This research paper primarily focuses on the selection of input-output variables(IOVs) of36 Indian commercial banks in the frame work of DEA. 20 financial ratios of those selected Indian banks as suggested by CAMEL model over the period 2009 to 2019 are initially used as multiple IOVs for measuring the technical and scale efficiencies of the selected banks. In this paper two types of financial indicators are used for the identification of efficient and inefficient banks-firstly, the CAMEL ratios to select IOVs and measuring technical and scale efficiencies of the Indian banks and secondly, the average logarithmic returns for measuring earning generating efficiency of the scale-efficient banks. Initially this paper focused on selection of IOVs using correlation matrix and multiple regression analysis. Then technical and scale efficiencies of the selected Indian banks is measured by applying non-parametric Data Envelopment Analysis. We have examined the earning efficiency of scale-efficient banks based on their stock prices and returns. In the terminal section, we have identified that stock of 3 Indian Banks namely City Union Bank Ltd., Kotak Mahindra Bank Ltd. and IndusInd Bank Ltd. are relatively scale-efficient as well as earning- efficient in Indian stock markets. Finally, a perceptual map based on the perception of the average investors has been constructed which, in turn, facilitates them to form a “portfolio basket of investment” based on the overall efficiency of the selected Indian banks.

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Keywords: CRS, VRS, IRS, IOVs, DMUs, DEA,CV.