The study examines the relationship among growth, profitability and productivity for Indian public sector banks. For measuring profitability, Return on Assets (ROA) was selected and for assessing productivity, business per employee and profit per employee were used as measures. We chose Indian public sector banks as they contribute 74.20% to total deposits of scheduled commercial banks and 75.07% to the total credit of scheduled commercial banks. The study intends to assess whether differing growth rates of Indian public sector banks have any impact on profitability and productivity. During the study period (2005-2012), the business of the Indian public sector banks grew at a compounded annual growth rate of 18.7%. The study concludes that change in growth rates does not significantly affect the profitability. The business per employee and profit per employee for public sector banks remained higher for banks with higher growth rates. We observed significant differences for business per employee for all the years and for profit per employee for four out of seven years.

Some of the major management strategic concerns for the banks are growth, profitability and productivity. The objective of growth has been reiterated by many CEOs that banks should grow faster. At the same time, there is a feeling that the banks which followed aggressive growth path landed in trouble during the recent financial crisis. As a result, questions were raised regarding the size and growth strategy adopted by banks. So, return to growth is approached with caution, and there is also a view that higher growth can lead to asset quality problems.

The Reserve Bank of India, in its report on Trend and Progress of Banking, observed that domestic banks continued to manage growth with resilience in 2011-12 with improved performance in profitability and asset quality. Indian public sector banks offer higher prospects in the backdrop of high growth potential of the Indian economy and favorable demographics. The strength of the Indian banking sector is appreciated worldwide for the fact that it remained relatively unscathed from the global financial crisis of 2007-08.