EFFICIENCY–INCLUSION NEXUS IN INDIAN BANKING: DEA EVIDENCE FOR ACHIEVING SDG 8

Abstract

This study investigates the nexus between efficiency of banks and financial inclusion in India in the context of Sustainable Development Goal (SDG) 8. Using a two-stage Data Envelopment Analysis (DEA) under Constant and Variable Returns to Scale models, the efficiency of ten commercial banks—five public and five private—was assessed over the period 2017–2022. Technical Efficiency (TE), Pure Technical Efficiency (PTE), and Scale Efficiency (SE) scores were computed and descriptively aligned with inclusion indicators such as ATM density, PMJDY account penetration, and digital transaction volumes. The results reveal that private sector banks, supported by early digital adoption and lean operating structures, consistently achieved higher efficiency levels, whereas public sector banks continued to dominate in physical outreach. The findings highlight that operational efficiency and financial inclusion are mutually reinforcing, particularly in the post-2020 digital banking environment. By integrating efficiency outcomes with inclusion metrics, this study contributes policy-relevant insights on strengthening India’s financial sector to expand access and resilience. The analysis underscores that advancing both efficiency and inclusion is central to achieving SDG Target 8.10 on universal access to financial services.