Topic: Income source diversification and bank performance in Indian banks.

Abstract

-The changing banking environment has influenced the banking institution to enter into new area of
products i.e. from traditional activities into non-traditional activities. The shift in non-interest income so far has
helped to improve the performance of the banking business in India by reducing various risks associated with
traditional activities of the bank. Non-traditional activities generate fee income, service charges and other types
of non interest income/non fund based income. The paper focuses on finding out the effect of bank
characteristics such as size of the bank, bank ownership, business per employee and other characteristics has
any influence in non-interest income of the banks. The study also focuses on finding out its impact on bank
performance. The study has used panel data regression model to study the impact of non-interest income in the
Private Sector Banks and foreign banks in India during the period 2005-2019. The paper finds that size of the
banks does affect the way they diversify in to non interest income but it was also found that well managed
banks depend more on interest income. It was also found that private banks are more inclined towards noninterest
income than foreign banks in India. The findings are based on Stata13.