The Survival of Public Sector Banks in the Post LPG Era (New Competitive Strategies to Develop Brisk Efficiency)

In the Indian banking industry public sector banks occupies a vital place but their performance is very critical even in the post banking sector reforms period. There are so many issues, challenges, threats; they are facing for their survival in the era of globalization. The present paper compares and analyzes the profitability of four major bank groups i.e. SBI & its associates (G-I), Nationalized Banks (G-II), New Private Sector Banks (G-III) and Foreign Banks (G-IV) in the second post banking sector reforms era and concludes that there is a significant difference in the profitability of various major bank groups. The average profitability is the highest in the foreign banks (1.06 pc) and new private sector banks (0.96 pc) but the public sector banks are far behind in many parameters. From the correlation matrix, it is examined that the lower profitability of public sector banks is due to the significant and negative effect of burden whereas opposite in case of new private sector banks having their profitability higher due to the lowest burden and positive impact of interest income and interest expended. The paper suggests some strategies like (competitive strategies, customer focus, latest technology, effective HRM, capital planning, profit accountability, merger and acquisition and autonomy) which are necessary for the survival of public sector banks in the liberalized and globalized environment.