Vol. 10, Issue 10, Part C (2024)

The banking sector in India has contributed significantly to the country's economic growth and development. It has facilitated investment, trade, and commerce, and has also helped to mobilize savings and channel them towards productive sectors of the economy. The sector has also played a critical role in financial inclusion by providing banking services to the unbanked and underbanked population of the country. The banking sector has a 16% contribution to the Indian GDP. According to the Reserve Bank of India, "a bank is a financial institution that accepts deposits from the public and creates credit". Banks in India offer a range of financial services, including deposit-taking, lending, and investment services, to individuals, businesses, and governments.

This study offers a new and accurate analysis of the influence of budgetary development on the performance of Indian commercial banks. The analysis aims to evaluate the behaviour and determinants affecting the costs and profitability of bank intermediation over a certain timeframe. The research is based on discretionary data and evaluates both public and private sector banks in India.

Empirical findings indicate that heightened competition during financial development correlates with diminished intermediation costs and enhanced efficiency of Indian banks. Only financially savvy, customer-focused, innovation-oriented, and capital-strong banks that comply with prudential standards can successfully attract investors and borrowers in the current competitive landscape. The individual banks must exhibit a robust commitment, while the regulator should guarantee that the prudential regulations maintain the requisite stability and financial integrity of banks without compromising their appropriate incentives.