Journal of Advance Management Research, ISSN:

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1 INTRODUCTION FINANCIAL PERFORMANCE OF PUBLIC AND PRIVATE SECTORS BANKS IN INDIA Cheenu Goel Research Scholar, I.K.Gujral Punjab Technical University, Jalandhar Dr. K.N.S Kang Director General, PCTE Group of Institutes, Ludhiana Banking system is one of the important pillars of the financial sector. It is the life line of the modern economy and is very important for the economic development of the country. In other words it can be said that the development of a country is highly associated with the development of its banking sector. Banks plays an important role in mobilization of deposits and disbursement of credits to various sectors of the economy. The strength of an economy depends on its financial system that in turn depends on the sound and efficient banking system. The Indian economy is emerging as one of the strongest economy of the world and banking sector had played a vital in the growth and development of the economy after independence. After the liberalization of Indian economy, government has announced a number of reforms on the basis of recommendations of Narsimha Committee to make the banking system stronger. Keeping in view the importance of banks, the present research paper was undertaken with the following objectives: i) To study the financial performance of public sector and private sector banks; and ii) To compare the financial performance between public and private sector banks on the basis of significance of Corporate Growth Rates. REVIEW OF LITERATURE Chaudhary & Gakhar (2018) In today's corporate world, every stakeholder's group requires good corporate governance. Corporate Governance reforms were initiated after the rise of frauds and scams in the corporate sector. In the present scenario of rising business scams all over the world, the present study addresses a central research question: how does corporate governance contribute to firm's financial performance? Relationship of board size and the frequency of board's meetings with firm's financial performance, in terms of ROA, ROE, and EPS, PE Ratios have been examined in this research paper. The study is based on secondary data collected from PROWESS database. Regression analysis has been carried out to find out the impact of corporate governance variables on the firm's financial performance measures. Sarkar & Sarkar (2018) the effect of board governance in state-owned and private banks is studied by undertaking a study of commercial banks in India that has both bank groups. Covering a ten-year period from 2003 to 2012 that witnessed a large number of governance reforms in India, the results of the empirical analysis provide evidence of strong ownership effects with board independence exhibiting a significant positive correlation with the performance of private banks and a significant but negative correlation with the performance of state-owned banks. The effect of CEO duality is negative in state- (JAMR) id- jamrpublication@gmail.com Page 276

2 owned banks where incidence of CEO duality is high. The results have governance implications for strengthening the composition of board of directors and CEO tenure especially in state-owned banks. Tandon, et al (2018) The Indian banking sector is undergoing a phenomenal transformation through innovative business lines. Reliability, transparency, corporate governance, Economic Value Added (EVA), Corporate Social Responsibility (CSR) are a recent buzz when ranking of the profitability of banks is to be considered by the investor. Operational efficiency, liquidity, solvency, profitability is to be weighed using metrics and evaluation of the sources and magnitude and performance of the banks. DuPont analysis/david Cole Method of bank groups comes to the rescue of the researcher to understand the profitability. The authors have evaluated sources and magnitude of performance, profitability and productivity of the listed Indian Banks. As a pilot study, data has been collected for the years of three public and three private sector banks and statistical Chi-square tool has been applied to ROA, ROE and EM as variables. Ghosh (2017) the purpose of the study is to understand the importance of corporate governance reforms for the Middle East and North Africa (MENA) country banks. To address this issue, the author combines the staggered timing of corporate governance reforms for banks across MENA countries with bank-level data for the period and examines the impact on bank performance. The analysis suggests that not all governance characteristics are equally effective and some of these characteristics exert a more pronounced effect on bank performance as compared to others. These results also vary across oil-exporting and -importing nations and differ during the crisis. Besides, the authors find that improved operating efficiency and access to finance are the key channels through which governance improves bank performance. Gupta (2017) the evidence that risk governance predicts market value of banks is very limited in the Indian context. Also, the bank firm relationship is in news in recent. The study shows evidence that banking reforms activities made the large banks more profitable as compared to small banks. In this study of the banking reforms, the large banks who have the high amount of diversion of cash to related parties earn positive returns, relative to mid-sized banks. The results confirm that this diversion of resources to related parties promotes the loans to the firms which are involved in the diversion of resources and default in future and this way hitting the public investors both ways. A battery of regression tests shows that better risk governance by banks mediates the negative effect of related party transactions on value and the sensitivity of bank profitability differs between industries. To measure the propensity of banks to misbehave an index called, Banks misbehavior risk index (BMRI) is developed. The list of proxies has been developed through network structure to differentiate the expropriating behavior of group affiliated firms. First, an event study was conducted of the key banking reform events for risk management by the banks and investigated whether market views these reforms as limiting the possible misbehavior in near future. An event study is conducted to analyze the returns effect of banks on firms with the close association. Next, the effect of governance reform on the expropriating behavior of banks and firms in association with banks was conducted. Alhroob &Al-Dalaien (2016) in their research paper investigated the impact of corporate governance on the financial performance of selected banks in Jordan with the application of multiple regressions. The results of regression revealed that there is a significant impact of corporate governance score on the financial performance banks under study. (JAMR) id- jamrpublication@gmail.com Page 277

3 Arora, Sharma (2016) this paper studies the impact of corporate governance on firm performance for a large representative sample. The study includes 20 Indian Manufacturing Industries for the period The result of the analyses advocated that companies that comply with good corporate governance practices are expected to achieve higher accounting and market performance. It implies that good corporate governance practices lead to reduced agency costs. Thus the firms of the developing world can possibly enhance their performance by implementing good corporate governance practices. Tyagi (2015) in the study evaluated the impact of corporate governance on the financial performance of Indian IT companies. The sample consists of 20 IT companies listed on NSE Sectoral Index i.e., CNX IT Index. Data was collected from National Stock Exchange (NSE) for the financial year and analyzed with the application of multiple regressions. Four corporate governance variables were selected namely: Board Size, Board Independence, CEO Duality, and Audit Committee which were also independent variables in the study. Moreover, the firm s financial performance (ROE) was considered as dependent variable. The findings after regression test revealed that overall corporate governance has a positive impact on the financial performance of selected IT companies in India. Claessens, Yurtoglu (2013) This paper finds that better corporate governance benefit firms through greater access to financing, lower cost of capital, better performance, and more favorable treatment of all stakeholders. Evidence also shows that voluntary and market corporate governance mechanisms have less effect when a country's governance system is weak. Importantly, how corporate governance regimes change over time and how this impacts firms are receiving more attention recently. The paper concludes by identifying issues requiring further study, including the special corporate governance issues of banks, and family-owned and state-owned firms, and the nature and determinants of public and private enforcement. RESEARCH METHODOLOGY Top four banks in the public sector and top four private banks on the basis of total assets were selected for the study. Secondary data were collected from the official websites of the selected banks as well as of RBI. Data collected were analyzed by using statistical techniques like mean, coefficient of variation (C.V.) and of Compound Growth Rate. RESULTS AND DISCUSSION The financial performance ratios like dividend per share, return on assets, financial leverage ratio, earning per share, net profit margin and return on net worth were taken for the study. The existing trend in these ratios were worked out in terms of compound growth rates and elaborated for different banks of public and private sector. DIVIDEND PER SHARE Dividend per share is the total dividend that a company pays out to its investors over a period of 12 months on its outstanding shares. Dividend per share can tell the investors about the company s past performance and its current financial stability. (JAMR) id- jamrpublication@gmail.com Page 278

4 Information contained in Table 1 showed the dividend per share of various public sector banks from the period to As per the information the IDBI bank paid dividend of 1.49 percent to its shareholders in the year that increased to 5.50 percent in the year Dividend per share decreased to 1.50 percent in the year but again increased to 4.22 percent in It decreased to 0.27 percent in but started increasing from (0.75 percent) and reached the level of 1.10 percent in the year The analysis further revealed that heavy fluctuation turned the decline (-8.64) to be non-significant. Table 1: Trend in Dividend per share in different public and private sector banks Year IDBI SBI BOB PNB Axis ICICI HDFC Federal Average C.V C.G.R t-value * ** 15.71** 24.53** 5.24** In State Bank of India the dividend per share increased from 1.11 percent from to 3.90 in the year Dividend per share decreased to 2.00 percent in the year , which again increased to 3.00 percent in the year and reached the level of 5.65 percent in the year Dividend per share was 1.50 percent in the year , 3.50 percent in and 2.60 percent in the year The results showed that various ups and downs turned the growth rate of 7.61 non-significant. Bank of Baroda paid the dividend of 0.58 percent to its shareholders in the year and showed a continuous increasing trend till the year and reached the level of 6.50 percent. In the year , it decreased to 2.10 percent but increased to the level of 3.20 percent in the year It again increased to 2.94 percent in the year There was a significant growth in dividend per share at the rate of percent compounded annually. Punjab National Bank showed an increasing trend in the dividend per share from the year to as it increased from 1.10 percent to 6.00 percent during this period. But in the year it decreased to 2.40 percent that again increased to 4.40 percent in the year and remained same for the year also. In the year , dividend per share was 7.40 percent that decreased to 5.20 percent in and further to 3.30 and 2.40 percent in the year and respectively. The analysis revealed that various ups and downs turned the growth rate of percent non-significant. (JAMR) id- jamrpublication@gmail.com Page 279

5 As per the given information, in AXIS Bank, dividend per share showed a continuous trend throughout the period of study as it was 0.70 percent in and increased to 5.00 percent till The t-value of showed that dividend per share increased significantly at the rate of percent compounded annually. Similarly in ICICI Bank, dividend per share increased from 3.24 percent in to 9.11 percent in showing a continuous increasing trend. According to the calculated t-value of 15.71, dividend per share increased significantly at the rate of percent compounded annually. HDFC Bank is also showing the similar trend. From 3.70 percent in , dividend per share increased to percent in The analysis showed that dividend per share increased significantly at the rate of percent compounded annually. In Federal Bank, dividend per share increased from 0.24 percent in to 1.10 percent in but decreased to 0.70 percent in But as shown by the result, there was a significant increase in the dividend per share of the bank. Dividend per share increased significantly at the rate of percent compounded annually. In all the private sector banks under study, growth rate of dividend per share was highest in YES Bank (33.29 %), followed by percent in Indisind Bank, percent in HDFC Bank and percent in Axis Bank. The growth rate was lowest in ICICI Bank (11.96 %) followed by percent in South Indian Banks and percent in federal Bank. All other banks in private sector could not depict any definite trend. Overall, among public sector banks, only Bank of Baroda could register a significantly increasing trend in dividend per share, while among private sector banks, all the 4 banks registered significantly increasing trends. Thus, as per far dividend per share is concerned, the private sector banks performed better than the public sector banks. RETURN ON ASSETS Return on assets indicates the efficiency of management in managing its assets to generate profits during a year. In other words it is a financial ratio that shows the percentage of profit a company earns in relation to its total resources. Table 2 showed the return on assets of various public sector banks from the period to As per the given information the return on assets in IDBI bank was 0.74 percent in the year that decreased to 0.50 percent till the year Again in the year it increased to 0.64 percent and further to 0.74 percent in But it decreased to 0.28 percent till the year In the year , return on assets again increased to Various ups and downs turned the growth rate of 2.14 percent non-significant. In State Bank of India, return on assets decreased from 0.87 percent in to 0.43 percent in the year However it touched the level of 0.97 in the year but could not sustain it in the subsequent years. The analysis showed that return on assets in SBI bank decreased significantly at the rate of percent compounded annually. The result was also confirmed by the t-value of (JAMR) id- jamrpublication@gmail.com Page 280

6 Return on assets in Bank of Baroda, increased from 0.96 percent in the year to 1.36 percent in But it decreased in the year to the level of 1.27 percent and showed the same trend till In the year , it reached the level of 0.26 percent. The analysis further revealed that return on assets declined significantly at the rate of percent compounded annually. Return on assets decreased from 1.21 percent in to 0.16 percent in in Punjab National Bank. However it showed a slight increase in the year and but overall it showed a decreasing trend. There was a significant decline in the return on assets of the bank. Return on assets declined significantly at the rate of percent compounded annually. The return on assets ion AXIS Bank 1.09 percent in to 1.75 percent in but decreased to 1.67 percent in and to 0.69 percent in The results showed that fluctuations turned the growth rate of 0.07 percent per annum non-significant. In ICICI Bank, return on assets increased from 0.71 percent in to 1.56 percent in but decreased to 1.17 percent in and further to 1.07 percent in Return on assets has shown both increase and decrease during the period but overall return on assets increased in ICICI Bank. Return on assets increased significantly at the rate of 6.72 percent compounded annually. Table 2: Trends in Return on assets in different public and private sector banks Year IDBI SBI BOB PNB Axis ICICI HDFC Federal Average C.V C.G.R t-value ** 3.09* 4.55** * 2.37* 1.90 Return on assets in HDFC Bank was percent in , percent in , percent and percent in In the year it decreased to percent and further to percent in It again started increasing from the year and reached the level of percent till A calculated t-value of 2.37 showed that return on assets in HDFC Bank declined significantly at the rate of percent compounded annually. In Federal Bank, return on assets increased from 1.16 percent in to 1.32 percent in but decreased to 1.13 percent in In the year the return on assets was 1.17 percent that increased to 1.35 percent in but again decreased to 1.30 percent in and further to 1.17 (JAMR) id- jamrpublication@gmail.com Page 281

7 percent in Return on assets was 1.34 percent in that decreased to 0.56 percent in and again increased to 0.84 percent in The analysis showed that various ups and downs turned the decline of per annum non-significant. As far as the return on assets is concerned, the only one 3 public sector banks witnessed significantly decline, while in private sector banks, there was only one such banks showing a significant decline and another private sector bank i.e. ICICI registered a significant increase. This indicated that on the whole again private sector banks done better job as compared to the public sector banks. FINANCIAL LEVERAGE RATIO Financial leverage ratio helps in the financial measurement of the company. It tells the investors about the financial condition of the company. It is a measure that indicates how much capital comes in from debts and also assesses the ability of a company to meet its financial obligations. Table 3: Trends in Financial Leverage ratio in different public and private sector banks Year IDBI SBI BOB PNB Axis ICICI HDFC Federal Average C.V C.G.R t-value * 8.04** Table 3 showed the financial leverage ratio in various public sector banks under study. In IDBI Bank, financial leverage ratio increased from percent in to percent in , but decreased to percent in and further to percent in It witnessed various ups and downs from to and ultimately reached the level of percent. Frequent ups and downs turned the decline (-1.85 %) in growth rate non-significant. In State Bank of India, the financial leverage ratio witnessed various ups and downs. In the year , it was percent that increased to percent in but decreased to percent in Again in the year it increased to percent but decreased to percent in and reached the level of percent in Ultimately it reached the level of percent in The analysis showed that frequent ups and downs in the financial leverage ratio turned the decline (-0.39 percent) non-significant. (JAMR) id- jamrpublication@gmail.com Page 282

8 Financial leverage ratio in Bank of Baroda increased from percent in to percent in It witnessed many ups and downs during the period under study. The t-value of 1.10 revealed that various ups and down turned the growth rate of 0.65 percent non-significant. Financial leverage ratio in Punjab National Bank increased from percent in to percent in , but decreased to percent in Again in the year it increased to percent that decreased to percent in and further to percent in From the year , financial leverage ratio witnessed an increasing trend and reached the level of percent till In the year , the financial leverage ratio was percent. The nonsignificant t-value of 0.94 showed that financial leverage ratio in Punjab National Bank could not depict any definite trend throughout the period of the study. The financial leverage ratio in AXIS bank increased from percent in to percent in , but decreased to percent in Again in the year the financial leverage ratio increased to percent but decreased to percent in and further to percent in and percent in It again increased to percent in , but decreased to 9.93 percent in In the year , financial leverage ratio increased to percent in The results showed that ups and downs turned the decline (-1.96 %) non-significant. A similar trend could be seen in ICICI bank as it witnessed many ups and downs during the period. Financial leverage ratio increased from 8.97 percent in to percent in bur decreased to percent in and to 9.54 percent in Again in the year , financial leverage ratio increased slightly to 9.65 percent, to 9.86 percent in Financial leverage ratio decreased to the level of 9.75 percent till but increased slightly to 9.76 percent that decreased to 9.42 percent in The results showed that ups and downs turned the decline (-0.26 %) non-significant. In HDFC bank financial leverage ratio increased from percent in to percent in It witnessed many ups and downs during these years but managed to register a significant growth at the rate of 4.17 percent compounded annually. Similarly in Federal bank financial leverage ratio increased from 7.49 percent in to percent in , after witnessing many ups and downs during the period under study. According to the calculated t-value of 8.04, financial leverage ratio increased significantly at the rate of 4.57 percent compounded annually. The analysis revealed that all the selected public sector banks witnessed stagnation in financial leverage ratio throughout the period of the study, while 2 of 4 (50%) private sector banks registered significant increase in financial leverage ratio. The performance of private sector banks was found to be better than that of public sector banks. EARNING PER SHARE Earning per share indicates the overall profitability of the company during a period. It is the monetary value of earnings per outstanding share for common stock of a company. (JAMR) id- jamrpublication@gmail.com Page 283

9 Information contained in Table 4 showed the earning per share of various public sector banks under study. In IDBI Bank, the earning per share increased from 8.45 percent in to percent in , but decreased to 8.22 percent in and 5.87 percent in In the year earnings per share again increased to percent and further to percent in The results indicated that heavy fluctuations turned the growth rate of 4.84 percent non-significant. In State Bank of India earning per share was percent in the year that increased to percent till , but decreased to percent in in the year Earning per share again increased to percent but again decreased to percent in It increased to percent in but decreased to percent till the year Frequent ups and downs turned the decline non-significant. Table 4: Trends in Earning per Share in different public and private sector banks Year IDBI SBI BOB PNB Axis ICICI HDFC Federal Average C.V C.G.R t-value ** 7.70** * Earning retention ratio in Bank of Baroda increased from 7.55 percent in to percent in but decreased to percent in In the year , earning retention ratio again increased to percent but decreased to percent in It increased to percent in but decreased to 7.88 percent in The analysis showed that earning per share ratio could not depict any definite trend during the period under study. In Punjab National Bank, earning per share increased from percent in to percent in but decreased to 4.06 percent till It again increased to percent in and to percent in but decreased to percent in The fluctuations turned decline in earning per share to be non-significant. As per the given information earning per share in Axis bank increased from 4.49 percent in to percent in , but decreased to percent by the year Average earning per share was calculated to be percent. Despite there was a decrease in the earning per share in the year (16.48 %), it managed to register a significant compounded growth rate of percent per annum. (JAMR) id- jamrpublication@gmail.com Page 284

10 In ICICI bank, earning per share showed an increasing trend from (9.45 %) to (38.07 %). but it decreased to percent in but increased to percent by However there was a decline in and , even though the earning per share increased significantly at the rate of percent compounded annually. HDFC witnessed some heavy fluctuation in earning per share as in the year , earning per share was percent that increased to percent in , but decreased to percent in From the year it showed an increasing trend and reached the level of percent by , but decreased drastically to the level of percent by Such heavy fluctuations turned the growth rate of percent non-significant. Although the earning per share in the Federal bank was not showing a consistent trend, but the average earning per share was 389 percent. The analysis further revealed that earning per share increased significantly at the rate of 6.31 percent compounded annually. Overall the earning per share witnessed stagnation in all the selected public sector banks, while 3 of 4 (75%) of private sector banks registered significant growth in earning per share. NET PROFIT MARGIN Net profit margin is a measure of the amount of profit that a business entity earns from its sales, after deducting all the expenses. In other words it is a percentage of revenue remains after deducting all the operating expenses and taxes from company s total revenue. A perusal of Table 5 showed the net profit margin in different public sector banks under study. In IDBI bank net profit margin was 6.40 percent in that increased to 8.22 percent in but decreased to 7.38 percent in the year But in the year net profit margin increased to 8.69 percent but decreased to the level of 3.10 percent till Again in the year net profit margin increased to percent and further to percent in The analysis showed that heavy fluctuations turned the growth rate of 3.18 percent per annum non-significant. In SBI Bank the net profit margin increased from 6.36 percent in to percent in but decreased to percent in and 8.55 percent in In the year net profit margin increased to 9.73 percent and further to percent in Again in net profit margin decreased to 7.98 percent but again increased to 5.59 percent. Net profit margin decreased to 5.97 percent in the year Frequent ups and down turned the decline (-2.05 %) non-significant. Net profit margin in Bank of Baroda increased from 9.48 percent in to percent in It started decreasing in the year and dipped to the level of 7.91 percent. In the year it increased to percent but again decreased to 3.27 percent. The t-value of 1.62 indicated that heavy fluctuations turned the decline of percent non-significant. (JAMR) id- jamrpublication@gmail.com Page 285

11 Table 5: Trends in Net profit margin in different public and private sector banks Year IDBI SBI BOB PNB Axis ICICI HDFC Federal Average C.V C.G.R t-value * ** 5.60** 0.84 In Punjab National Bank, net profit margin increased from percent in to percent in but decreased to 6.61 percent till Again in the year net profit margin increased to 8.38 percent that decreased to 7.49 percent in Analysis showed that net profit margin witnessed a significant decline at the rate of percent compounded annually. The net profit margin ratio in AXIS bank was percent in that decreased to percent in but increased to the level of percent by the year In the year it decreased to percent and further to percent in Net profit margin ratio again increased to percent in and further to percent in In the year , it decreased to and ultimately dipped to the level of 8.26 percent in Fluctuations turned the compounded growth rate of 1.33 percent non-significant. In ICICI bank net profit margin ratio increased from 9.63 percent in to percent in Although it witnessed many ups and downs during the period but on an average not profit margin ratio came to be percent for the period. Calculated t-value of 3.98 indicated that net profit margin ratio in ICICI bank increased significantly at the rate of 8.70 percent compounded annually. Same trend could be seen in HDFC bank, where the net profit margin ratio increased from percent in to percent in During the year it witnessed many ups and downs but overall it increased significantly at the compounded growth rate of 7.48 percent per annum. In Federal bank net profit margin ratio decreased from percent in to percent in but increased slightly to percent in In , net profit margin ratio declined drastically to 5.67 percent but again increased to 8.65 percent in and further increased to percent in Net profit margin ratio again decreased to percent in but increased to percent in Again in the year net profit margin ratio decreased to 6.14 percent in that increased to 9.57 percent in Heavy fluctuations turned the decline non-significant. (JAMR) id- jamrpublication@gmail.com Page 286

12 It can be easily said that 3 out of 4 (75%) of public sector banks witnessed stagnation and 1 (25%) experienced a significant decline in net profit margin. On the other hand, 2 of 4 (50%) of private sector banks witnessed stagnation and the remaining 2 (50%) registered significant growth in net profit margin. RETURN ON NET WORTH Return on net worth is a measure of the profitability that shows how much profit a company generates with the money that shareholders have invested in the company. It is utilized to analyze the investors return. Table 6 showed the trends in return on net worth in various public sector banks under study. In IDBI bank, net worth ratio increased from 8.34 percent in to percent in but decreased to 3.85 percent in Again in the year , return on net worth ratio increased to percent and further to percent in Heavy fluctuations turned the growth rate of 2.62 percent nonsignificant. In State Bank of India, return on net worth was percent in , that increased to percent in but decreased to percent in In the year return on net worth was percent that increased to percent in , but decreased to 9.20 percent in Again in the year return on net worth ratio increased to percent that decreased to 6.68 percent in The t-value of 3.48 showed that return on net worth declined significantly at the rate of percent compounded annually. Table 6: Trends in Return on net worth in different public and private sector banks Year IDBI SBI BOB PNB Axis ICICI HDFC Federal Average C.V C.G.R t-value ** ** ** 3.16* 0.82 Bank of Baroda witnessed an increasing trend from the year (11.78 %) to (20.24 %), but decreased to 8.53 percent till the year It increase to percent in but again decreased to 3.43 percent in Fluctuations turned the decline in return in net worth ratio nonsignificant. (JAMR) id- jamrpublication@gmail.com Page 287

13 In Punjab National Bank, return on net worth ratio declined from percent in to percent in that decreased to 8.12 percent in Again in the year return on net worth ratio increased to percent but decreased to 3.47 percent in There was a significant decline in the return on net worth ratio at the rate of percent compounded annually. As per the given information in AXIS bank return on net worth increased from percent in to percent in but decreased to percent in It again increased to the level of percent in and further increased to percent in but decreased to the level of percent in In the year , return on net worth increased to percent and in it further increased to percent. Return on net worth decreased again to the level of percent in and further decreased to 6.59 percent. Various ups and downs turned the decline non-significant. In ICICI bank return on net worth increased from 7.55 percent in to percent in the year despite various increases and decreases during the period. The analysis revealed that return on net worth increased significantly at the rate of 5.17 percent compounded annually. Similarly in HDFC bank, despite various ups and downs, return on net worth increased from percent in to percent in The calculated t- value of 3.16 showed that return on net worth increased significantly at the rate of 3.29 percent compounded annually. Federal bank showed a very inconsistent trend in return on net worth as it was 8.65 percent in that increased to percent by the year but decreased to percent in Again in the year , return on net worth increased to percent but decreased to the level of 6.05 in It again increased to percent in but decreased to 5.87 percent in In the year , return on net worth ultimately increased to the level of 9.29 percent. The analysis showed that fluctuations turned the decline (-2.49 %) non-significant. As far as return on net worth is concerned, 2 of 4 (50%) of public sector banks witnessed stagnation and the remaining 2 (50%) banks experienced significant decline in return on net worth. On the other hand, 2 of 4(50%) of private sector banks witnessed stagnation, while the remaining 2(50%) registered significant increase in return on net worth. CONCLUSIONS As far as the financial performance of banks is concerned, the study highlights that the financial performance of private sector banks is better than that of public sector banks. In the era of acute competition, the old public sector players are going to be ousted by the new private sector players in the banking sector in India. In this situation, it is highly recommended that the public sector banks, which have sound and broader financial base, should make their credit, investment and deposit schemes in such a way to turn the stagnation or decline in the financial performance into positive and increasing direction. (JAMR) id- jamrpublication@gmail.com Page 288

14 REFERENCES Akshita Arora, Chandan Sharma (2016). Corporate governance and firm performance in developing countries: Evidence from India. Corporate Governance: The International Journal of Business in Society, Vol. 16, Issue 2, pp Alhroob, M. N. A., & Al-Dalaien, B. O. A. (2016). Impact of Corporate Governance on the Financial Performance of Selected Jordanian Banks. Golden Research Thoughts, 6(6), Chaudhary, N., & Gakhar, K. (2018). Corporate Governance and Financial Performance with a Perspective on Board Size and Frequency of Board Meetings: Empirical Evidence from India. Drishtikon: A Management Journal, 9(1). Claessens, S., & Yurtoglu, B. B. (2013). Corporate governance in emerging markets: A survey. Emerging markets review, 15, Ghosh, S. (2017). Corporate governance reforms and bank performance: evidence from the Middle East and North Africa. Corporate Governance: The International Journal of Business in Society, 17(5), Gupta, P. (2017). Banking Reforms, Risk Governance and Performance: A Natural Experiment for Study of Bank-Firm Relationship in India. Sarkar, J., & Sarkar, S. (2018). Bank ownership, board characteristics and performance: Evidence from commercial banks in India. International Journal of Financial Studies, 6(1), 17. Tandon, D., Batra, D. K., & Tandon, N. (2018). Financial Performance and Valuation of Indian Banks: David Cole Model. In Start-Up Enterprises and Contemporary Innovation Strategies in the Global Marketplace (pp ). IGI Global. Tyagi, N. (2015). Does the Quality of Corporate Governance Affect the Financial Performance in Indian IT Sector? An Insight. International Journal of Research in Commerce, Economics and Management, (JAMR) id- jamrpublication@gmail.com Page 289