Factors Determining the Financial Performance of Public Sector Banks in India

This paper examines the determinants of profitability in Indian public sector banks from 2010-11 to 2021-22. A sample of 12 public sector banks listed on NSE & BSE was analyzed using multiple linear regression. The study found that bank asset size, cost to income, net non-performing assets, credit deposit ratio, and inflation are negatively related to ROA, ROE, and NIM. Credit risk and economic growth (GDP) positively impact ROA, ROE, and NIM, while capital adequacy ratio negatively affects ROA and NIM, except for ROE. Macroeconomic factors significantly affect ROE and NIM. The findings suggest that focusing on these variables can improve bank profitability.

Suresh Babu Nalliboyina, G. Venkata Chalam