Economic Value Added (EVA) has received a lot of recognition as a measure of shareholder value creation. While the measure has been widely used for the purpose all over the world, many research studies have appeared to examine variety of issues related to EVA. An attempt has been made in this paper to revisit EVA-based analysis for the Indian Banking Industry. A Sample of 14 public sector and 12 private sector banks listed in Bombay Stock Exchange has been selected. The financial data of these sample units for four years, viz., 2003-04 to 2006-07, have been used for the analysis and comparison. Equity approach has been followed to compute EVA. Average EVA for all public sector banks under study for the whole period of analysis was found to be Rs. 774.57 cr. The corresponding figure for the private sector banks was Rs. 393.47 cr. This finding contradicts with that of some earlier researches (Parsuraman, 2000; and Thamy et al., 2000), which concluded that Indian banks do not create any value for their shareholders. The difference between the mean values of EVA for public sector and private sector banks, however, was not found significant (value of `t' 0.0096 < 2.06). Among public sector banks, State Bank of India (SBI) ranked the highest in terms of average EVA (Rs. 6193.24 cr), while Canara Bank was the only one with negative average EVA (Rs. 1390.20 cr). ICICI Bank Ltd. stood highest among private sector banks with regard to average EVA (Rs. 2036.12 cr), while no bank in this category had negative average EVA for the entire period of the study. Correlation analysis of EVA with other related figure was another objective of the present research and Karl Pearson's coefficients of correlation were determined and analyzed in the paper.

The financial sector in India, as well as over the world, continues to be one of the primary engines of economic growth. One of the key constituents of the financial sector in India is the banking system. Since the early 1990s, structure of the banking sector has significantly changed due to deregulation, liberalization and divestment of public banks. The economic liberalization has changed the business environment in the country. During the pre-liberalization period, the industry was merely focusing on deposit mobilization and branch expansion. Based on the recommendation of the Narasimhan Committee, the Government of India started diluting its stake in public sector banks. These developments are expected to have important implications for operating performance and profitability of the banking system. From the point of view of the shareholders, it is especially important to know the efficiency level of banking firms. Whether banks have created enough value is an important point for the shareholders to focus for an organization. The shareholders' value depends on the performance of the banks.

The term `performance' cannot be put into a tight framework of definition. It is an ambiguous phenomenon and it can be interpreted and measured in different ways (Goodman and Pennings, 1977; and Millward, 1982). Performance can be assessed by different users from their own points of view. The traditional measures like Return on Capital Employed (ROCE), Return on Net Worth (RONW), Earnings Per Share (EPS), etc., do not represent the shareholders' true return, because all these measures consider only the borrowing cost and not the cost of equity. Certain value-based performance measures, such as Cash Flow Return on Investment (CFROI), Cash Value Added (CVA), Shareholder Value Added (SVA) and Economic Value Added (EVA), have also appeared on the scene to measure the corporate financial performance.

Accounting Research and Audit Practices Journal,Economic Value Added, EVA, Bombay Stock Exchange, BSE, Economic Growth, Economic Liberalization, Return on Capital Employed, ROCE, Cash Value Added, CVA, Shareholder Value Added, SVA, Net Operating Profit After Tax, NOPAT, Weighted Average Cost of Capital, WACC, Reserve Bank of India, RBI.