After financial reforms, banks in India adopted financial innovation to earn more profits through various off-balance sheet tools. To gauge the impact of these items on the efficiency of selected banks, we used the non-parametric Malmquist method. We calculated the efficiency with and without inclusion of these items. Technical and technological efficiency changes were calculated to make total factor productivity change index for 10 years (2008–2017). The results for the banks strengthen the dominant view in the current literature, removing off-balance sheet items led to a biased efficiency of these banks. The presence of these items increased the efficiency of the banks. Nonetheless, it also supported that increment in efficiency was more due to technological change. Despite the odd distribution of these items among these banks, they made a significant pie in the income of banks and overlooking them eroded the efficiency of the banks.

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After financial reform, banks in India adopted financial innovations to earn more profits through various off-balance-sheet tools. To gauge the impact of these items on the efficiency of the top private banks, the authors used the non-parametric Malmquist method. They calculated efficiency with and without the inclusion of these items. Technical and technological efficiency changes were calculated to make a total factor productivity change index for ten years, 2008 to 2017. The results for the banks strengthened the dominant view in the current literature, removing off-balance sheet items led to the biased efficiency of these banks. The presence of these items increased the efficiency of the banks. Nonetheless, it also supported that increments in efficiency were more due to technological change. Despite the odd distribution of these items among these banks, they made a significant piece in the income of banks and overlooking them eroded the efficiency of the banks.

Off-balance-sheet activity played a vital role in helping banks limit long-term financial resources in the balance sheet report and increase the bank's profitability worldwide. The authors explored the determinates of OBS items with banking and economic factors influencing off-balance items in the measurement of banks' output of selected large banks in India for the duration of 2008 to 2017. This study used a multiple regression model to describe the logical connection between the role of OBS and its various determinants like bank size, CRAR loan SLR, NNPA, NIM, ROA, GDP, inflation for the said period. This study found that bank size and NIM were positively affected the OBS activities, whereas CRAR and loan negatively affected the OBSA of selected private sector banks.