Capital Productivity of State Bank of India: A Post Merger Analysis

Abstract

The banking sector plays a significant role ensuring efficient utilization of financial resources, particularly in the post-merger period where effective capital management becomes essential for operational stability and growth. The present study focused on the analysis of capital productivity of State Bank of India during post-merger period from 2017-18 to 2024-25. It is based on secondary data and the analysis carried out using various capital productivity ratios as well as descriptive statistics & Compound Annual Growth Rate. The overall results suggest that SBI maintained balanced utilization of capital resources and stable capital productivity performance during post-merger period.

Introduction

This study analyzes the capital productivity performance of State Bank of India (SBI) during the post-merger period (2017–18 to 2024–25) following its merger with associate banks and Bharatiya Mahila Bank in 2017. Capital productivity is crucial for assessing how efficiently a bank utilizes its capital to generate deposits, advances, investments, business, and returns.

The study uses secondary data from SBI annual reports and applies ratio analysis, descriptive statistics, and CAGR to evaluate capital productivity. The analysis reveals that SBI generally maintained stable capital utilization after the merger, with improvements in several key productivity indicators.

Key findings include:

• Deposit per Unit of Capital Ratio increased initially, peaking in 2020–21 before gradually declining, resulting in a slight overall decrease (CAGR: -0.17%).
• Advances per Unit of Capital Ratio showed steady growth and stable performance, indicating effective credit deployment (CAGR: 0.95%).
• Business per Unit of Capital Ratio improved during the early years and remained above pre-merger levels despite later declines (CAGR: 0.31%).
• Investments per Unit of Capital Ratio fluctuated and showed a continuous decline in later years, resulting in negative growth (CAGR: -3.29%).
• Return on Capital Employed (ROCE) demonstrated moderate fluctuations but improved overall, indicating better returns from capital utilization (CAGR: 1.04%).
• Interest Income to Capital Ratio remained relatively stable with slight improvement (CAGR: 0.59%).
• Interest Expenses to Capital Ratio showed moderate fluctuations but remained largely stable (CAGR: 0.11%).

Conclusion

The study on capital productivity of SBI during the post-merger period indicates a generally stable and balanced the utilization of capital resources. The Deposit, Advances and Business Per Unit of Capital Ratios exhibited improvement during initial years, followed by moderate fluctuations in the later period. The Return on Capital Employed Ratio also showed overall improvement, indicating better return generation from capital employed. In contrast, the Investments Per Unit of Capital Ratio recorded a declining trend over the study period. The Interest Income and Interest Expenses to Capital Ratios remained relatively stable, reflecting consistency in income generation and cost management. Overall, the findings suggest that, SBI maintained moderate improvement in capital productivity and operational efficiency during the post-merger period through effective utilization of capital resources.

References

[1] Gaurav Sisodia (2023), Impact of Mergers on Indian Banking Sector: A Case Study of State Bank of India, Retrieved from Shodhganga, http://hdl.handle.net/10603/546064. [2] Ch.Bhargavi&Dr.G.Shashidhar Rao (2021), A Study on Productivity Analysis of Select Banks in India, International Journal of Research Culture Society, ISSN: 2456-6683, Volume-5, Issue-8, Aug-2021. [3] Sravanthi.M&Dr.P.Indrasena Reddy (2021), Productivity Analysis in Public Sector Banks – A study of Select Banks, International Journal of Research Culture Society, ISSN: 2456-6683, Volume-5, Issue-8, Aug-2021. [4] https://www.rbi.org.in/ [5] https://sbi.bank.in/en/web/corporate-governance/annual-report-

Copyright

Copyright © 2026 Dr. M. Nirmala, Ms. P. Valarmathi. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.