Neural Network and DEA Model for Evaluation of Operational Efficiency of Co-operative Banks

India is amongst the highest growth economies of the world. This can be attributed to a large extent to the nation’s robust banking sector. Banks are the lifeline of an economy and their contribution leads to sustainable economic growth. The banking sector is undergoing tremendous change to meet the need of a globalized world. Cooperative and commercial banks are two broad categories of banks in India. In this paper, the authors have focused on cooperative banks using Data Envelopment Analysis by defining a unique model to measure their operational efficiency. The model has been used under both variable returns to scale (VRS) as well as constant returns to scale (CRS) assumptions. The efficiency of State Cooperative Banks is evaluated and ranks are given to them. Gujarat results in the best efficiency employing CRS and VRS. The model is validated using the Neural Network technique and the Correlation Coefficient is evaluated. After evaluation, the authors obtained 0.980 as R-value for the overall model indicating a good fit.