In the late 1980s and early 1990s, many countries adopted a series of financial sector liberalization measures that included interest rate liberalization, entry deregulations, reduction of reserves requirements and removal of credit allocation etc. This led to significant change in the pattern of profitability and efficiency of banking industry. The present paper focuses on India’s banking sector which has been attracting increasing attention since 1991 when a streamlined financial reform programme was launched. It assesses whether the selected bank specific and macro-economic determinants have any significant impact on profitability of banks in India. The paper concludes that the most of the selected indicators have significant positive impact on profitability of banks in India. Thus, it can be inferred that the last decade and a half has seen the transformation of the Indian banking sector with a high level of technology, diversity and sophistication in products and services and improved efficiency. The banking sector is rapidly moving towards international benchmarks with increasing efficiency, transparency and dynamism. The broad-based reforms have made the banking sector competitive and positioned it well to support sustained economic growth.
