Performance Analysis of Commercial Banks: A Case Study on Deposit Growth, Advances and NPA Management

Abstract

This study examines the performance of 10 public sector commercial banks in India, focusing on deposit growth, advances, and NPA management from FY 2019-20 to FY 2023-24. Using secondary data collected from bank annual reports, the RBI website, and relevant literature, the study employs the CAGR and Independent t-test (at a 95% confidence level) to analyze key trends. Data analysis was conducted using SPSS 21.0 for Windows. The findings reveal significant variations in deposit growth among the sample banks. Canara Bank demonstrated the highest deposit growth with a CAGR of 16%, while the Central Bank of India reported the lowest growth at 4%. Similarly, in terms of advances, Canara Bank achieved the highest CAGR of 17%, whereas the Bank of Maharashtra recorded the lowest at 3%. Correlation analysis indicated a moderate positive relationship (r = 0.448) between deposit and advance growth; however, this relationship was statistically insignificant (p-value = 0.194), suggesting that higher deposit growth does not necessarily lead to a proportional increase in advances. In NPA management, Bank of Maharashtra showed notable success in reducing NPAs, achieving a CAGR of -24% in the Priority Sector Lending (PSL) segment and -54% in the Non-Priority Sector Lending (NPSL) segment. Conversely, Canara Bank faced a 12.1% increase in PSL NPAs and achieved only a -15% reduction in NPSL NPAs, highlighting asset quality concerns. The Independent t-test confirmed that NPSL NPAs were significantly higher than PSL NPAs (p-value = 0.000), indicating a greater risk in non-priority lending. The study recommends expanding branch networks in underserved rural areas to enhance financial inclusion and attract new customers. Additionally, banks should strengthen credit monitoring practices, maintain regular contact with borrowers, and implement proactive strategies to manage NPAs effectively. These insights can guide bank managers in improving asset quality, ensuring better financial stability, and enhancing overall performance