PSBs beat private banks in ‘efficiency’: SBI study

MUMBAI: Public sector banks in India are more efficient than their private sector peers, according to a study by SBI – the country’s biggest state-owned lender. The study measures efficiency by assessing how well banks utilise resources to generate output at an optimal scale.
In the relative performance of individual banks over the full sample period from FY06-23, SBI leads among public sector banks with a score of nearly 98%, followed by Union Bank of India at 92.5%.In the private sector, HDFC Bank tops the list with a score of nearly 98%, followed by Axis Bank at 94.4%.
PSBs have generally been more efficient than private banks except during FY19-23, likely due to mergers and rationalisation of business, branches, and employees, the study showed. Despite numerous structural changes, PSBs have operated at an efficiency level of 82.8%, compared to 81.2% for all scheduled commercial banks, 79.6% for private banks and 78.2% for foreign banks.