Public Sector Bank Lending Efficiency During COVID‑19 | Award-Winning Insights

Explore public sector bank lending efficiency during COVID‑19 with IIMB’s award-winning study. In-depth analysis, research highlights, and sector implications inside.

Introduction

India’s banking sector has long been a cornerstone of economic development, but the COVID‑19 pandemic pushed it into uncharted territory. At the heart of this transformation lies an award-winning study on public sector bank lending efficiency during COVID‑19, conducted by researchers from the Indian Institute of Management Bangalore (IIMB). This research not only won the Best Paper Award at the prestigious Indian Conference on Financial Markets and Corporate Finance (ICFMCF 2025), but also uncovered compelling evidence on how government banks adapted their lending strategies under crisis conditions.

With the financial world navigating volatility, this paper has become a cornerstone reference for understanding government bank performance analysis using difference-in-differences—a statistical approach that isolates the impact of systemic shocks like COVID‑19.

The Context: Public Sector Banks at a Crossroads

Public sector banks (PSBs) in India account for over 60% of the total banking assets. During the COVID-19 pandemic, these institutions faced immense pressure to continue disbursing credit while maintaining solvency. With liquidity fears looming and public demand for stimulus credit rising, their response served as a litmus test of the nation’s financial infrastructure.

This environment laid the groundwork for an urgent investigation into banking efficiency in public sector banks crisis case study India, a subject previously underexplored despite its relevance.

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About the Research: A Data-Driven Evaluation

The award-winning research titled “Crisis Lending and Efficiency of Public Sector Banks” dives deep into the comparative performance of PSBs during the pandemic. Authored by Prof. Manish Gangwar, Prof. Nitin Rakesh, and research fellow Arjun Patel, the paper applied a difference-in-differences approach to isolate COVID-19’s impact on PSB lending behavior.

By evaluating lending patterns across multiple quarters before and during the crisis, the researchers revealed key shifts in efficiency, disbursal rates, and credit-risk appetite in PSBs compared to private sector counterparts.

Key Findings: Lending Efficiency in Action

The standout findings of the study include:

• Higher credit disbursal rates by PSBs despite liquidity tightening.
• PSBs showed greater resilience and speed in implementing government-backed stimulus lending schemes.
• Operational efficiency, though traditionally questioned, showed marked improvement during the crisis, thanks to digitalization and centralized sanctioning processes.

These findings corroborate the belief that public sector bank lending efficiency during COVID‑19 defied expectations.

Expert Perspective

Dr. Raghuram Rajan, former RBI Governor, commenting on broader trends in public banking, said, “Crisis often brings the best out of institutions that have otherwise been slow to adapt.” While not commenting directly on this paper, his statement supports the idea that PSBs responded strategically under stress—affirming insights from IIMB’s research.

The Role of Policy: Government Interventions Matter

During the pandemic, government schemes like Emergency Credit Line Guarantee Scheme (ECLGS) depended heavily on PSBs. These institutions bore the responsibility to act quickly—especially in underserved and rural areas.

The paper argues that without government bank performance analysis using difference-in-differences, it would have been impossible to quantify just how effective these interventions were.

Implications for India’s Banking Sector

This study sets the stage for reformative discussions around:

• Boosting digital lending capabilities in PSBs
• Institutionalizing efficiency metrics in crisis response strategies
• Reconsidering traditional narratives about PSB sluggishness

For policy-makers, this offers a goldmine of data to plan for future disruptions. For academic circles, the paper sets a benchmark for using empirical tools like difference-in-differences in emerging market research.

ICFMCF 2025: A Platform for Financial Innovation

The ICFMCF 2025 award-winning paper on PSU bank lending efficiency was chosen from among 120+ entries, each rigorously reviewed. The jury cited its “originality, policy relevance, and methodological rigor” as key reasons for recognition.

The Indian Conference on Financial Markets and Corporate Finance, hosted by IIM Ahmedabad and IIM Bangalore alternately, continues to foster high-caliber financial research in Asia.

Bridging Research and Learning

If you’re a student or educator, this research provides a real-world case to enhance your learning. You can access our curated educational resources below:

• 📚 For NCERT Courses
• 🗞️ For Current Affairs
• 📝 For Notes
• ❓ For MCQ’s
• 🎥 For Videos
• 📘 For Syllabus
• 📥 For Downloads of Free NCERT PDFs
• 🧠 For NCERT Mind Maps

And for educational website solutions, reach out to Mart India Infotech, a trusted tech partner for schools.

Conclusion: A Blueprint for Crisis Resilience

The study on public sector bank lending efficiency during COVID‑19 does more than highlight performance metrics—it reframes how we perceive PSBs. Rather than being slow-moving bureaucratic giants, these institutions proved to be agile and responsive under duress.

As the global financial landscape evolves, lessons from India’s public banks during COVID-19 will resonate far beyond national borders. With academic rigor and policy implications aligned, this research sets a new standard for data-driven banking reform in emerging markets.

FAQs: Insights on Public Sector Bank Efficiency & COVID-19

1. What is public sector bank lending efficiency during COVID‑19?
   It refers to how effectively Indian PSBs disbursed loans and managed credit risk during the pandemic.
2. Which banks showed higher lending efficiency during COVID‑19?
   Public sector banks generally performed better than private banks in crisis disbursal efforts.
3. What is the difference-in-differences method in bank analysis?
   It’s a statistical method used to evaluate the effect of a treatment (like COVID-19) by comparing before-and-after data across groups.
4. How did government banks adapt lending strategies during COVID-19?
   Through faster digital approvals, centralized decision-making, and prioritizing government-backed loans.
5. What did the IIMB study conclude about PSB lending during the pandemic?
   It concluded that PSBs became more efficient, responsive, and critical to economic recovery.
6. Why was the ICFMCF 2025 award-winning paper significant?
   It provided empirical backing to claims about improved PSB efficiency and used advanced analytics.
7. How does this research help policymakers?
   It offers measurable insights to guide public credit policy during future crises.
8. Can students use this research in academic studies?
   Yes, it is ideal for case studies on crisis finance, public policy, and banking efficiency.
9. Where can I learn more about banking reforms in India?
   Refer to Current Affairs or NCERT Notes for deeper insights.
10. Who are the researchers behind this award-winning study?
    Professors Manish Gangwar, Nitin Rakesh, and researcher Arjun Patel from IIMB.