Use of Data Driven Index for Profitability Measure of Indian Public Sector Banks

A strong and sound financial system is a necessary precondition for accelerated growth of an economy. In a country like India, the banking system is the heart of the financial system since they infuse money in the system resulting in additional purchasing power. The rate of financial intermediation, capital formation and rate of economic growth are inextricably linked. Higher the rate of financial intermediation, higher the rate of capital formation and higher will be the economic growth rate and vice-versa. An organized, efficient, well-planned and viable banking system is, therefore, a demanded concomitant for development of a country. But all these requirements can be fulfilled while banks are sustaining a healthy bottom-line. In this backdrop, the present paper strives to suggest a data driven index to assess the profitability performance of Indian PSBs during the study period.