Purpose <p>The purpose of this paper is to analyse how managerial and organisational capability drives bank performance in the Indian banking industry. The paper also analyses the mediating impact of managerial and operational efficiency, compares the significance and performance of the key capability dimensions, derives action-oriented managerial priorities, and assesses the predictive value of the proposed model.</p> Design/methodology/approach <p>The primary data were collected through a survey of 327 professionals working in public-sector, private-sector, foreign, and regional rural banks in India. The proposed research framework was tested by using Partial Least Squares Structural Equation Modelling (PLS-SEM). Managerial and organisational capability was operationalised as a higher-order construct comprising decision-making effectiveness, strategic planning capability, operational control effectiveness, resource utilisation effectiveness, corporate governance effectiveness, and human capital competence. Mediation effects, strategic priorities and out-of-sample predictive relevance were analysed with mediation analysis, Importance-Performance Map Analysis (IPMA), and PLS predict.</p> Findings <p>The findings show a strong, significant positive impact of managerial and organisational capability on managerial and operational efficiency. Managerial efficiency, in turn, has a strong positive influence on bank performance, whereas operational efficiency has no significant direct influence once managerial efficiency is accounted for. Managerial and organisational capabilities have no significant direct relationship with bank performance, implying that managerial efficiency fully mediates this relationship. The IPMA findings indicate that several managerial efficiency dimensions are high-importance, low-performance areas, indicating critical priorities that require managerial intervention. The results also indicate that the type of bank ownership does not significantly affect performance. The findings from PLS Predict confirm that the proposed model has strong out-of-sample predictive power.</p> Research limitations/implications <p>The study is limited by its cross-sectional design and its focus on the Indian banking sector. Future studies can expand the model to other institutional settings, nations and longitudinal designs and include objective measures of efficiency.</p> Originality/value <p>The study contributes to the banking and management literature by combining higher-order managerial and organisational capability with efficiency-based mediation, IPMA-based prioritisation and predictive assessment. The results present a predictive, process-based explanation of how internal managerial mechanisms drive bank performance in an emerging economy.</p>