Benchmarking Indian Banks: Size, Growth, Efficiency, and Risk Management

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29 September 2010


Since 1991, liberalization of the Indian banking sector has encouraged the country’s firms to become more efficient and competitive by international standards. Advances in both regulatory standards and rates of IT adoption have allowed banks to streamline their processes.

In a new report, Benchmarking Indian Banks: Size, Growth, Efficiency, and Risk Management, Celent compares the competitiveness and risk management capabilities of banks in India. Included in the report are 21 public sector banks, eight domestic private banks, and six foreign banks. Within Celent’s methodology, four basic factors are considered (size, growth, efficiency, and risk management), and a total of 18 parameters are analyzed.

Banks such as Axis Bank, Bank of Baroda, HDFC Bank, Union Bank, and Indian Bank perform well because they have high growth rates with a low ratio of Nonperforming Assets (NPAs) to Net Advance. Some banks that should work towards reducing the ratio of NPAs to Net Advance are Citibank, HSBC, ICICI Bank, and SBI.

“Public sector banks have hired much larger numbers of management graduates and are closing the performance gap with domestic and foreign private banks,” says Anshuman Jaswal, Celent Senior Analyst and author of the report. “For their part, private banks, especially the domestic ones, are also contributing to higher levels of financial inclusion in the country. Hence, on the basis of these findings, Celent believes that the banking sector is well poised for growth in the coming years.”