INFLUENCE OF DIGITAL FINANCIAL SERVICES ON FINANCIAL PERFORMANCE OF PRIVATE SECTOR AND PUBLIC SECTOR COMMERCIAL BANKS IN INDIA

Abstract

In this study, influence of digital financial services on financial performance of private sector and public sector commercial banks in India has been studied. Payments, credit, savings, remittances, and insurance are some of the financial services that can be accessed and delivered through digital platforms. The term "digital channels" refers to the internet, mobile devices, ATM, POS systems, digital payments, and so on. Banks' financial performance was measured using ROA and Return on Equity. The secondary data was employed in the study. The data of independent variables (ATM, POS, Mobile Banking, NEFT and RTGS) were collected from the Central Bank of India i.e. Reserve Bank of India from the year 2018 to 2022. The data for dependent variables (ROA and ROE), were collected from Money Control. A sample of 22 commercial banks was taken from the indices Nifty PSU Bank and Nifty Private Bank of NSE. Out of these 22 banks, an analysis of 17 banks was performed .Two private sector commercial bank (Bandhan Bank Ltd and City Union Bank) out of 10 from Nifty Private Bank indices and three public sector commercial banks (Indian Overseas Bank, Punjab and Sind Bank and UCO bank) out of 12 from Nifty PSU Bank indices were removed because there was no consolidated data of ROA and ROE ratios. There was two year consolidated ratios of UCO but the study aimed to collect five year data thus, the bank was removed. The analysis of data was done using SPSS. The study aims to analyze the relationships between the independent variables and the dependent variables. The study shows that there is significant influence of RTGS transactions volume on ROA and ROE of private sector commercial banks in India. Similarly, there is impact of Mobile Banking transactions volume on ROA of public sector commercial banks in India. Whereas there is no significant influence of Mobile Banking, NEFT and RTGS transactions volume, and numbers of POS and ATMs deployed on ROE of public sector commercial banks in India.