An investigative study of operational performance and service quality of Indian public sector banks

Since economic liberalisation in the early 1990s, the public sector banks in India have been facing stiff competition from the private Indian and foreign banks that have captured a large share of Indian financial market. However, the country's banking system is still dominated by the public sector banks and there is an emerging need for a comprehensive framework for measuring their operational efficiency and service quality. This paper attempts to measure the operational efficiency and service quality of these banks. For operational performance benchmarking data envelopment analysis (DEA) methodology has been used and SERVQUAL model has been applied to measure service quality. Further, the operational performance and service quality of these banks have been compared with two leading private sector banks to derive academic and managerial insights. Linkages between operational efficiency, service quality and profitability of these banks have also been investigated.