Unveiling Productivity Dynamics Among Regional Rural Banks in India

This study employs the non-parametric Malmquist productivity index to evaluate the total factor productivity (TFP) change among the regional rural banks (RRBs) in India from 2016 to 2023. The analysis of productivity change among the RRBs holds intrinsic significance due to its potential impact on overall performance and to the delivery of quality services among the rural population. To evaluate the productivity change under varying combinations of input and output selections, two distinct approaches were used: the intermediation approach and the production approach. The empirical results reveal substantial variation in average TEP estimates across the RRBs under consideration throughout the sample period. Furthermore, the observed productivity changes predominantly emanated from technological change (TC) rather than efficiency improvements. Additionally, we found that the smaller RRBs were performing better than their larger counterparts. These empirical findings bear noteworthy policy implications, offering valuable insights for policymakers and regulators to formulate effective strategies to ensure the competitiveness and sustainability of RRBs in India.