Among the bank groups, the highest order of decline in intermediation costs during 1999-2000 was recorded by the foreign banks (38 bps). New private sector banks recorded the lowest intermediation cost (1.42 per cent).

State-run banks recorded a decline of 14 bps in intermediation cost( 2.52 per cent) during 1999-2000.

Operating and net profits across all bank groups exhibited a substantial increase during 1999-2000 as against a decline across all bank groups, barring nationalised banks, in operating profits during 1998-99. In particular, new and old private sector banks registered operating profit growth of 81.8 per cent and 80.4 per cent respectively, during 1999-2000, as against a decline of 7.5 per cent and 26.8 per cent, respectively, in the preceding year.

The rise in the operating profits of foreign banks too turned out to be high at around 51.5 per cent as against a decline of 30.3 per cent during 1998-99. State-run banks exhibited an operating profit growth of 23.7 per cent during 1999-2000, as compared with a marginal increase of 2.8 per cent during 1998-99.

Even more spectacular was the increase in net profit (57.2 per cent), as against a decline of 35.3 per cent in 1998-99."The improved financial performance of state-run banks came about despite a sharper increase in interest expenditure (15.8 per cent) than that in interest incomes (14.5 per cent), and it was attributable to the spurt in other income and deceleration in operating expenses. Booking of capital gains by state-run banks in their treasury operations in the context of downward movement of interest rates, inter alia, boosted their other income," the RBI said in its Report on Trend and Progress of Banking in India for 1999-2000.

As a proportion of total assets, provisions and contingencies of scheduled commercial banks increased by 2 bps to 1 per cent during 1999-2000. "The aggregate figure however, hides the vast differences in the banks' group-wise position in respect of provision...provisions by both foreign and new private-sector banks increased sharply by 44 and 40 bps respectively, to 2.07 per cent and 1.15 per cent respectively during 1999-2000," said the RBI report.

Provisions of old private sector banks increased by 27 bps to 1 per cent. On the other hand, provisions by state-run banks declined by 6 bps to 0.89 per cent, mainly due to the sharp decline in the provisions of 17 bps by the SBI Group.