Moreover, widening of ownership due to stock market listing and associated disclosure requirements brought greater market discipline and transparency in the bank management. These measures transformed the banking sector which could be discerned in measures of efficiency and soundness. There has been steady decline in intermediation cost of banks from 6.24 per cent in 1991-92 to 3.43 in 2006-07.
DEA based estimates of efficiency and productivity indicates sharp improvement in operations of public sector banks and are now comparable to their counter parts in the private sector (RBI, 2008). Growing soundness of the banking sector is also evident in falling NPAs from 7.7 per cent in 1995-96 to about 1 per cent in 2006-07.