Abstract: By directing capital, promoting savings, and providing credit to a range of industries, India's banking industry is essential to the nation's economic expansion. Examining the link between risk and return is crucial to comprehending the performance and resilience of the financial sector given its constantly shifting context. The purpose of this study is to evaluate the risk-return profile of a few chosen Indian banks in order to provide information about their growth prospects and overall soundness. The primary goal of the study is to investigate how risk and return are related in banks in the public and private sectors. It examines key financial indicators such the Capital Adequacy Ratio (CAR), Net Interest Margin (NIM), Return on Equity (ROE), Return on Assets (ROA), and Non-Performing Assets (NPAs). Additionally, it takes into account a variety of hazards, such as interest rate, market, operational, and credit risk. The study also looks at the effects of macroeconomic variables on the overall performance of the banks, such as GDP growth, inflation, and the repo rate. Using secondary data gathered over a five-year period from RBI publications, bank annual reports, and financial databases, a quantitative approach is used. To comprehend the risk-return relationship, statistical methods like regression, correlation, beta analysis, and standard deviation are employed. Furthermore, instruments such as the Treynor Ratio and Sharpe Ratio are employed to assess performance from the perspective of an investor. The findings show clear distinctions between banks in the public and private sectors. While public sector banks exhibit more stability but lesser profitability, private banks often exhibit higher returns accompanied by higher risks. The results emphasize how crucial it is to manage risks well and follow legal requirements in order to maintain steady performance and sound financial standing. In conclusion, this study emphasizes how crucial strategic planning and continuous risk analysis are to the banking sector. The information can help banks improve their risk management plans, help regulators fortify the financial system, and help investors make better judgments.

Keywords: Indian banking sector, Economic growth, Risk-return analysis

| DOI: 10.17148/IARJSET.2025.125118