Does performance of bank affected by interest income? a study on Indian Banks with reference to State Bank of India & its associates Dr. Pal Brajaballav1, Choudhury Saswata2 1Assistant Professor, Department of Commerce with Farm Management, Vidyasagar University, Midnapore, West Bengal, India. Email id: pal.brajaballav@gmail.com 2Research Scholar, Department of Commerce with Farm Management, Vidyasagar University, Midnapore, West Bengal, India. Email id: saswata.choudhury@gmail.com Online published on 17 September, 2018. Abstract Today financial health of banks are frequently questioned due to a few remarkable bank failures that happened across the globe and raised questions about the lending policy of the banks. Whether their investments are prudent to the objectives or not? In this critical crunch it is real time to examine the relation between income and financial performance of the banks. In this study, we have made an attempt to find out how the interest income affects the performance of the SBI and its associate banks, being a major player in the banking industry. For this purpose, we have made a comprehensive study on State Bank of India and its Associates who have played a substantial role in the economy at large and accordingly, data are collected for 10 years from 2008 to 2017 from the RBI database. The result of the study shows that there is a significant relationship between interest income and the bank performance. Moreover, interest/discount on advances/bills have positive impact on both ROA and ROE. On the other hand, income on investments has negative impact on both ROA and ROE of the banks. Top Keywords Banks, Government Policy, Macro economy, Regulation Jel Classification: G21, G28, G18, E02. Top |