In this paper, a comparison has been made between the public sector banks and their private and foreign counterparts based on the measures of efficiency and productivity that use quantities of outputs and inputs. Efficiency measures a bank’s performance relative to a benchmark at a given point of time and productivity measures a bank’s performance over a period of time. Both measures are relevant in attempting a comparison between these banks. Data Envelopment Analysis (DEA) and Malmquist Index have been used for comparison. The comparisons have been made over the period 2004-09. The empirical findings confirm that the foreign sector banks have been able to score a high Total Factor Productivity (TFP) followed by private banks mainly because of their high technical efficiency change or the use of advanced technology by them. The public sector banks have performed better than the private and foreign banks in pure efficiency change index, which shows that they are more efficient in their operations and need to invest in technology to compete with the private and foreign banks.

In the past few years, the banking sector has undergone significant changes. The opening up of the financial sector in 1990 and phase-wise reforms in 1991 and 1997 by RBI to create an efficient and competitive banking environment in India, witnessed the entry of many private and foreign banks. All these changes have led to stringent prudential norms, regulatory disclosures and supervisory norms for the banks. At this juncture the performance of banks has become a major concern for policy makers and planners in India as the growth of real sector economy depends on financial sector efficiency and its function of financial intermediation. Therefore, a need was felt to compare the public sector banks and their private and foreign counterparts on productivity and efficiency parameters. The results of the study could help the policy makers and bank officials to draft the appropriate strategy to improve the banking efficiency. Rest of the paper is structured as follows: the next section cites the review of literature followed by methodology and data review. In the subsequent section empirical findings are presented. Finally, the paper ends with a conclusion.

Bank Management Journal, Indian Banks, Asset Liability Management, Data Filtering, Least Absolute Deviation, Decision-Making Group, Commercial Banks, Ordinary Least Square, Banking Industry, Kenyan Banks, Least Squares Regression, Mutual Fund Industry, Linear Programming, Financial Markets, Capital Required Adequacy Ratio, Public Sector Banks.