Banking Reforms and Efficiency in India: Evidence from Data Envelopment Analysis and Tobit Regression Analysis

This study examines Indian commercial banks' performance over the 1991–2022 reform period using Data Envelopment Analysis (DEA). The first stage of the two-stage procedure calculates efficiency scores, and the second stage uses Tobit regression to find the factors that affect efficiency. The data show that efficiency went up a lot following the global financial crisis, but it went down during the recovery from COVID-19. Public Sector Banks (PSBs) were always more efficient than private and foreign banks. This was because they were bigger, got help from the government, and reached more people. The Tobit model shows that total assets and return on assets had a big beneficial effect on efficiency. On the other hand, the capital adequacy ratio and non-performing assets were not statistically significant. The results show that Indian banks have adapted to liberalisation and new technology, yet there are still big problems since they aren't using their resources enough. The study shows that to close the gap between actual and prospective performance, businesses need to improve their operational methods, come up with new ideas, and manage their credit better, especially when the economy and regulations change.