In India there are different sectors which play the major role of accelerator in the growth of Indian economy. In this study, the area of focus is financial transactions sector specially banking sector which plays a momentous role in the economic growth by regulating and controlling the demand for and supply of money. The Indian banking sector supports the fastest growing economy of the world but it is grappling with multiple challenges. This research work analyzes the different variables that affect the financial performance of scheduled commercial banks in India and establish the relationship between selected macroeconomic variables and financial performance indicator. It also highlights the role of banking in changing economic scenario of India. The present study is empirical by nature. Descriptive cum exploratory research design has been used in this study. It has been found that GDP, CPI, exchange rate and lending interest rates are significant macroeconomic variables for determining the financial performance of scheduled commercial banks in India. It has been revealed that long term relationship exists between the selected macroeconomic variables and financial performance variables.

In India there are different sectors which play the major role of accelerator in the growth of Indian economy. In this study, the area of focus is financial transactions sector specially banking sector which plays a momentous role in the economic growth by regulating and controlling the demand for and supply of money. Interrelationship between macroeconomic variables and financial performance has been an issue of debate amongst economists, policy makers and scholars at all level of the economies whether developed or developing . The Indian banking sector supports the fastest growing economy of the world but it is grappling with multiple challenges. Primary among them is the changing macroeconomic environment. The impact of macroeconomic variables broadly depends on how the different financial performance indicators of banking industry react according to change in macroeconomic variables and how management can help in assessing these variables. This research paper analyzes the relationship between macroeconomic variables and financial performance indicator and highlights the role of management in changing economic scenario in banking sector. The present study is empirical by nature. Descriptive cum exploratory research design has been used in this study. Various statistical tests such as Johansen cointegration test, ARDL, Granger causality test and regression analysis have been used for data analysis.