operational efficiency and on the interplay between the two. Importance of productivity in banking 9. As I mentioned earlier, banks perform the important function of financial intermediation and the efficiency of their operations has an important bearing on overall economic health of the country. Greater efficiency in banking operations ensures that the cost of financial intermediation is minimized.
At a time when the global and Indian economy are facing challenges on multiple fronts, efficient financial intermediation would provide impetus to the process of economic recovery by channelizing funds to the most productive sectors at the lowest cost. 10. Improvement in productivity and efficiency, and the resultant decline in cost of providing financial services will help in furthering financial inclusion (FI).