Archive · 25 Aug 2026
EAC-PM Paper Finds Public Banks Outperform Private Rivals
A study looked at how efficiently different kinds of banks in India work.
It found that public sector banks performed better than private banks in most years.
Public bank efficiency improved a lot between FY20 and FY26.
Private banks also improved, but their average result remained lower in FY26.
Foreign banks had fairly steady efficiency during the same period.
The study said mergers may have affected public banks between FY19 and FY22.
It also said banks will increasingly use artificial intelligence and data to offer more personalized services.
The researchers believe India’s strong savings, foreign-exchange reserves and banking system support continued economic growth.
An EAC-PM working paper found public sector banks more efficient than private and foreign banks overall.
The study examined 47 banks covering more than 95% of India’s banking-system assets from FY15 to FY26.
Public sector bank efficiency rose from 72.46% in FY20 to 93.12% in FY26.
Private bank efficiency increased from about 78% in FY20 to above 86% in FY26, while foreign banks stayed around 83-85%.
The paper identified capital infusion, technology upgrades, AI, data security and customized services as important influences on banking’s future.
- Who
- The Economic Advisory Council to the Prime Minister, with authors Soumya Kanti Ghosh and Tapas Kumar Parida, studied 47 banks.
- What
- The working paper compared the efficiency and productivity of 12 public sector banks, 21 private sector banks and 14 foreign banks.
- When
- The study covered FY15 to FY26 and was published on August 25, 2026.
- Where
- India’s banking system.
- Why
- The paper aimed to assess bank efficiency and discuss the forces likely to shape Indian banking in the long term.
EAC-PM Paper’s Findings
Conventional Perception
Relative bank efficiency
EAC-PM Paper’s Findings
The paper found that public sector banks were generally more efficient than private banks, particularly during FY24-FY26.
Conventional Perception
The paper’s conclusion runs contrary to the stated popular perception that private banks are more efficient than public sector banks.
Reasons for public-bank improvement
EAC-PM Paper’s Findings
The paper attributed improved public-bank performance partly to capital infusion and technological upgrades, while noting mergers and rationalisation affected results during FY19-FY22.
Conventional Perception
The article does not provide a separate private-bank explanation for why public banks improved relative to them.
Foreign-bank performance
EAC-PM Paper’s Findings
Foreign banks had strong rankings in the full-period comparison, with HSBC and JP Morgan ranked first and Citibank third.
Conventional Perception
The paper said foreign banks’ efficiency was mainly linked to their prevalent business models, while their average efficiency remained around 83-85% during FY20-FY26.
- Banks studied
- 47 banks: 12 public sector, 21 private sector and 14 foreign banks.
- Asset coverage
- The banks represented more than 95% of the banking system’s assets.
- Public bank efficiency
- Improved from 72.46% in FY20 to 93.12% in FY26.
- Private bank efficiency
- Rose from around 78% in FY20 to more than 86% in FY26.
- Foreign bank efficiency
- Remained between 83% and 85% from FY20 to FY26.
- Top full-period public bank
- State Bank of India scored 97.49% over FY15-FY26, followed by Bank of Maharashtra at 90.49%.
- Top full-period private bank
- HDFC Bank scored 97.54%, followed by IDBI Bank at 96.51%.