Performance Evaluation of Commercial Banks in the Indian Banking Industry
1. Prajnyabodh Sinha, Xavier School of Management (XLRI), Jamshedpur, India, Postdoctoral Researcher, India
Bank regulation is crucial due to the systemic risks highly leveraged banking organizations face. Since the 2008 financial crisis, countries have focused on strengthening financial institutions and restoring economic security. In the Indian finance industry, globalization, intense competition, and new challenges have heightened the importance of regulation. A performance evaluation model is invaluable to drive organizational success, aligning objectives with strategy, and effectively track and share information. Traditional evaluation methods primarily focus on financial outcomes, but in today's fast-paced and competitive economy, long-term viability must be considered alongside financial success. As a service industry, banking relies on tangible and intangible factors to enhance productivity. The Balanced Scorecard, a performance measurement method, incorporates the outcomes of both measurable and unmeasurable aspects.
Commercial banks Balanced Scorecard Financial crisis Regulation framework Competition Asset categorization Long-term objectives
This study demonstrates the value of using the Balanced Scorecard's several criteria in assessing India's financial institutions. It highlights the limitations of using monetary metrics alone for examination since they can only reveal trends in the past. The current regulatory standards in India do not adequately evaluate financial metrics or manage risks. The assessment methods often overlook banks' competitive strategies to ensure long-term viability. By implementing the Balanced Scorecard, banks can adopt a new approach to evaluating success, considering customer focus and innovative approaches to overcome challenges and stay ahead of the competition. Banks can use the Balanced Scorecard as a benchmark to align their efforts with long-term objectives. Embracing the Balanced Scorecard would redefine performance evaluation in the banking industry.
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The author confirms sole responsibility for the following: study conception and design, data collection, analysis and interpretation of results, and manuscript preparation.
The authors did not receive any specific grants from funding agencies in the public, commercial, or non-profit sectors for the research, authorship, and/or publication of this article.
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All authors declare that they have no conflicts of interest.
I thank the following individuals for their expertise and assistance in all aspects of our study and for their help in writing the manuscript. I am also grateful for the insightful comments given by anonymous peer reviewers. Everyone's generosity and expertise have improved this study in myriad ways and saved me from many errors.
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