In view of the changed scenario in the Indian banking sector during the reform period, the present paper tries to make a comparison of fund based operating performance and total factor productivity growth of select (30) Indian commercial banks (20 public sector, eight private sector and two foreign commercial banks) for the five year period 2000-01 to 2004-05 using Data Envelopment Analysis and Malmquist total factor productivity index. The results obtained from the exercise indicate substantial fluctuations in mean technical efficiency scores for the observed years. The mean technical efficiency of the in-sample private and foreign banks is somewhat higher than the in-sample public sector banks. Further, most of the in-sample banks exhibit decreasing returns to scale. In so far as total factor productivity growth is concerned, the in-sample public sector commercial banks exhibited relatively higher Malmquist TFP Index than the in-sample private sector banks. Decomposition of the total factor productivity growth rate into technical efficiency change and technical change components reveals that across the groups the commercial banks exhibit rising technical efficiency but negative technical change.
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Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.