public and private sector companies. A Corporate social reporting Index was constructed for data collection through content analysis from the annual reports. The results of the study revealed that social accounting information were disclosed in company’s annual reports, chairman’s speech, directors’ reports, notes to accounts, schedule to accounts and auditor’s report. The degree of corporate social reporting varies between public sector and private sector companies. The public sector companies have disclosed more corporate social reporting information than the private sector companies. The study found that higher the level of capital employed, earnings before depreciation and taxes, total assets and total sales higher was the level of corporate social reporting. However, the degree of influence of determinants on corporate social reporting was different among public and private sector companies. Most of the companies have disclosed corporate social information on voluntary basis. To improve the understandably, uniformity, and comparability of corporate social information, this study suggests making it mandatory. A standard format for disclosure of corporate social information shall be prescribed by the Ministry of Corporate Affairs by amending the Indian Companies Act. The concept of social accounting is relatively new in India. This study suggests to include it in the commerce curriculum and also in the curriculum of CA/CWA/CS. Corporate Social Reporting is such a vast area of research that no single study can cover different dimensions related to it. Though some studies including the present study have been conducted on Corporate Social Reporting Practices in India, but still there is much potential of research in this area. Future research in this area will hopefully bring more brightening result measuring and analysing social costs and benefits data by manager as well as by other concerned. Since the subject is in the primary stage, an in-depth research is needed to be done in different sectors such as banking information technology, manufacturing etc. The results are specifically applicable to sample companies and generalisations can be made with caution. The results of the study are based on the data collected from published annual reports of sample companies using content analysis method. Corporate social reporting in company websites, brochures etc are not covered. Social cost and benefit analysis is not covered in this study.

Impact Assessment Study of NPAs and Rate of Recovery: Are Private Sector Banks in India Better off?

2021 ◽  
pp. 097215092098030
Author(s):  
Richa Verma Bajaj ◽  
Gargi Sanati ◽  
Chetan Lodha
Keyword(s):  
Private Sector ◽  
Negative Relationship ◽  
Dynamic Panel ◽  
Public And Private ◽  
Basel Committee ◽  
Assessment Study ◽  
Gdp Growth Rate ◽  
Net Interest Margin ◽  
Rate Of Recovery ◽  
Public And Private Sector

Our study significantly contributes in understanding a comparative framework and the interactions of idiosyncratic and systematic factors for determining non-performing assets (NPA) and rate of recovery for banks in India, as put forward by Basel committee. Although determinants of NPA is very well debated issue, the comparison of public and private sector banks in terms of their assets quality i.e. NPAs and rate of recovery and their determinants like collateral, operational inefficiency, GDP growth rate etc. are the added contribition of this study. We have employed Arrelano–Bond dynamic panel method on 35 banks in India for the period 1998–1999 to 2017–2018 for determinants of NPAs, while determinants of rate of recovery are studied for the period 2003–2004 to 2017–2018. Our findings show that the priority sector loan has significant differences in determining NPA across banks despite them having sufficient collateral. The negative relationship between collateral and recovery, especially for private sector banks, signifies low recovery for illliquid collateral. This study may recommend that a bank with high net interest margin (NIM), high proportion of secured and liquid collateral, and sufficient mix of long- and short-duration loans in line with bank’s asset liability policy can manage their portfolio well.

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