Title: A post-reform assessment of the Indian banking sector: profitability, risk and transparency

Authors: Niranjan Chipalkatti, Meenakshi Rishi

Addresses: Department of Accounting, Albers College of Business and Economics, Seattle University, 900 Broadway, Seattle WA 98122-4340, USA. ' Department of Economics and Finance, Albers College of Business and Economics, Seattle University, 900 Broadway, Seattle, WA 98122-4340, USA

Abstract: This paper critically evaluates the performance of Indian banks by examining quantitative data on bank profitability and risk subsequent to the market-oriented reforms in 1991. A bank transparency indicator is also constructed to appraise the performance of Indian banks with respect to the quality of their disclosures. The assessment indicates deteriorating profitability, heightened risk exposure and inadequate transparency of accounting disclosures. The study underscores an urgent need for an improvement in the risk management skills of Indian banks and their supervisors. Such practices may necessitate more rather than less governance in areas of corrective action, financial transparency, and risk management.

Keywords: India; banks; banking reform; credit risk; non-performing assets; market risk; accounting disclosures; profitability; transparency; risk management; financial services.

DOI: 10.1504/IJFSM.2007.011679

International Journal of Financial Services Management, 2007 Vol.2 No.1/2, pp.159 - 174

Published online: 14 Dec 2006 *

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