Augmenting commercial banks’ other income through off-balance sheet activities in relation to their determinants in the Indian banking system

ABSTRACT COVID-19 has a devastating impact on the global economy, particularly on robustness and resilience of emerging and developing economies’ (EMDE’s) economic-cum-financial systems. Reinventing banking practices with strategies are indispensable for sustainable growth. EMDEs like India have distinct country-specific business models. We aim to devise a sustainable model for augmenting banks’ other income; analyzing off-balance sheet (OBS) activities in India, which may be applied in EMDEs’ efficacy. We apply least-squares dummy variables and ordinary least squares models for fixed-effect regression analysis on OBS from 1996-2019. Regulatory determinants like capital adequacy, net non-performing assets, liquidity have more significant impact on OBS than bank-specific variables like bank size or macroeconomic like GDP. OBS can generate revenue is exemplified by strong relation to other income. Findings reveal that while assessing impact of COVID-19 on-balance sheets, banks should prioritize capital and contingency liquidity planning, focusing on OBS activities to augment other income in the revival strategy.