Of all large banks, only three — Axis Bank, Bank of India and HDFC Bank —could feature in the list of top 10 most efficient banks. Federal Bank topped the list as the most efficient bank.
Its net interest margin is in the range of 4%, while most of the other banks struggle to reach the magical mark of 3%. Its return on assets is in the range of 1.3%-1.5%, which is among the best in the industry.
The study was a kind of eye opener in the sense that it showed that smaller banks like Karur Vyasa Bank and City Union Bank are more efficient than their larger peers.
Karur Vyasa Bank boasts of third highest RoA (return on assets) in the industry. That coupled with above average net interest margin (NIM) helped it sneaking in the list of top 10 most efficient banks.
Similarly, City Union Bank has the second highest RoA and sixth highest NIM in the industry. IDBI Bank has the best business per employee in the sector, but due to its dismal NIM and RoA, the bank is not among the best in the industry.
On this parameter too, Federal Bank ranks the best followed by Yes Bank and Indian Bank. Federal Bank has the highest CAR (capital adequacy ratio) along with one of the lowest non-performing assets (NPAs). Karur Vyasa Bank comes as a strong bank even on this count.
Many banks performed well only on one parameter and could not replicate that performance on the other parameters, which pulled down their rank. For instance, Kotak Mahindra Bank has the second highest CAR in the industry. However, the bank has one of the highest NPAs in percentage terms, which has pulled down its ranks. HDFC Bank features in top 10 banks even in terms of financial strength.
This makes it an exceptional bank, as it ranks among the best across all parameters. Indian Bank came third in this list, besides being the fourth most efficient bank. In fact, unlike other parameters, PSU banks did not flock here, primarily because their capital adequacy ratio is less than their private sector counterparts.
| NIFTY 
