Assessing the Performance of Three Weak Public Sector Banks Using Composite Rating Methoda

Till early 1990s the banking sector in India was dominated by public sector banks and with liberalization hitting Indian shores, suddenly the public sector banks found it hard to cope with the dynamic changes in industry, specially with the entry of several new private sector banks. Some public sector banks even turned negative while some maintained their dominance. In order to study the performance of the public sector banks in the post-reforms scenario, for the first time in 1999, the Government of India appointed a working group under M.S. Verma. The committee identified three public sector banks with weak health. These include: UCO bank. Indian Bank. and United Bank of India. It is exactly five years now since the report was submitted. Though these banks now turned profitable, no attempt has been made to study the financial health of these banks and how the transformation took place. The present paper is a study of these three public sector banks and their performance in the last five years (post-restructuring period). The financial soundness of these banks is measured by using composite rating method. The paper also emphasizes on the strategies adopted by each of these three banks during the last five years as a part of their internal restructuring programme.