This paper presents a systematic review of the methods and evidence used to measure efficiency in the banking sector, with a particular focus on Small Finance Banks (SFBs) in India. The review draws on peer-reviewed journal articles, Reserve Bank of India reports, and policy documents published between 1957 and 2024. It examines the evolution of banking efficiency from traditional ratio-based assessment to frontier-based techniques such as Data Envelopment Analysis (DEA), Stochastic Frontier Analysis (SFA), and the Malmquist Productivity Index (MPI). The study finds that while banking efficiency has been widely studied, most research has focused on public and private sector banks. Research on SFBs is still limited and often does not fully reflect their distinct operating conditions, such as their financial inclusion mandate, smaller scale, and higher exposure to credit risk. The review also highlights gaps in comparative studies and the limited use of integrated efficiency models. The paper concludes that measuring the efficiency of SFBs requires a more context-sensitive and balanced approach. By bringing together existing studies in a structured way, this review identifies key gaps in the literature and offers useful directions for future research, policy, and regulation.
Omkumar munshi (Wed,) studied this question.