A Pre-Recession Comparative Analysis of Cost, Productivity and Employees’ Efficiency in Indian Banking Industry

The core task of banking industry planning is to achieve economic growth which ordinary market forces cannot. Banking industry planning is act of socialism which depends upon collectivism and uses scant resources to achieve certain deliberate chosen ends. For the purpose, banks have to establish equilibrium between cost and employee's productivity along with global standards between demand and supply in prevailing socio, political and economic environment, and have to coordinate its pace and efficiency with ever changing technological and metamorphic environmental developments within and outside the political boundary. In order to become globally competitive Indian banking industry needs revolution especially in cost prone efficiency which can effectively mobilize and productively utilize public savings to optimum. It is a core truth that Indian modern universal banking can survive in global competition if it has employee's productivity and cost efficient new hybrid financial products and specialized services at par. This paper attempts to explore the relation between employee's potential to overall cost; and for the purpose pre recession period from 1997 to 2008 has been taken for study. For the same employee's productivity and employee's cost ratios comparison has been carried out between the traditional and modern hybrid banks. The outcome of study produced the fact that during the period of study performance of traditional social sector and private banks were below par in comparison to modern hybrid, universal foreign banks. The study also revealed the fact that by recognizing the shortcoming and later implementing measures, Indian banking industry minimizes the performance gap.