Employee Productivity

International Journal of Management and Social Sciences Research (IJMSSR)
Volume 2, No. 10, October 2013
ISSN: 2319-4421
Employee Productivity of Private Sector Banks in India

Dr. Hawa Singh, Department of Commerce, Kurukshetra University, Kurukshetra, India
Kamlesh , Research Scholar, Department of Commerce, Kurukshetra University, Kurukshetra, India
ABSTRACT
The Indian banking industry is said to have an excessive
use of labour due to the significant market share of
government owned banks. Indian government has
undertaken a process of regulatory reform to bring about
market discipline in the usage of inputs and to increase the
employee efficiency and productivity. Banks, just like any
other firm, need to transform inputs into outputs at an
efficient rate in order to maximize profitability and to
survive under competitive conditions. Human resource is
the most important resource of the organization. Due to
motivated and talented manpower the banking sector is
giving good results every year. In Indian banking sector
public, private, foreign, development and cooperative
banks are performing banking service very well under
competitive situation. In this situation, for survival and
growth management in banks is adopting different
strategies to improve employee productivity. The focus of
this paper is the estimation employee productivity in the
Indian banking sectors. To analyze the employee
productivity of the private sector banks eight parameter
like profit, deposit, advances, spread, burden, total
income, business and total expenses are selected and
statistical tools like average, standard deviation,
coefficient of variation, exponential growth rate (EGR)
and trend analysis have been used for analyzing the data.
The time period selected for the study is 2002-2012. This
study will help the private sector banks in India to make
some financial decision for further years.
Keywords:
Productivity, Private Sector Banks, Employee and
Performance.
INTRODUCTION
Commercial banks play an important role in the any
country's economy by financing the requirements of trade,
industry and agriculture with a greater degree of
responsibility. Banks mop up deposits by drawing the
community savings into the organized sector, which are
then priorities laid down by the RBI in consonance with
the fiscal policies of the GOI. Commercial banks can be
described as a type of financial intermediary. Commercial
banks provide a number of import financial and trading
documents such as letters of credit, performance bonds,
standby letters of credit, security underwriting
commitments and various other types of balance sheet

guarantees. They also take responsibility for safeguarding
such documents and other valuables by safe deposit boxes.
For the past three decades Indias banking system has
several outstanding achievements system to its credit. The
most striking is its extensive reach. It is no longer confined
to only metropolitans or cosmopolitans in India. In fact,
Indian banking system has reached even to the remote
corners of the country. Thus, Growing Indian economy is
the
result
of effective
Indian banking system
amongst many other responsible internal and external
factors, in which the role played by public commercial
banks in the country is also a crucial one.
Banking in India has its origin as early or Vedic period. It
is believed that the transitions from many lending to
banking must have occurred even before Manu, the great
Hindu furriest, who has devoted a section of his work to
deposit and advances and laid down rules relating to the
rate of interest. During the mogul period, the indigenous
banker played a very important role in lending money and
financing foreign trade and commerce.
During the days of the East India Company it was the turn
of agency house to carry on the banking business. The
General Bank of India was the first joint stock bank to be
established in the year 1786. The other which followed
was the Bank of Hindustan and Bengal Bank. The Bank of
Hindustan is reported to have continued till 1906. While
other two failed in the meantime. In the first half of the
19th century the East India Company established there
banks, the bank of Bengal in 1809, the Bank of Bombay in
1840 and the Bank of Bombay in1843. These three banks
also known as the Presidency banks were the independent
units and functioned well. These three banks were
amalgamated in 1920 and new bank, the Imperial Bank of
India was established on 27th January, 1921. With the
passing of the State Bank of India Act in 1955 the
undertaking of the Imperial Bank of India was taken over
by the newly constituted SBI. The Reserve Bank of India
(RBI) which is the Central bank was established in April,
1935 by passing Reserve bank of India act 1935. The
Central office of RBI is in Mumbai and it controls all the
other banks in the country. In the wake of Swadeshi
Movement, number of banks with the Indian management
were established in the country namely, Punjab National
Bank Ltd., Bank of India Ltd., Bank of Baroda Ltd.,
Canara Bank. Ltd. on 19th July 1969, 14 major banks of
the country were nationalized and on 15th April 1980, 6
i-Xplore International Research Journal Consortium
www.irjcjournals.org
64

ISSN: 2319-4421
more commercial private sector banks were taken over by At present scheduled banking structure has 26 public
the government. The first bank in India, though sector banks operating in India, 20 private sector banks, 40
conservative, was established in 1786. From 1786 till foreign banks. Out of the 20 private sector banks, there are
today, the journey of Indian Banking System is very 13 old private sector banks and 7 new private sector banks.
progressive.
Table 1: Structure of Indian Commercial Banks (2011-12)
Amount in million
S. No. Bank Group
No of Branches Employees Deposit
Capital
Investment Return
banks
on
assets
1
Nationalised Banks
20
50013
491132
35969893
2483271 10867544
0.88
2
SBI & its Associates

Public Sector Banks
6
26
19485
69498
280256
771388
14050241
50020134
1072494
3555765
4173221
15040765
0.89
Old Private Sector

Bank
New Private Sector
Banks
Private Sector Banks
13
5555
62965
3158914
278963
1093333
1.2
7853
151339
8586960
1313989
4166489
1.63
20
13408
214304
11745874
1592952
5259822
936598
2004885
5
Foreign Banks
40
323
27698
2770634
Source: RBIs Report on Trend and Progress of Banking in India (2011-12)
1.76
The present structure of the Indian commercial banks has According to RBI report on the global banking
been shown in the Table 1. From the table it is clear that development, the return on assets (ROA), an indicator of
the major market share is enjoyed by the public sector the banking systems profitability, showed a divergent
banks in India. However a note worthy point here is that trend across economies. In general, it witnessed a
the new generation private sector banks are performing declining trend (Table 2). But the return on assets of India
better than old private sector banks and foreign banks have has shown a constant trend.
highest return on assets.
Table 2: Return on Assets of Banks for Select Countries
(per cent)
Country
2007
2008
2009
France
0.1
0.3
Germany
0.3
-0.1
Greece
Italy
0.8
2010
2011
2012
0.6
0.4
0.2
0.4
0.2
-0.1
-0.6
-2.1
0.3
0.3
0.3
-0.9
Advanced economies
Japan
0.5
0.3
-0.3
0.2
0.3
Portugal
1.1
0.3
0.4
0.5
-0.3
0.1
Spain
1.1
0.8
0.6
0.5
0.2
United Kingdom
0.4
-0.4
0.1
0.1
0.1
United States
1.2
-0.1
-0.1
0.9
Emerging and developing economies
1.2
Russia
1.8
0.7
1.9
2.5
China
0.9
0.9
1.1
1.3
India
0.9
0.9
Malaysia
1.5
1.5
1.2
1.5
1.5
1.6
Brazil
3.5
1.6
2.4
3.2
1.5
1.4
Mexico
2.3
1.4
1.5
1.8
Source: RBIs Report on Trend and Progress of Banking in India (2011-12)
1.5
1.8
65

In service sector, involvement of human element is of very

high and this is application in banking service too.
Attitude, interest, motivation, skills and knowledge,
behavior, promptness, response to call etc. all are related
to employees. These factors affect the individual and
organizational performance. Hence, the concept of labour
productivity is banking sector has great significance in
present time. In present stiff competitive situation, it has
become difficult to attract customers, retain and motivate
them for further business. When employees give better
performance then only the profitability of the banking unit
will go high. Human resource is the most important
resource of the organization. In a competitive and
changing business environment, the need for highly skilled
and dedicated manpower is felt who can give the best
output. The firm that gets the advantage over other
competitors through their talented and dedicated
manpower can take the lead in the market. The
contribution of employees on job is the most important
factor for development and excellence in business. The
performance of employees on different jobs in close
coordination is needed for success of the unit.
ADVANTAGES
OF
HIGHER
EMPLOYEES PERFORMANCE
Following are advantages of higher performance to the
individuals, organization, society and nation as a whole:
a. The productivity of individual on job increases.
b. Employee gets job satisfaction at job.
c. Psychological problems of employees come to low
level.
d. Involvement of employees in their jobs increases.
e. A sense of commitment and loyalty among
employees develop.
f. Employees get higher salaries and incentives on
production basis.
g. Quality and quantity of the total production
increase.
h. Sales and market shares of the company in the
market improves.
i. Profit improves and that leads to progress of the
business.
j. All these contribute in the development of national
economy and living standard of the society as a
whole.
PRODUCTIVITY ANALYSIS
Productivity is a vital indicator of economic performance
of an economic system. Productivity is not an end in itself.
In fact, it is a mechanism for improving the material
quality of life. Productivity is fundamental to progress
throughout the world. It is at the heart of economic growth
and development, improvements in standards of living and
quality of life.
ISSN: 2319-4421
66
DEFINITION
Productivity is defined as the goods and services produced
per unit of labour, capital or both. The ratio of output to
labour and capital is a total productivity measure. In
simple words, productivity is the output per unit of input
employed. The basic definition of productivity is:
Total Output
Productivity = ----------------------------Total Input
Kopleman has defined productivity as the relationship
between physical output of one or more of the associated
physical inputs used in production. When single input is
used to measure productivity, it is called factor
productivity and when all factors are combined together
for the purpose, it is known as total factor productivity.
CONCEPT
BANKING
OF
PRODUCTIVITY
IN
The concept and definition of productivity as applied in

manufacturing industries cannot be applied as such in
banking industry because it is primarily a service industry.
In the field of banking, the various products are accounts,
drafts, exchange remittances, cheques, travellers cheques,
credit cards, debit cards, services for guarantees, various
kinds of loans like housing loan, education loan, car loan
etc. Identification and measurement of output in banking is
very difficult exercise as it is not possible to bring various
services to measure output. However, banking being an
important economic activity cannot afford to lose sight of
the concept of productivity. Application of the concept in
the Indian banking industry becomes all the more difficult,
as it gets associated with such diverse aspects like
operational cost effectiveness, profitability, customer
services, priority sector lending, mobilization of deposits,
deployment of credit in rural and backward regions. But as
we know that banks are the mirror of an economy.
Therefore better functioning of banking sector may lead to
the overall improvement of the economy. In fact, banks act
as a link between those who want to save and those who
want to invest, so improvement in the productivity of the
banking sector is very much needed who want to save and
obviously, difficulty is not in applying the broader concept
of productivity as ratio of output and input, but is in
measuring output in the form of services. Productivity at
the national level is dependent on various factors like per
capita income, saving habits and banking habits. In
addition to it, there are regional variations which affect the
productivity of various players in the banking field. So in
order to have a reliable idea of productivity, it is necessary
to analyze every segment, different sizes of banks and
region wise positioning of banks. As in banking industry
in India, volume of business became progressively
imperative to secure more resources for meeting social

objectives while maintaining viability of operations,

business level may be preferred as being more
representative of productivity. Productivity helps firms,
industries and nations to achieve sustainable competitive
advantage. Industry is a thrust area for countries in their
quest for competitiveness. It must be noted that banks
which have maintained the momentum of continuous
growth, and profitability showed better ratio of manpower
effectiveness. Each element has crucial sub- components
which serve as building blocks for productivity. The
Government policies effectively support competitiveness
if they are structures around productivity driven reform
mechanism, cost deflating tariff structure and technology
and industry vision.
REVIEW OF LITERATURE
Performance evaluation of banks, has received lot of
attention over the past several years (Seifrd and Zhu,
1999). A number of studies were conducted to compare
different types of banks operating in India based on different
performance/efficiency criteria/ parameters from time to time.
After nationalization of banks, there was a growing concern
on the deteriorating of banking sectors efficiency in several
spheres. The Reserve Bank of India constituted a number
of committees, notably Tondon Committee (1975), Luther
Committee (1977), Chakravarty Committee (1986) and
Narsimham Committee (1991) which inter-alia examined
various parameters of efficiency and given a number of
suggestions to improve the efficiency of the banks in India.
Nag and Shivaswamy (1990) compared the performance of
Foreign Banks operating in India with the Indian scheduled
commercial banks in terms of growth of deposits and loans
and found that the performance of foreign banks stand out
significantly higher. Sarkar and Das (1998) used 15 indicators
in their study to compare public sector, private sector and
foreign banks based on major criteria representing efficiency
viz. profitability, productivity and financial management on
which bank-wise/ bank group wise information was
available. According to CRISIL study (2002) it was
concluded that lower operating expenses improved the
profitability of banks, contrary to the popular perception
that only trading profits helped the banking sector shore up
their bottom lines. Karam and Puja (2008) compare the
productivity of public, private and foreign banks using
ACGR and regression and concluded that public sector
banks are growing with consistent pace and intra group
variations are also less than other sector. K.V.N. Prasad
(2012) compares the performance of public and private
sector banks through CAMEL model and concluded that
there is no significant difference between performance of
public and private sector banks.
OBJECTIVES OF THE STUDY

The broad objectives of this study are as under:
1.
2.
ISSN: 2319-4421
To evaluate the employee productivity of private

banks during the period 2002-2012.
To compare the relative performance of private
banks during the period 2002-2012.
RESEARCH METHODOLOGY
The study is primarily based on the secondary data and the
same has been collected from The Trend and Progress of
Banking in India an annual publication of RBI. Data was
collected from 20 Private Banks during the period 2001-02
to 2011-2012
SAMPLING DESIGN
The detailed list of banks selected as follow:
1. City Union Bank Ltd.
2. ING Vysya Bank Ltd.
3. Tamilnad Mercantile Bank Ltd.
4. The Catholic Syrian Bank Ltd.
5. The Dhanalakshmi Bank Ltd.
6. The Federal Bank Ltd.
7. The Jammu & Kashmir Bank Ltd.
8. The Karnataka Bank Ltd.
9. The Karur Vysya Bank Ltd.
10. The Lakshmi Vilas Bank Ltd.
11. Nainital Bank Ltd.
12. The Ratnakar Bank Ltd.
13. The South Indian Bank Ltd.
New Private sector Banks
14. Axis Bank Ltd.
15. Development Credit Bank Ltd.
16. HDFC Bank Ltd.
17. ICICI Bank Ltd.
18. Indusind Bank Ltd.
19. Kotak Mahindra Bank Ltd.
20. YES Bank
The selected ratios that are used to compute the
productivity of private sector banks:
Per Employee Indicators (Labour Productivity):
1. Deposit per employee
= Deposit / No. of
employees
2. Advance per employee
= Advances / No.
of employees
3. Business per employee
= Business / No. of
employees
4. Total expenditure per employee
= Total
expenditure / No. of employees
5. Total income per employee
= Total Income /
No. of employees
6. Spread per employee
= Spread / No. of
employees
7. Net profit per employee
= Total net profit /
No. of employees
8. Burden per employee
= Burden / No. of
employees
67

The statistical tools like standard deviation, coefficient of

variation, exponential growth rate (EGR) and trend
analysis have been used for analyzing the data. To have a
better view of the performance of banks, the ratios have
been analyzed and interpreted by calculating Mean (X),
Standard Deviation (S.D.) and Co-efficient of variation
(C.V.).
Mean ( X )
Where X
=
N
=
S.D. () =
where x
series and
X/N
Sum of series of observations
Number of items
x/N
ISSN: 2319-4421
Apart from the exponential growth rate, percentage growth

rate over the base year will be calculated to analyze the
trends on year-to-year basis.
The percentage growth rate over the base year is given as:
Vc Vb
= --------------------------------- x 100
Vb
Where: Vc = Value of the given parameter in the
current year.
Vb = Value of the given parameter in the base
year.
(X- X ), X is the mean of the
ANALYSIS AND INTERPRETATION
(X- X ) is the deviation from the
The study seeks to access the labour productivity of

private sector banks and relative performance of various
banks with respect to the eight parameter which talks
about the productivity of the banks.
mean.
N
Number of items
C.V.
(/ X ) x 100
Where is Standard Deviation (S.D.) and X is the mean

of the series.
As the operations of the commercial banks normally grow
from year to year and each year enables it to have an
enlarged base to compound the growth rate, therefore
exponential growth function shall be fitted to analyze the
trends in selected parameters.
The equation of the exponential curve is of the form,
Y = abx
Putting the equation in logarithmic form, we get
Log Y = Log a+X Log b
To obtain the values of constants a and b, the two
normal equations to be solved are:
Log Y = n Log a + Log b X
(X.Log Y) = Log a X+Log bX2
Where Y is the variable for which rate of growth is
calculated at timet and a is the Y intercept and b the
slope of the curve.
Under the growth function, growth rate is actually equal to
Log b, which implies that there is growth over the period,
provided Log b>0. Antilog of Log b gives the value of b
and the growth rate in percentage form shall be equal to:
[{(Antilog of Log b) x 100} 100]
TABLE: 3 PROFIT PER EMPLOYEE

Table 3 deals with profit per employee which is calculated
by profit divided by no. of employees. Every business
exists in order to earn profit. Without profit no commercial
activity can sustain for a long period. Similarly, profit
earning has become the main motive of commercial banks
operating in India. Profit earning and timely growth in the
profit earning is an essential feature for the continued
success of a bank. An analysis of data on the basis of
percentage growth rate (as shown in Table 3) over the base
year shows that the maximum percentage growth rate was
recorded in 2003 to 2012 respectively ICICI Bank Ltd.
(106 %) in 2003, City Union Bank Ltd. (73%) in 2004,
Karnataka Bank Ltd. (8%) in 2005, Lakshmi Vilas Bank
(606 %) in 2006 ,ING Vysya Bank (876 %) in 2007 and
Ratnakar Bank Ltd. (456 %) in 2008, Dhanalakshmi Bank
Ltd. (103 %) in 2009, Kotak Mahindra Bank Ltd. (133 %)
in 2010 and again Dhanalakshmi Bank Ltd. (914%) in
2011 and again Ratnakar Bank Ltd. (400 %) in 2012. The
maximum exponential growth rate was witnessed by
Nainital Bank Ltd. (21.96%) followed by Federal Bank
Ltd. (19.27%) then by Tamilnad Mercantile Bank Ltd.
(14.88 %), South Indian Bank Ltd. (14.27%), Ratnakar
Bank Ltd. (13.74%) while the negative exponential growth
rate was witnessed by Catholic Syrian Bank Ltd. (-2.37%
), Development Credit Bank Ltd. (-2.35%), HDFC Bank
Ltd. (-1.83%) and Kotak Mahindra Bank Ltd. (-1.3%).
Overall private banks shows increasing trend from 56.8
lakhs in 2002 to 148.6 lakhs in 2012 in absolute terms but
over the base year it shows decreasing growth rate 26% to
8% and overall private sector banks has 9.6% exponential
growth rate for the period 2002-2012.
68

Average
(Rs Lakhs)
-2-0
ISSN: 2319-4421
TABLE 3.1
Summarized Statement of Average Profit per Employee of Private Sector Banks
No. of Banks
Name of Banks
1
Development Credit Bank Ltd.
0-2
Dhanalakshmi Bank Ltd., Catholic Syrian Bank Ltd., Lakshmi Vilas Bank
Ltd., Ratnakar Bank Ltd.
2-5
ING Vysya Bank Ltd., South Indian Bank Ltd., Karnataka Bank Ltd.,
Nainital Bank Ltd., Federal Bank Ltd., City Union Bank Ltd.
5-10
Jammu & Kashmir Bank Ltd., Tamilnad Mercantile Bank Ltd., Karur
Vysya Bank Ltd., Kotak Mahindra Bank Ltd., IndusInd Bank Ltd., HDFC
Bank Ltd., Axis Bank Ltd.
10-12
ICICI Bank Ltd., Yes Bank

TABLE: 4 BUSINESS PER EMPLOYEE
Table 4 deals with business per employee which is in 2012. The maximum exponential growth rate was
calculated by business (Deposits + Advances) during the witnessed by Nainital Bank Ltd. (18.37%) followed by
year divided by no. of employees. This is the most South Indian Bank Ltd. (16%) then Catholic Syrian Bank
common productivity indicator used by banks. An analysis Ltd. (15.66%), Federal Bank Ltd. (15.3%), Karur Vysya
of data on the basis of percentage growth rate (as shown in Bank Ltd. (15.03%), Tamilnad Mercantile Bank Ltd.
Table 4) over the base year shows that the maximum (14.71%), City Union Bank Ltd. (14.26%), Ratnakar Bank
percentage growth rate was recorded in 2003 to 2012 Ltd. (14.15%), Lakshmi Vilas Bank Ltd. (13.12%) while
respectively ICICI Bank Ltd. (130.22 %) in 2003, ING the negative exponential growth rate was witnessed by
Vysya Bank Ltd. (34.02 %) in 2004, Nainital Bank Ltd. Indusind Bank Ltd. (-7 %) and HDFC Bank Ltd. (-1.74%).
(30.31 %) in 2005 , Nainital Bank Ltd. (38.62%) in 2006 Overall Private sector banks shows increasing trend from
and Federal Bank Ltd. (26.22 %) in 2007, City Union 6,825 lakhs in 2002 to 16,976 lakhs in 2012 in absolute
Bank Ltd. (42.54 %) in 2008 and YES Bank (44.68%) in terms and overall private sector banks has 9.11%
2009 again YES Bank (54.47 %) in 2010, Dhanalakshmi exponential growth rate for the period 2002-2012.
Bank Ltd. (59.42%) in 2011, Ratnakar Bank Ltd. (53.79%)
TABLE 4.1
Summarized Statement of Average Business per Employee of Private Sector Banks
Average
No. of Banks
Name of Banks
(Rs Lakhs)
0-500
9
Ratnakar Bank Ltd. , Catholic Syrian Bank Ltd., Nainital Bank Ltd.,
Dhanalakshmi Bank Ltd., Kotak Mahindra Bank Ltd., Lakshmi Vilas
Bank Ltd., Development Credit Bank Ltd., City Union Bank Ltd., ING
Vysya Bank Ltd.
500-600
Karnataka Bank Ltd., Jammu & Kashmir Bank Ltd., Tamilnad Mercantile
Bank Ltd., South Indian Bank Ltd., Karur Vysya Bank Ltd., Federal Bank
Ltd.
600-700
HDFC Bank Ltd.
700-900
------------------------
900-1200
ICICI Bank Ltd., Yes Bank, IndusInd Bank Ltd., Axis Bank Ltd.
69

ISSN: 2319-4421
TABLE: 5 TOTAL INCOME PER EMPLOYEE

The total income of a bank depends upon the interest and
discount earned, commission, exchange and brokerage and
the other miscellaneous receipts. This ratio has been
computed by dividing the amount of total income by the
number of employees in the bank. The ratio has shown an
upward trend (in absolute terms) 5.91 crore per employee
to 17.12 crore per employee in general as shown in Table
5 and overall private sector banks has 11 % exponential
growth rate for the period 2002-2012. In 2003 percentage
growth rates (as shown in Table5) over the base year was
the highest in the case of with ICICI Bank Ltd. 207 % per
employee then City Union Bank Ltd. (19.77 %) in 2004,
Yes Bank (99.46 %) in 2006 and Development Credit
Bank Ltd. (48.22 %) in 2007, again Yes Bank (64.95%) in
Average
(Rs crore)
0-0.5
0.5-1
2008 and again Yes Bank (72.51 %) in 2009, Lakshmi

Vilas Bank Ltd. (20.5%) in 2010, Ratnakar Bank Ltd.
(1446.01%) in 2011 and Dhanalakshmi Bank Ltd. (54.17
%) in 2012. The maximum exponential growth rate was
witnessed by Ratnakar Bank Ltd. (32.65 %) followed by
Yes Bank (17 %) then ICICI Bank Ltd. (15.27 %),
Nainital Bank Ltd. (14.29 %), Federal Bank Ltd. (12.37
%), Tamilnad Mercantile Bank Ltd. (11.87 %), South
Indian Bank Ltd. (11.61 %), Karur Vysya Bank Ltd.
(11.36 %), City Union Bank Ltd. (10.91 %) while the
negative exponential growth rate was witnessed by
IndusInd Bank Ltd. (-5.78 %) , HDFC Bank Ltd. (-1 %),
Axis Bank Ltd. (-0.71 %) .
TABLE 5.1
Summarized Statement of Average Total Income per Employee of Private Sector Banks
No. of Banks
Name of Banks
15
Catholic Syrian Bank Ltd., Nainital Bank Ltd., Dhanalakshmi Bank Ltd.,
Kotak Mahindra Bank Ltd., Lakshmi Vilas Bank Ltd., Development
Credit Bank Ltd., City Union Bank Ltd., ING Vysya Bank Ltd., Karnataka
Bank Ltd., Jammu & Kashmir Bank Ltd., Tamilnad Mercantile Bank Ltd.,
South Indian Bank Ltd., Karur Vysya Bank Ltd., Federal Bank Ltd. ,
HDFC Bank Ltd.
Ratnakar Bank Ltd., Axis Bank Ltd., ICICI Bank Ltd., IndusInd Bank
Ltd., Yes Bank
TABLE: 6 TOTAL EXPENDITURE PER EMPLOYEE

This ratio has been computed by dividing the amount of
total expenses by the number of employees in the bank.
The main components of the bank expenditure are interest
on deposit, establishment expenditure and other
expenditure. The ratio has shown an upward trend (in
absolute terms) 4.44 crore per employee to 14.95 crore per
employee in general as shown in Table 6 and overall
private sector banks has 12.14 % exponential growth rate
for the period 2002-2012. In 2003 percentage growth rates
(as shown in Table 6) over the base year was the highest in
the case of with ICICI Bank Ltd. 205.37 % Income per
employee then Tamilnad Mercantile Bank Ltd. (12.35%)
in 2004, Jammu & Kashmir Bank Ltd. (10.16 %) in 2005
and Federal Bank Ltd. (28.99%) in 2006, Development
Credit Bank Ltd. (26.75 %) in 2007,Yes Bank (67.5 %) in

2008 and again Yes Bank (71.32%) in 2009, Tamilnad
Mercantile Bank Ltd. (18.67 %) in 2010, Ratnakar Bank
Ltd. (1651.21 %) in 2011 and Dhanalakshmi Bank Ltd.
(75.21 %) in 2012. The maximum exponential growth rate
was witnessed by Ratnakar Bank Ltd. (36.96 %) followed
by ICICI Bank Ltd. (14.58 %) then Yes Bank (13.78 %),
Nainital Bank Ltd. (13.25 %), South Indian Bank Ltd.
(12.36 %),Karur Vysya Bank Ltd. (12.33%), Catholic
Syrian Bank Ltd. (12.29 %), Federal Bank Ltd. (12.29 %)
while the negative exponential growth rate was witnessed
by IndusInd Bank Ltd. (-4.89 %) , HDFC Bank Ltd. (1.11 %), Axis Bank Ltd. (-0.89 %) .
70

Average
(Rs crore)
0-0.25
ISSN: 2319-4421
TABLE 6.1
Summarized Statement of Average Total Expenditure per Employee of Private Sector Banks
No. of Banks
Name of Banks
5
Nainital Bank Ltd., Catholic Syrian Bank Ltd., Dhanalakshmi Bank Ltd.,
City Union Bank Ltd., Lakshmi Vilas Bank Ltd.
0.25-0.50
11
ING Vysya Bank Ltd., Karnataka Bank Ltd., Jammu & Kashmir Bank
Ltd., Tamilnad Mercantile Bank Ltd., South Indian Bank Ltd., Karur
Vysya Bank Ltd., Federal Bank Ltd. , Kotak Mahindra Bank Ltd.,
Development Credit Bank Ltd., HDFC Bank Ltd., Axis Bank Ltd.
0.5-1
Ratnakar Bank Ltd., ICICI Bank Ltd., IndusInd Bank Ltd., Yes Bank
TABLE: 7 SPREAD PER EMPLOYEE

Spread, which is the difference between the interest earned and Karur Vysya Bank Ltd. (75.34 %) in 2004, ING
on loans and advances and interest paid on deposits and Vysya Bank Ltd. (48.6%) in 2005, Yes Bank (61.4 %) in
borrowings by the banks. It is the net amount available to 2006, Development Credit Bank Ltd. (79.35%) in 2007
banks for meeting the various expenses. This ratio has and Ratnakar Bank Ltd. (64.14 %) in 2008 and again Yes
been computed by dividing the amount of total amount of Bank (81.54 %) in 2009 and Indusind Bank Ltd. (52.43%)
spread by the number of employees in the bank. The ratio in 2010, Ratnakar Bank Ltd. (153.24%) in 2011 and
has shown an upward trend (in absolute terms) 1.2 crore Catholic Syrian Bank Ltd. (27.9%) in 2012. The maximum
per employee to 2.62 crore per employee in general as exponential growth rate was witnessed by ICICI Bank Ltd.
shown in Table 7 but over the base year it shows (17.12%) followed by Federal Bank Ltd. (16.19%),
decreasing growth rate 11% to (-26%) and overall private Nainital Bank Ltd. (14.5%), Catholic Syrian Bank Ltd.
sector banks has 7.8 % exponential growth rate for the (14.32%) and South Indian Bank Ltd. (14.22%), Lakshmi
period 2002-2012. In 2003 percentage growth rates (as Vilas Bank Ltd. (13.32%), City Union Bank Ltd. (13.25%)
shown in Table 7) over the base year was the highest in while the negative exponential growth rate was witnessed
the case of ICICI Bank Ltd. with 60.71 % per employee by IndusInd Bank Ltd. (-1.94 %).
Average
(Rs crore)
-0.5-1
TABLE 7.1
Summarized Statement of Average Spread per Employee of Private Sector Banks
No. of Banks
Name of Banks
1
Ratnakar Bank Ltd.
0-0.10
Catholic Syrian Bank Ltd., Dhanalakshmi Bank Ltd., Lakshmi Vilas Bank
Ltd., Karnataka Bank Ltd., Development Credit Bank Ltd., City Union
Bank Ltd., ING Vysya Bank Ltd., South Indian Bank Ltd., Nainital Bank
Ltd.
0.10-0.15
Jammu & Kashmir Bank Ltd., Tamilnad Mercantile Bank Ltd., Karur
Vysya Bank Ltd., Federal Bank Ltd.
0.15-0.20
Axis Bank Ltd., ICICI Bank Ltd., IndusInd Bank Ltd., Yes Bank, HDFC
Bank Ltd., Kotak Mahindra Bank Ltd.
TABLE: 8 BURDEN PER EMPLOYEE

It is a difference between non-interest expenditure and an important role. This ratio has been computed by
non-interest income of a commercial bank. While making dividing the amount of total burden by the number of
a profitability analysis of commercial banks, burden plays employees in the bank. The ratio has shown an upward
71

trend (in absolute terms) -0.27 crore per employee to 0.45

crore per employee in general as shown in Table 8 but
over the base year it shows decreasing growth rate 14% to
(-30%). In 2003 percentage growth rates (as shown in
Table 8) over the base year was the highest in the case of
South Indian Bank Ltd. with 131.42% per employee and
Development Credit Bank Ltd. (252.1%) in 2004,
Dhanalakshmi Bank Ltd. (1720.61%) in 2005, Indusind
Bank Ltd. (714.16%) in 2006, Karnataka Bank Ltd.
(68.7%) in 2007 and Yes Bank (656.29%) in 2008,
Average
(Rs crore)
-0.05-0
ISSN: 2319-4421
Development Credit Bank Ltd. (118.14%) in 2009 and

Axis Bank Ltd. (476.72%) in 2010, Karnataka Bank Ltd.
(210.32%) in 2011 and again Axis Bank Ltd. (230.69%) in
2012. The maximum exponential growth rate was
witnessed by Ratnakar Bank Ltd. (37.13%) followed by
Karur Vysya Bank Ltd. (34.73%), Tamilnad Mercantile
Bank Ltd. (13.65%), Nainital Bank Ltd. (9.92%) and
HDFC Bank Ltd. (8%), ICICI Bank Ltd. (7.96%), Kotak
Mahindra Bank Ltd. (6.4%).
TABLE 8.1
Summarized Statement of Average Burden per Employee of Private Sector Banks
No. of Banks
Name of Banks
4
Ratnakar Bank Ltd., ICICI Bank Ltd., Axis Bank Ltd., IndusInd Bank Ltd.
0-0.02
Yes Bank, Karnataka Bank Ltd., Karur Vysya Bank Ltd., Federal Bank
Ltd. , Lakshmi Vilas Bank Ltd., Jammu & Kashmir Bank Ltd., South
Indian Bank Ltd.
0.02-0.05
Catholic Syrian Bank Ltd., Nainital Bank Ltd., Dhanalakshmi Bank Ltd.,
Development Credit Bank Ltd., ING Vysya Bank Ltd., Tamilnad
Mercantile Bank Ltd., HDFC Bank Ltd.
0.05-0.10
Kotak Mahindra Bank Ltd.
0.10-2
------------------------
2-3
City Union Bank Ltd.
TABLE: 9 DEPOSIT PER EMPLOYEE

It is the main component of the liability side of the balance
sheet of a bank. Interest is to be paid on the deposits
received from the public and the other parties. Interest
paid constitutes the major part of the total expenditure of a
commercial bank. This ratio has been computed by
dividing the amount of total deposits by the number of
employees in the bank. Keeping in mind the significance
of this factor, the EGR of deposits has been computed.
The trend wise growth rate has shown a increasing trend 3
% per employee to 5 % per employee in general as shown
in Table 9 and the ratio also has shown an upward trend
(in absolute terms) 48.6 crore per employee to 103 crore
per employee and overall Private sector banks has 7.5%
exponential growth rate for the period 2002-2012. In 2003
percentage growth rates (as shown in Table 9) over the
base year was the highest in the case of ING Vysya Bank
Ltd. with 28 % per employee then Jammu & Kashmir
Bank Ltd. (27.6%) in 2004 and again ING Vysya Bank

Ltd. (21.8%) in 2005, Yes Bank (44.9%) in 2006,
Development Credit Bank Ltd. (58.4%) in 2007, Ratnakar
Bank Ltd. (27.8%) in 2008, Yes Bank (43.7%) in 2009
and again Yes Bank (45.91%) in 2010, Dhanalakshmi
Bank Ltd. (57.74%) in 2011 and Ratnakar Bank Ltd.
(58.5%) in 2012. The maximum exponential growth rate
was witnessed by Nainital Bank Ltd. (14.65%) followed
by Federal Bank Ltd. (13.71%), Karur Vysya Bank Ltd.
(13.56%), South Indian Bank Ltd. (13.55%), Catholic
Syrian Bank Ltd. (13.01%), Lakshmi Vilas Bank Ltd.
(12.83%), Tamilnad Mercantile Bank Ltd. (12.59%), City
Union Bank Ltd. (12.14%), Ratnakar Bank Ltd. (11.57%)
while the negative exponential growth rate was witnessed
by IndusInd Bank Ltd. (-9.23%) , HDFC Bank Ltd. (-2.34
%), Kotak Mahindra Bank Ltd. (-1.51 %) and Axis Bank
Ltd. (-0.29%)
72

Average
(Rs Crores )
0-3
ISSN: 2319-4421
TABLE 9.1
Summarized Statement of Average Deposit per Employee of Private Sector Banks
No. of Banks
Name of Banks
8
Ratnakar Bank Ltd., Catholic Syrian Bank Ltd., Dhanalakshmi Bank Ltd.,
City Union Bank Ltd., Nainital Bank Ltd., Lakshmi Vilas Bank Ltd.,
Development Credit Bank Ltd., Kotak Mahindra Bank Ltd.
3-6
ING Vysya Bank Ltd., Karnataka Bank Ltd., Jammu & Kashmir Bank
Ltd., Tamilnad Mercantile Bank Ltd., South Indian Bank Ltd., Karur
Vysya Bank Ltd., Federal Bank Ltd., HDFC Bank Ltd.
6-7
Axis Bank Ltd., ICICI Bank Ltd., IndusInd Bank Ltd., Yes Bank
TABLE: 10 ADVANCES PER EMPLOYEE

The main earning of a commercial bank is from the (39.25%) in 2004 and again Nainital Bank Ltd. (51.31%)
advances provided to the private and the industry. in 2005, and again Nainital Bank Ltd. (63.45%) in 2006,
Ultimately, the interest is to be earned from this major Development Credit Bank Ltd. (59.59%) in 2007, Nainital
factor only. Interest constitutes the main part of the total Bank Ltd. (24.2 %) in 2008, Yes Bank (55.11%) in 2009
income of the commercial bank. This ratio has been and again Yes Bank (57.52%) in 2010, Dhanalakshmi
computed by dividing the amount of total advances by the Bank Ltd. (61.82%) in 2011, Ratnakar Bank Ltd. (48.14%)
number of employees in the bank. The ratio has shown an growth rates in 2012. The maximum exponential growth
upward trend (in absolute terms) 29.6 crore per employee rate was witnessed by Nainital Bank Ltd. (24%) followed
to 80.4 crore per employee in general as shown in Table by Catholic Syrian Bank Ltd. (19.45 %), Ratnakar Bank
10 and overall Private sector banks has 10 % exponential Ltd. (18.25%), Tamilnad Mercantile Bank Ltd. (17.86%)
growth rate for the period 2002-2012. In 2003 percentage and South Indian Bank Ltd. (16.7%) while the negative
growth rates (as shown in Table 10) over the base year exponential growth rate was witnessed IndusInd Bank Ltd.
was the highest in the case of ING Vysya Bank Ltd. with (-7%).
43.25% per employee and again Nainital Bank Ltd.
TABLE 10.1
Summarized Statement of Average Advances per Employee of Private Sector Banks
Average
No. of Banks
Name of Banks
(Rs Crores )
0-3
16
Nainital Bank Ltd., Catholic Syrian Bank Ltd., Ratnakar Bank Ltd.,
Dhanalakshmi Bank Ltd., City Union Bank Ltd., Lakshmi Vilas Bank
Ltd., Development Credit Bank Ltd., Kotak Mahindra Bank Ltd., ING
Vysya Bank Ltd., Karnataka Bank Ltd., Jammu & Kashmir Bank Ltd.,
Tamilnad Mercantile Bank Ltd., South Indian Bank Ltd., Karur Vysya
Bank Ltd., Federal Bank Ltd., HDFC Bank Ltd.
3-6
Axis Bank Ltd., IndusInd Bank Ltd., Yes Bank
6-7
ICICI Bank Ltd.,
CONCLUSION
While comparing the 11 years data from 2002 to 2012 on
productivity factors viz. Business per Employee (BPE),
Profit per Employee (PPE) and Total Income per
Employee, Total Expenditure per Employee, Spread
per Employee, Burden per Employee, Deposit per
Employee and Advances per Employee it was observed

that the performance of the private banks on all the eight
variables has shown a increasing trend. In the year 2004-05
and 2011-2012, the performance of private banks has
decreasing growth rate over the base year. The private
sector banks has higher exponential growth rate (12.14%)
regarding total expenditure per employee than total
73

income per employee (10.63%) for the period 2002-2012

which is not a good sign. From the financial year 2001-02
to 2005-06 the performance of new private sector bank is
better than old private sector bank regarding selected
ISSN: 2319-4421
74
productivity indicators but after 2005-06 the old private

sector banks compete with the new private sector banks
and perform better than new private sector banks ( as
shown in table 11).
TABLE 11
Comparison of Old Private Sector Banks & New Private Sector Bank
Productivity
Indicators/Year
20012002200302
03
04
PROFIT PER EMPLOYEE (in` Rs. lakhs)
Old Private
Sector Banks
24.51
30.05 37.09
New Private
sector Banks
32.28
41.41 55.90
BUSINESS PER EMPLOYEE (in` Rs. lakhs)
Old Private
3561.
Sector Banks
2633.39 3038.31
51
New Private
4598.
sector Banks
4191.40 4658.06
68
ADVANCES PER EMPLOYEE (in` Rs. Crore)
Old Private
Sector Banks
9.38
11.22 13.34
New Private
sector Banks
20.25
18.21 18.34
DEPOSIT PER EMPLOYEE (in `Rs. Crore)
Old Private
Sector Banks
18.49
21.16 24.87
New Private
sector Banks
30.14
28.82 30.17
INCOME PER EMPLOYEE (in `Rs. Crore)
Old Private
Sector Banks
2.52
2.68
2.88
New Private
sector Banks
3.39
3.90
3.47
EXPENSES PER EMPLOYEE (in `Rs. Crore)
Old Private
Sector Banks
1.93
2.01
2.09
New Private
sector Banks
2.51
2.93
2.50
SPREAD PER EMPLOYEE (in `Rs. Crore)
Old Private
Sector Banks
0.55
0.63
0.82
New Private
sector Banks
0.65
0.70
0.95
BURDEN PER EMPLOYEE (in `Rs. Crore)
Old Private
Sector Banks
-0.05
-0.04
0.02
New Private
sector Banks
-0.22
-0.27
-0.02
200405
200506
200607
200708
200809
200910
201011
2011
-12
75.5
2
73.1
1
15.73
28.95
36.56
49.10
60.19
57.15
67.54
30.65
33.61
32.72
38.33
39.07
54.24
69.50
4146.33
4815.90
5545.53
6487.84
7300.84
8240.51
9674.19
5100.27
5153.26
5003.18
5214.63
5210.36
6096.16
6844.23
16.54
20.08
23.66
26.67
30.21
34.06
40.54
22.34
22.31
22.58
22.28
24.20
28.10
33.58
27.61
30.89
34.98
39.93
46.62
50.69
57.08
30.25
31.28
31.45
30.03
30.26
35.06
41.29
62.4
1
40.5
4
2.63
2.89
3.37
4.13
5.07
5.20
8.94
11.1
5
3.03
3.18
3.42
3.85
4.52
4.43
4.98
5.97
2.04
2.26
2.58
3.22
3.92
4.11
7.36
10.3
7
2.37
2.46
2.77
3.10
3.59
3.19
3.63
4.58
0.93
1.06
1.19
1.21
1.44
1.45
1.98
0.95
0.94
0.95
0.86
0.92
1.15
1.35
1.58
1.67
0.34
0.43
0.40
0.30
0.30
0.36
0.40
0.17
0.28
0.23
0.21
0.17
0.21
0.11
0.23
0.28
1067
4.49
6301
.07
45.5
4
34.8
9

Productivity
Indicators
ISSN: 2319-4421
TABLE 12
Summarized Statement of Top 5 Private Sector Banks on the Basis of EGR: 2002-2012
PPE
BPE
IPE
EXP
SPE
BPE
DPE
APE
Nainital
Bank Ltd.
Nainital
Bank Ltd.
Ratnakar
Bank
Ltd.
Ratnakar
Bank
Ltd.
ICICI
Bank
Ltd.
Ratnakar
Bank Ltd.
Nainital
Bank
Ltd.
Nainital
Bank Ltd.
Federal
Bank Ltd.
South
Indian
Bank Ltd.
Yes Bank
ICICI
Bank
Ltd.
Federal
Bank
Ltd.
Karur
Vysya
Bank Ltd.
Federal
Bank
Ltd.
Catholic
Syrian
Bank Ltd
Tamilnad
Mercantile
Bank Ltd.
Catholic
Syrian
Bank Ltd
ICICI
Bank
Ltd.
Yes Bank
Nainital
Bank
Ltd.
Tamilnad
Mercantile
Bank Ltd.
Ratnakar
Bank Ltd.
South
Indian
Bank Ltd.
Federal
Bank Ltd.
Nainital
Bank Ltd
Nainital
Bank Ltd
Catholic
Syrian
Bank
Ltd
Nainital
Bank Ltd.
Karur
Vysya
Bank
Ltd.
South
Indian
Bank
Ltd.
Ratnakar
Bank Ltd.
Karur
Vysya
Bank Ltd.
Federal
Bank
Ltd.
South
Indian
Bank
Ltd.
South
Indian
Bank
Ltd.
Hdfc Bank
Ltd.
Catholic
Syrian
Bank
Ltd
South
Indian
Bank Ltd.
REFERENCES
[1] Kopleman, Richard E., Managing Productivity
Organizations. McGraw Hill Book Company, New
Delhi, 1986, p.3.
[2] Nag. A. K and Shivaswamy. K (1990), Foreign Banks
in India Recent Performance, Reserve Bank of India
Occasional Papers, Vol. 11, No. 4, December, pp 297328.
[3] Pal. K and Goyal. P (2008), Productivity-based
Comparative Analysis of Public, Private and Foreign
Banks, The Indian Journal of Commerce, Vol.61,
No.3, pp 22-35.
[4] Profitability of Banks: A Study conducted by CRISIL,
2002.
[5] Prasad. K.V.N.(2012), Evaluating Performance of
Public and Private Sector Banks through CAMEL
Model, Asian Journal of Research in Banking and
Finance,Vol.2,No.3, March.
[6] Reserve Bank of India (1975), Report of the Study
Group to Frame Guidelines to Banks for the Followup Credit, (Tandon Committee).
[7] Reserve Bank of India (1977), Report of the
Productivity, Efficiency and Profitability Committee
on Banking, (Luther Committee).
Tamilnad
Mercantile
Bank Ltd.

Committee to Review the Working of the Monetary
System, (Chakravarty Committee).
Committee on the Financial System, (Narasimham
Committee)
[10] Reserve Bank of India, Trend and Progress of Banks
in India, various Issues (2001 to 2012).
[11] Sarkar, P.C. & Das, Abhiman (1997), Development
of Composite Index of Banking Efficiency: The
Indian Case, Reserve Bank of India Occasional
Papers, Vol.18, No.4, December, pp.679-709.
[12] Seiford, L.M. and Zhu, J. (1999), Profitability and
marketability of the top 55 US commercial banks,
Management Science, Vol.45, pp. 1270-88.
WEBSITES
[1] www.rbi.org.in
[2] www.iba.org.in
[3] www.en.wikipedia.org
[4] Annexure-I
Abbreviations used in the study Labour Productivity of
Private Banks in India
1. City Union Bank Ltd. - CUB
2. ING Vysya Bank Ltd. - ING V
3. Tamilnad Mercantile Bank Ltd. - TMB
4. The Catholic Syrian Bank Ltd. - CSB
75

5.
6.
7.
8.
9.
10.
11.
12.
13.
The Dhanalakshmi Bank Ltd. - DLB

The Federal Bank Ltd. - FB
The Jammu & Kashmir Bank Ltd.
- J&KB
The Karnataka Bank Ltd. - KB
The Karur Vysya Bank Ltd. - KVB
The Lakshmi Vilas Bank Ltd. - LVB
Nainital Bank Ltd. - NB
The Ratnakar Bank Ltd. - RB
The South Indian Bank Ltd. - SIB
14.
15.
16.
17.
18.
19.
20.
21.
ISSN: 2319-4421
New Private sector Banks

Axis Bank Ltd. - AB
Development Credit Bank Ltd. - DCB
HDFC Bank Ltd. - HDFC
ICICI Bank Ltd. - ICICI
Indusind Bank Ltd. - IIB
Kotak Mahindra Bank Ltd. - KMB
YES Bank - YES
76

ISSN: 2319-4421
77

ISSN: 2319-4421
78

ISSN: 2319-4421
79

Employee Productivity

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Employee Productivity

Hochgeladen von

Copyright:

Verfügbare Formate

International Journal of Management and Social Sciences Research (IJMSSR)

Volume 2, No. 10, October 2013