Need and Significance of Shareholder Value Creation in Indian Banks

Journal Name: 
Journal of Accounting and Finance
Volume: 
Vol. 27 - No. 1
Authors: 
Author Name Designation Organization
Bhargav Pandya
Abstract: 

Indian banking sector has witnessed a great transformation due to introduction of prudential norms, liberalization and deregulation. With  an advent of foreign players and increased participation of domestic private banks, banking sector has become more competitive than  ever before. Banks are under pressure to maintain and improve their operational efficiency as measured in terms of ROI, ROE and EPS.  In this paper an attempt has been made to explore the need and significance of these value based measures in the context of Indian  banking sector. The study reflects that in the wake of globalization and changed global scenario shareholder wealth maximization is a  very potent criterion to review the performance of banks. This paper discusses the need and significance of shareholder value creation in  Indian banks in the backdrop of existing performance of the banks and inability of the traditional methods to measure the economic  profitability of the banks.