Efficiency of IT Deployment of Public Sector Banks in India

Sanjay Dhingra

Sanjay Dhingra University School of Management Studies, G. G. S. Indraprastha University, Delhi, India;

Keywords: Data Envelopment Analysis, Public Sector Banks, Technical Efficiency, Scale Efficiency

Abstract

This paper evaluates the efficiency of IT deployment of Public sector banks (PSBs) in India for the period 2003 to 2009 using a
technique known as Data envelopment analysis (DEA). DEA technique is a non-parametric method used for evaluating the relative
efficiency of similar units like banks. The input variables selected for DEA are computerization expenditure to operating
expenditure, fully computerized branches to total branches, number of ATMs, PCs per employee, core banking branches to fully
computerized branches, while the output variables chosen are business per employee, business per branch and operating profits
per employee. The CCR model with output orientation and BCC model with output orientation have been applied separately on the
same data to calculate the efficiency of each bank. Results indicate that average technical efficiency of IT deployment of PSBs has
gradually improved during the study period. It has also been observed that banks have considerably improved their scale efficiency
over the same period.