"Camel Framework": Project Report

A
PROJECT REPORT
ON
“CAMEL FRAMEWORK”
as a tool of performance evaluation for
banking institutions
Submitted By:
Lovely Ganeriwal (18)
Unnati Modi (31)
Submitted To:
SOM- LALIT INSTITUTE OF MANAGEMENT STUDIES (SLIMS)

AHMEDABAD – 380 009
CAMEL Framework Page 1

CERTIFICATE
This is to certify that Miss Unnati Modi and Lovely Ganeriwal have
completed their project report titled “To study the strength of using
CAMELS framework as a tool of performance evaluation for banking
institutions” under my supervision. To the best of my knowledge and belief
this is their original work and this, wholly or partially, has not been
submitted for any degree of this or any other University.

Date: Prof.
Nirali Parikh
Signature - ______________
DECLARATION
We hereby declare that this project work entitled “To study the strength of
using CAMELS framework as a tool of performance evaluation for
banking institutions” is our work, carried out under the guidance of
Professor Nirali Parikh and Mr Shivshankar (Corporation Bank). Our
report neither fully nor partially has ever been submitted for award of any
other degree to either this university or any other university.
LOVELY GANERIWAL
UNNATI MODI

PREFACE
We know that final the project is for the development and enhancement of the knowledge
in particular field. It can never be possible to make a mark in today’s competitive era only
with theoretical knowledge when industries are developing at global level, practical
knowledge of administration and management of business is very important. Hence,
practical study is of great importance to PGDM student
Banking is a highly information intensive activity that relies heavily on information

technology (IT) to acquire, process, and deliver the information to all relevant customers.
Banks used the Internet technology as a strategic weapon to revolutionize the way they
operate, deliver, and compete against each other. Although a complete turnaround in
banking sector performance is not expected till the completion of reforms, signs of
improvement are visible in some indicators under the CAMEL framework. Under this
bank is required to enhance capital adequacy, strengthen asset quality, improve
management, increase earnings and reduce sensitivity to various financial risks.
Amongst these reforms and restructuring the CAMELS Framework has its own
contribution to the way modern banking is looked up on now. The attempt here is to see
how various ratios have been used and interpreted to reveal a bank’s performance and
how this particular model encompasses a wide range of parameters making it a widely
used and accepted model in today’s scenario.
We have undergone our Grand Project at CORPORATION BANK, AHMEDABAD. We
feel great pleasure to present this report work after our training at CORPORATION
BANK that produced to be golden opportunity for us by enriching our knowledge by
comparing our theoretical knowledge with the managerial skill and application. Simple
language has been used throughout the report. Report is illustrated with figure, charts and
diagrams as and when required.

ACKNOWLEDGMENT
Words are the dress of thoughts, appreciating and acknowledging those who
are responsible for successful completion of the project.
Our sincerity gratitude goes to Prof. Nirali Parikh who helped us to work on
this project and provided us all the help, guidance and encouragement to
complete this project.
The encouragement and guidance given by Mr Shivshankar (Corporation
Bank) have made this a personally rewarding experience. We thank him for
his support and inspiration, without which, understanding the intricacies of
the project would have been exponentially difficult.
We are sincerely grateful Som-Lalit Institute Of Business Management who
provided us the opportunity and inspiration needed to prepare this training
report in congenial manner.
WITH SINCERE THANKS,

LOVELY GANERIWAL
UNNATI MODI

EXECUTIVE SUMMARY
In today’s scenario, the banking sector is one of the fastest growing sector and a lot of
funds are invested in Banks. Also today’s banking system is becoming more complex. So,
we thought of evaluating the performance of the banks. There are so many models of
evaluating the performance of the banks, but we have chosen the CAMELS Model to
evaluate the performance of the banks. We have read a lot of books and found it the best
model because it measures the performance of the banks from each parameter i.e. Capital,
Assets, Management, Earnings and Liquidity.
After deciding the model, we have decided to take two public bank and two private bank
for comparison. We have collected annual reports of all the banks. And we have
calculated ratios for all the banks and interpreted them.
After that we have given weightage to each parameter of the CAMELS Model. According
to their importance and our understandings, we have allocated weightage to the each
ratios of the each parameter. From the weighted results of each ratio, we got percentage
on the bases of the performance of the bank. On the basis of total derived, we have given
ranking to the banks.
Ranking as per our analysis,
1. Kotak Mahindra Bank

2. Bank of Baroda
3. Corporation Bank
4. Karur Vysya Bank

TABLE OF CONTENT
Chapter Particulars Page no
Certificate I
Declaration ii
Preface iii
Acknowledgement iv
Executive Summary V
1 INTRODUCTION
1.1 Bank
1.2 Origin and Use of Banks
1.3 Banking Reforms
1.4 Basel II Accord
1.5 Camel Rating System
1.6 Need for Camel Rating
2 CAMEL FRAMEWORK
2.1 Capital Adequacy

2.2 Asset Management
2.3 Management Soundness
2.4 Earnings & Profitability
2.5 Liquidity
3 Introduction of Banks
3.1 Private sector Banks

3.1.1 Karur Vysya Bank
3.1.2 Kotak Mahindra Bank
3.2 Public Sector Banks
3.2.1 Bank Of Baroda
3.2.2 Corporation Bank

4 RESEARCH METHODOLOGY
4.1 Objective of the study

4.1.1 Statement of problem
4.1.2 Research type
4.2 Research Method
4.2.1 Data Source
4.2.2 Contribution of the Study
4.2.3 Beneficiaries
4.3 Limitation of the study
5 RATIOS ANALYSIS
5.1 Corporation Bank Ratios

5.2 Karur Vysya Bank Ratios
5.3 Bank Of Baroda Ratios
5.4 Kotak Mahindra Bank Ratios
6 FINDING AND ANALYSIS
6.1 Reasons for weightage

6.2 Capital adequency
6.3 Assets Quality
6.4 Management
6.5 Earnings
6.6 Liquidity
7 Camel Rating
7.1 Table showing rating

7.2 Chart Showing comparison
Recommendation
Conclusion
Bibliography
Annexure
LIST OF TABLES
TABLE PARTICULARS PAGE

NO. NO.
1 Corporation Bank
1.1 Capital Ratios
1.2 Assets Ratios
1.3 Management Ratios
1.4 Earnings Ratios
1.5 Liquidity Ratios
2 Karur Vysya Bank

2.1 Capital Ratios
2.2 Assets Ratios
2.4 Earnings Ratios
3 Bank of Baroda
3.1 Capital Ratios
3.2 Assets Ratios
3.4 Earnings Ratios
4 Kotak Mahindra Bank

4.1 Capital Ratios
4.2 Assets Ratios
4.4 Earnings Ratios
5 Comparison of Capital adequacy ratios

6 Comparison of Asset quality ratios
7 Comparison of Management ratios
8 Comparison of Earnings ratios
9 Comparison of Liquidity ratios
10 Camel Rating

1.1 The Bank
The word bank means an organization where people and business can invest or borrow
money; change it to foreign currency etc. According to Halsbury “A Banker is an
individual, Partnership or Corporation whose sole pre-dominant business is banking, that
is the receipt of money on current or deposit account, and the payment of cheque drawn
and the collection of cheque paid in by a customer.’’
1.2 The Origin and Use of Banks
The Word ‘Bank’ is derived from the Italian word ‘Banko’ signifying a bench, which was
erected in the market-place, where it was customary to exchange money. The Lombard
Jews were the first to practice this exchange business, the first bench having been
established in Italy A.D. 808. Some authorities assert that the Lombard merchants

commenced the business of money-dealing, employing bills of exchange as remittances,
about the beginning of the thirteenth century.
About the middle of the twelfth century it became evident, as the advantage of coined
money was gradually acknowledged, that there must be some controlling power, some
corporation which would undertake to keep the coins that were to bear the royal stamp up
to a certain standard of value; as, independently of the ‘sweating’ which invention may
place to the credit of the ingenuity of the Lombard merchants- all coins will, by wear or
abrasion, become thinner, and consequently less valuable; and it is of the last importance,
not only for the credit of a country, but for the easier regulation of commercial
transactions, that the metallic currency be kept as nearly as possible up to the legal
standard. Much unnecessary trouble and annoyance has been caused formerly by
negligence in this respect.
The gradual merging of the business of a goldsmith into a bank appears to have been the
way in which banking, as we now understand the term, was introduced into England; and
it was not until long after the establishment of banks in other countries-for state purposes,
the regulation of the coinage, etc. that any large or similar institution was introduced into
England. It is only within the last twenty years that printed cheques have been in use in
that establishment. First commercial bank was Bank of Venice which was established in
1157 in Italy.
1.3 THE BANKING REFORMS
In 1991, the Indian economy went through a process of economic liberalization, which
was followed up by the initiation of fundamental reforms in the banking sector in 1992.
The banking reform package was based on the recommendations proposed by the
Narasimham Committee Report (1991) that advocated a move to a more market oriented
banking system, which would operate in an environment of prudential regulation and
transparent accounting. One of the primary motives behind this drive was to introduce an
element of market discipline into the regulatory process that would reinforce the

supervisory effort of the Reserve Bank of India (RBI). Market discipline, especially in the
financial liberalization phase, reinforces regulatory and supervisory efforts and provides a
strong incentive to banks to conduct their business in a prudent and efficient manner and
to maintain adequate capital as a cushion against risk exposures. Recognizing that the
success of economic reforms was contingent on the success of financial sector reform as
well, the government initiated a fundamental banking sector reform package in 1992.
Banking sector, the world over, is known for the adoption of multidimensional strategies
from time to time with varying degrees of success. Banks are very important for the
smooth functioning of financial markets as they serve as repositories of vital financial
information and can potentially alleviate the problems created by information
asymmetries. From a central bank’s perspective, such high-quality disclosures help the
early detection of problems faced by banks in the market and reduce the severity of
market disruptions.
Consequently, the RBI as part and parcel of the financial sector deregulation, attempted
to enhance the transparency of the annual reports of Indian banks by, among other things,
introducing stricter income recognition and asset classification rules, enhancing the
capital adequacy norms, and by requiring a number of additional disclosures sought by
investors to make better cash flow and risk assessments.
During the pre-economic reforms period, commercial banks & development financial
institutions were functioning distinctly, the former specializing in short & medium term
financing, while the latter on long term lending & project financing. Commercial banks
were accessing short term low cost funds thru savings investments like current accounts,
savings bank accounts & short duration fixed deposits, besides collection float.
Development Financial Institutions (DFIs) on the other hand, were essentially depending
on budget allocations for long term lending at a concessionary rate of interest. The
scenario has changed radically during the post reforms period, with the resolve of the
government not to fund the DFIs through budget allocations. DFIs like IDBI, IFCI &
ICICI had posted dismal financial results. Infect, their very viability has become a

question mark. Now, they have taken the route of reverse merger with IDBI bank &
ICICI bank thus converting them into the universal banking system.
1.4 BASEL II ACCORD
Bank capital framework sponsored by the world's central banks designed to promote
uniformity, make regulatory capital more risk sensitive, and promote enhanced risk
management among large, internationally active banking organizations. The International
Capital Accord, as it is called, will be fully effective by January 2008 for banks active in
international markets. Other banks can choose to "opt in," or they can continue to follow
the minimum capital guidelines in the original Basel Accord, finalized in 1988. The
revised accord (Basel II) completely overhauls the 1988 Basel Accord and is based on
three mutually supporting concepts, or "pillars," of capital adequacy. The first of these
pillars is an explicitly defined regulatory capital requirement, a minimum capital-to-asset
ratio equal to at least 8% of risk-weighted assets. Second, bank supervisory agencies,
such as the Comptroller of the Currency, have authority to adjust capital levels for
individual banks above the 8% minimum when necessary. The third supporting pillar
calls upon market discipline to supplement reviews by banking agencies.
Basel II is the second of the Basel Accords, which are recommendations on banking laws
and regulations issued by the Basel Committee on Banking Supervision. The purpose of
Basel II, which was initially published in June 2004, is to create an international standard
that banking regulators can use when creating regulations about how much capital banks
need to put aside to guard against the types of financial and operational risks banks face.
Advocates of Basel II believe that such an international standard can help protect the
international financial system from the types of problems that might arise should a major
bank or a series of banks collapse. In practice, Basel II attempts to accomplish this by
setting up rigorous risk and capital management requirements designed to ensure that a
bank holds capital reserves appropriate to the risk the bank exposes itself to through its
lending and investment practices. Generally speaking, these rules mean that the greater

risk to which the bank is exposed, the greater the amount of capital the bank needs to
hold to safeguard its solvency and overall economic stability.
Main Aim:
1. Ensuring that capital allocation is more risk sensitive;

2. Separating operational risk from credit risk, and quantifying both;
3. Attempting to align economic and regulatory capital more closely to reduce the scope
for regulatory arbitrage.
Basel II has largely left unchanged the question of how to actually define bank capital,
which diverges from accounting equity in important respects. The Basel I definition, as
modified up to the present, remains in place.

The Accord in operation
Basel II uses a "three pillars" concept – (1) minimum capital requirements (addressing
risk), (2) supervisory review and (3) market discipline – to promote greater stability in
the financial system.
The Three Pillars of Basel II
The Basel I accord dealt with only parts of each of these pillars. For example: with
respect to the first Basel II pillar, only one risk, credit risk, was dealt with in a simple
manner while market risk was an afterthought; operational risk was not dealt with at all.
The First Pillar

The first pillar deals with maintenance of regulatory capital calculated for three major
components of risk that a bank faces: credit risk, operational risk and market risk. Other
risks are not considered fully quantifiable at this stage. The credit risk component can be
calculated in three different ways of varying degree of sophistication, namely
standardized approach, Foundation IRB and Advanced IRB. IRB stands for "Internal
Rating-Based Approach". For operational risk, there are three different approaches - basic
indicator approach or BIA, standardized approach or TSA, and advanced measurement
approach or AMA. For market risk the preferred approach is VAR (value at risk). As the
Basel 2 recommendations are phased in by the banking industry it will move from
standardized requirements to more refined and specific requirements that have been
developed for each risk category by each individual bank. The upside for banks that do
develop their own bespoke risk measurement systems is that they will be rewarded with
potentially lower risk capital requirements. In future there will be closer links between
the concepts of economic profit and regulatory capital.

Credit Risk can be calculated by using one of three approaches
1. Standardized Approach
2. Foundation IRB (Internal Ratings Based) Approach
3. Advanced IRB Approach
The standardized approach sets out specific risk weights for certain types of credit risk.
The standard risk weight categories are used under Basel 1 and are 0% for short term
government bonds, 20% for exposures to OECD Banks, 50% for residential mortgages
and 100% weighting on commercial loans. A new 150% rating comes in for borrowers
with poor credit ratings. The minimum capital requirement( the percentage of risk
weighted assets to be held as capital) remains at 8%. For those Banks that decide to adopt
the standardized ratings approach they will be forced to rely on the ratings generated by
external agencies. Certain Banks are developing the IRB approach as a result.
The Second Pillar

The second pillar deals with the regulatory response to the first pillar, giving regulators
much improved 'tools' over those available to them under Basel I. It also provides a
framework for dealing with all the other risks a bank may face, such as systemic risk,
pension risk, concentration risk, strategic risk, reputation risk, liquidity risk and legal
risk, which the accord combines under the title of residual risk. It gives banks a power to
review their risk management system.
The Third Pillar

The third pillar greatly increases the disclosures that the bank must make. This is
designed to allow the market to have a better picture of the overall risk position of the
bank and to allow the counterparties of the bank to price and deal appropriately. The new
Basel Accord has its foundation on three mutually reinforcing pillars that allow banks and
bank supervisors to evaluate properly the various risks that banks face and realign
regulatory capital more closely with underlying risks. The first pillar is compatible with

the credit risk, market risk and operational risk. The regulatory capital will be focused on
these three risks. The second pillar gives the bank responsibility to exercise the best ways
to manage the risk specific to that bank. Concurrently, it also casts responsibility on the
supervisors to review and validate banks’ risk measurement models. The third pillar on
market discipline is used to leverage the influence that other market players can bring.
This is aimed at improving the transparency in banks and improves reporting.
1.5 CAMEL RATING SYSTEM
The CAMEL rating system is based upon an evaluation of five critical elements of a
credit union's operations: Capital Adequacy, Asset Quality, Management, Earnings and
Asset/Liability Management. This rating system is designed to take into account and
reflect all significant financial and operational factors examiners assess in their
evaluation of a credit union's performance. Credit unions are rated using a combination of
financial ratios and examiner judgment.
Since the composite CAMEL rating is an indicator of the viability of a credit union, it is
important that examiners rate credit unions based on their performance in absolute terms
rather than against peer averages or predetermined benchmarks. The examiner must use
professional judgment and consider both qualitative and quantitative factors when
analyzing a credit union's performance. Since numbers are often lagging indicators of a
credit union's condition, the examiner must also conduct a qualitative analysis of current
and projected operations when assigning CAMEL ratings.
Although the CAMEL composite rating should normally bear a close relationship to the
component ratings, the examiner should not derive the composite rating solely by
computing an arithmetic average of the component ratings. Following are general
definitions the examiner should use for assigning the credit union's CAMEL composite
rating:

1.6 NEED OF CAMEL RATING SYSTEM IN BANKS
In 1979, the bank regulatory agencies created the Uniform Financial Institutions Rating
System (UFIRS). Under the original UFIRS a bank was assigned ratings based on
performance in five areas: the adequacy of Capital, the quality of Assets, the capability of
Management, the quality and level of Earnings and the adequacy of Liquidity. Bank
supervisors assigned a 1 through 5 rating for each of these components and a composite
rating for the bank. This 1 through 5 composite rating was known primarily by the
acronym CAMEL.
A bank that received a CAMEL of 1 was considered sound in every respect and generally
had component ratings of 1 or 2 while a bank with a CAMEL of 5 exhibited unsafe and
unsound practices or conditions, critically deficient performance and was of the greatest
supervisory concern. While the CAMEL rating normally bore close relation to the five
component ratings, it was not the result of averaging those five grades. Rather,
supervisors consider each institution's specific situation when weighing component
ratings and, more generally, review all relevant factors when assigning ratings.
CAMEL ratings reflect the excellent banking conditions and performance over the last
several years. There is a need for bank employees to have sufficient knowledge of the
rating system, in order to guide the banking growth rate in the positive direction. Lack of
knowledge among employees regarding banking performance indicators affects banks
negatively as these are the basis for any banking action.

2.1 CAPITAL
Capital base of financial institutions facilitates depositors in forming their risk perception
about the institutions. Also, it is the key parameter for financial managers to maintain
adequate levels of capitalization. Moreover, besides absorbing unanticipated shocks, it
signals that the institution will continue to honor its obligations. The most widely used
indicator of capital adequacy is capital to risk-weighted assets ratio (CRWA). According
to Bank Supervision Regulation Committee (The Basle Committee) of Bank for
International Settlements, a minimum 8 percent CRWA is required. Capital adequacy
ultimately determines how well financial institutions can cope with shocks to their
balance sheets. Thus, it is useful to track capital-adequacy ratios that take into account the
most important financial risks—foreign exchange, credit, and interest rate risks—by
assigning risk weightings to the institution’s assets.
Capital cushions fluctuations in earnings so that credit unions can continue to operate in
periods of loss or negligible earnings. It also provides a measure of reassurance to the
members that the organization will continue to provide financial services. It serves to
support growth as a free source of funds and provides protection against insolvency.
While meeting statutory capital requirements is a key factor in determining capital
adequacy, the credit union’s operations and risk position may warrant additional capital
beyond the statutory requirements. Maintaining an adequate level of capital is a critical
element.
Determining the adequacy of a credit union's capital begins with a qualitative evaluation
of critical variables that directly bear on the institution's overall financial condition. The
examiner should also consider the interrelationships with the other areas:
 Capital level and trend analysis;

 Compliance with earnings transfers requirements and risk-based net worth
requirements;
 Composition of capital;

 Interest and dividend policies and practices;
 Adequacy of the Allowance for Loan and Lease Losses account; Quality, type,
liquidity and diversification of assets, with particular reference to classified
assets;
 Loan and investment concentrations;
 Growth plans;
 Ability of management to control and monitor risk, including credit and interest
rate risk;
 Earnings: Good historical and current earnings performance enables a credit
union to fund its growth, remain competitive, and maintain a strong capital
position;
 Liquidity and funds management;
 Economic Environment.
 Capital Risk Adequacy Ratio:

CRAR is a ratio of Capital Fund to Risk Weighted Assets. Reserve Bank of India
prescribes Banks to maintain a minimum Capital to risk-weighted Assets Ratio (CRAR)
of 9 % with regard to credit risk, market risk and operational risk on an ongoing basis, as
against 8 % prescribed in Basel documents.
Total capital includes tier-I capital and Tier-II capital. Tier-I capital includes paid up
equity capital, free reserves, intangible assets etc. Tier-II capital includes long term
unsecured loans, loss reserves, hybrid debt capital instruments etc. The higher the CRAR,
the stronger is considered a bank, as it ensures high safety against bankruptcy.
CRAR = Capital/ Total Risk Weighted Credit Exposure

 Debt Equity Ratio:
This ratio indicates the degree of leverage of a bank. It indicates how much of the bank
business is financed through debt and how much through equity. This is calculated as the
proportion of total asset liability to net worth. ‘Outside liability’ includes total borrowing,
deposits and other liabilities. ‘Net worth’ includes equity capital and reserve and surplus.
Higher the ratio indicates less protection for the creditors and depositors in the banking
system.
Debt Equity Ratio = Borrowings/ (Share Capital + reserves)
 Total Advance to Total Asset Ratio:

This is the ratio of the total advanced to total asset. This ratio indicates banks
aggressiveness in lending which ultimately results in better profitability. Higher ratio of
advances of bank deposits (assets) is preferred to a lower one. Total advances also include
receivables. The value of total assets is excluding the revolution of all the assets.
Total Advance to Total Asset Ratio = Total Advances/ Total Asset
 Government Securities to Total Investments:

The percentage of investment in government securities to total investment is a very
important indicator, which shows the risk taking ability of the bank. It indicates a bank’s
strategy as being high profit high risk or low profit low risk. It also gives a view as to the
availability of alternative investment opportunities. Government securities are generally
considered as the most safe debt instrument, which, as a result, carries the lowest return.
Since government securities are risk free, the higher the government security to
investment ratio, the lower the risk involved in a bank’s investments.
Government Securities to Total Investments = Government Securities/ Total
Investment

2.2 ASSET QUALITY
Asset quality determines the robustness of financial institutions against loss of value in
the assets. The deteriorating value of assets, being prime source of banking problems,
directly pour into other areas, as losses are eventually written-off against capital, which
ultimately jeopardizes the earning capacity of the institution. With this backdrop, the
asset quality is gauged in relation to the level and severity of non-performing assets,
adequacy of provisions, recoveries, distribution of assets etc. Popular indicators include
nonperforming loans to advances, loan default to total advances, and recoveries to loan
default ratios.
The solvency of financial institutions typically is at risk when their assets become
impaired, so it is important to monitor indicators of the quality of their assets in terms of
overexposure to specific risks, trends in nonperforming loans, and the health and
profitability of bank borrowers— especially the corporate sector. Share of bank assets in
the aggregate financial sector assets: In most emerging markets, banking sector assets
comprise well over 80 per cent of total financial sector assets, whereas these figures are
much lower in the developed economies. Furthermore, deposits as a share of total bank
liabilities have declined since 1990 in many developed countries, while in developing
countries public deposits continue to be dominant in banks. In India, the share of banking
assets in total financial sector assets is around 75 per cent, as of end-March 2008.
There is, no doubt, merit in recognizing the importance of diversification in the

institutional and instrument-specific aspects of financial intermediation in the interests of
wider choice, competition and stability. However, the dominant role of banks in financial
intermediation in emerging economies and particularly in India will continue in the
medium-term; and the banks will continue to be “special” for a long time. In this regard,
it is useful to emphasise the dominance of banks in the developing countries in promoting
non-bank financial intermediaries and services including in development of debt-markets.
Even where role of banks is apparently diminishing in emerging markets, substantively,
they continue to play a leading role in non-banking financing activities, including the

development of financial markets. One of the indicators for asset quality is the ratio of
non-performing loans to total loans (GNPA). The gross non-performing loans to gross
advances ratio is more indicative of the quality of credit decisions made by bankers.
Higher GNPA is indicative of poor credit decision-making.
NPA: Non-Performing Assets
Advances are classified into performing and non-performing advances (NPAs) as per RBI
guidelines. NPAs are further classified into sub-standard, doubtful and loss assets based
on the criteria stipulated by RBI. An asset, including a leased asset, becomes
nonperforming\ when it ceases to generate income for the Bank.
An NPA is a loan or an advance where:

1. Interest and/or installment of principal remains overdue for a period of more than
90 days in respect of a term loan.
2. The account remains "out-of-order'' in respect of an Overdraft or Cash Credit
(OD/CC).
3. The bill remains overdue for a period of more than 90 days in case of bills
purchased and discounted.
4. A loan granted for short duration crops will be treated as an NPA if the
installments of principal or interest thereon remain overdue for two crop seasons.
5. A loan granted for long duration crops will be treated as an NPA if the instalments
of principal or interest thereon remain overdue for one crop season
The Bank classifies an account as an NPA only if the interest imposed during any quarter
is not fully repaid within 90 days from the end of the relevant quarter. This is a key to the
stability of the banking sector. There should be no hesitation in stating that Indian banks
have done a remarkable job in containment of non-performing loans (NPL) considering
the overhang issues and overall difficult environment. For 2008, the net NPL ratio for the
Indian scheduled commercial banks at 2.9 per cent is ample testimony to the impressive
efforts being made by our banking system. In fact, recovery management is also linked to

the banks’ interest margins. The cost and recovery management supported by enabling
legal framework hold the key to future health and competitiveness of the Indian banks.
No doubt, improving recovery-management in India is an area requiring expeditious and
effective actions in legal, institutional and judicial processes.
Asset quality is rated in relation to:

 The quality of loan underwriting, policies, procedures and practices;
 The level, distribution and severity of classified assets;
 The level and composition of nonaccrual and restructured assets;
 The ability of management to properly administer its assets, including the timely
identification and collection of problem assets;
 The existence of significant growth trends indicating erosion or improvement in
asset quality;
 The existence of high loan concentrations that present undue risk to the credit
union;
 The appropriateness of investment policies and practices;
 The investment risk factors when compared to capital and earnings structure; and
the effect of fair (market) value of investments vs. book value of investments
 Total Loans/Total Shares

 Total Loans/Total Assets
 Fair (Market) Value / Book value

 Gross NPA ratio:
This ratio is used to check whether the bank's gross NPAs are increasing quarter on
quarter or year on year. If it is, indicating that the bank is adding a fresh stock of bad
loans. It would mean the bank is either not exercising enough caution when offering loans
or is too lax in terms of following up with borrowers on timely repayments.
 Net NPA ratio:

Net NPAs reflect the performance of banks. A high level of NPAs suggests high
probability of a large number of credit defaults that affect the profitability and net-worth
of banks and also wear down the value of the asset.
Loans and advances usually represent the largest asset of most of the banks. It monitors
the quality of the bank loan portfolio. The higher the ratio, the higher the credits risk.

2.3 MANAGEMENT
Management of financial institution is generally evaluated in terms of capital adequacy,

asset quality, earnings and profitability, liquidity and risk sensitivity ratings. In addition,
performance evaluation includes compliance with set norms, ability to plan and react to
changing circumstances, technical competence, leadership and administrative ability. In
effect, management rating is just an amalgam of performance in the above-mentioned
areas. Sound management is one of the most important factors behind financial
institutions’ performance. Indicators of quality of management, however, are primarily
applicable to individual institutions, and cannot be easily aggregated across the sector.
Furthermore, given the qualitative nature of management, it is difficult to judge its
soundness just by looking at financial accounts of the bank.
Management is the most forward-looking indicator of condition and a key determinant of

whether a credit union is able to correctly diagnose and respond to financial stress. The
management component provides examiners with objective, and not purely subjective,
indicators. An assessment of management is not solely dependent on the current financial
condition of the credit union and will not be an average of the other component ratings.
 Total Advance to Total Deposit Ratio:

This ratio measures the efficiency and ability of the banks management in converting
theVdeposits available with the banks (excluding other funds like equity capital, etc.) into
high earning advances. Total deposits include demand deposits, saving deposits, term
deposit and deposit of other bank. Total advances also include the receivables.
Total Advance/ Total Deposit

 Business per Employee:
Revenue per employee is a measure of how efficiently a particular bank is utilizing its
employees. Ideally, a bank wants the highest business per employee possible, as it
denotes higher productivity. In general, rising revenue per employee is a positive sign
that suggests the bank is finding ways to squeeze more sales/revenues out of each of its
employee.
Total Income/ No. of Employees
 Profit per Employee:

This ratio shows the surplus earned per employee. It is arrived at by dividing profit after
tax earned by the bank by the total number of employee. The higher the ratio shows good
efficiency of the management.
Profit after Tax/ No. of Employees

2.4 EARNINGS
Earnings and profitability, the prime source of increase in capital base, is examined with
regards to interest rate policies and adequacy of provisioning. In addition, it also helps to
support present and future operations of the institutions. The single best indicator used to
gauge earning is the Return on Assets (ROA), which is net income after taxes to total
asset ratio.
Strong earnings and profitability profile of banks reflects the ability to support present
and future operations. More specifically, this determines the capacity to absorb losses,
finance its expansion, pay dividends to its shareholders, and build up an adequate level of
capital. Being front line of defense against erosion of capital base from losses, the need
for high earnings and profitability can hardly be overemphasized. Although different
indicators are used to serve the purpose, the best and most widely used indicator is Return
on Assets (ROA). However, for in-depth analysis, another indicator Net Interest Margins
(NIM) is also used. Chronically unprofitable financial institutions risk insolvency.
Compared with most other indicators, trends in profitability can be more difficult to
interpret—for instance, unusually high profitability can reflect excessive risk taking.
Return on Assets (ROA):

An indicator of how profitable a company is relative to its total assets. ROA gives an idea
as to how efficient management is at using its assets to generate earnings. Calculated by
dividing a company's annual earnings by its total assets, ROA is displayed as a
percentage. Sometimes this is referred to as "return on investment".
The continued viability of a credit union depends on its ability to earn an appropriate
return on its assets. It enables a credit union to fund expansion, remain competitive, and
replenish and/or increase capital. In evaluating and rating earnings, it is not enough to
review past and present performance. Future performance is of equal or greater value,
including performance under various economic conditions. Examiners should evaluate
"core" earnings: that is the long-run earnings ability of a credit union discounting

temporary fluctuations in income and one-time items. A review for the reasonableness of
the credit union's budget and underlying assumptions is appropriate for this purpose. Key
factors to consider when assessing the credit union's earnings are:
 Level, growth trends, and stability of earnings, particularly return on average
assets;
 Quality and composition of earnings;
 Adequacy of valuation allowances and their effect on earnings;
 Future earnings prospects under a variety of economic conditions;
 Net interest margin;
 Net non-operating income and losses and their effect on earnings;
 Quality and composition of assets;
 Net worth level;
 Sufficiency of earnings for necessary capital formation
 Operating Profit by Average Working Fund:

This ratio indicates how much a bank can earn from its operations net of the operating
expenses for every rupee spent on working funds. Average working funds are the total
resources (total assets or total liabilities) employed by a bank. It is daily average of
total assets/ liabilities during a year. The higher the ratio, the better it is. This ratio
determines the operating profits generated out of working fund employed. The better
utilization of the funds will result in higher operating profits. Thus, this ratio will
indicate how a bank has employed its working funds in generating profits.
Operating Profit/ Average Working Fund

 Net Profit to Average Asset:
Net profit to average asset indicates the efficiency of the banks in utilizing their assets
in generating profits. A higher ratio indicates the better income generating capacity of
the assets and better efficiency of management. It is arrived at by dividing the net
profit by average assets, which is the average of total assets in the current year and
previous year.
Thus, this ratio measures the return on assets employed. Higher ratio indicates better
earning potential in the future.
Net Profit/ Average Asset
 Interest Income to Total Income:

Interest income is a basic source of revenue for banks. The interest income total
income indicates the ability of the bank in generating income from its lending. In
other words, this ratio measures the income from lending operations as a percentage
of the total income generated by the bank in a year. Interest income includes income
on advances, interest on deposits with the RBI, and dividend income.
Interest Income/ Total Income
 Other Income to Total Income:

Fee based income account for a major portion of the bank’s other income. The bank
generates higher fee income through innovative products and adapting the technology
for sustained service levels. The higher ratio indicates increasing proportion of fee-
based income. The ratio is also influenced by gains on government securities, which
fluctuates depending on interest rate movement in the economy.
Other Income/ Total Income

2.5 LIQUIDITY
An adequate liquidity position refers to a situation, where institution can obtain sufficient
funds, either by increasing liabilities or by converting its assets quickly at a reasonable
cost. It is, therefore, generally assessed in terms of overall assets and liability
management, as mismatching gives rise to liquidity risk. Efficient fund management
refers to a situation where a spread between rate sensitive assets (RSA) and rate sensitive
liabilities (RSL) is maintained. The most commonly used tool to evaluate interest rate
exposure is the Gap between RSA and RSL, while liquidity is gauged by liquid to total
asset ratio.
Initially solvent financial institutions may be driven toward closure by poor management
of short-term liquidity. Indicators should cover funding sources and capture large
maturity mismatches
The “L” of CAMEL represents the concept of Asset/Liability Management - the

identification, monitoring and control of:
 Interest rate risk sensitivity and exposure

 Liquidity risk and control
 Technical competence in asset/liability management techniques
Cash maintained by the banks and balances with central bank, to total asset ratio (LQD)
is an indicator of bank's liquidity. In general, banks with a larger volume of liquid assets
are perceived safe, since these assets would allow banks to meet unexpected withdrawals.

 Liquidity Asset to Total Asset:
Liquidity for a bank means the ability to meet its financial obligations as they come due.
Bank lending finances investments in relatively illiquid assets, but it fund its loans with
mostly short term liabilities. Thus one of the main challenges to a bank is ensuring its
own liquidity under all reasonable conditions. Liquid assets include cash in hand, balance
with the RBI, balance with other banks (both in India and abroad), and money at call and
short notice. Total asset include the revaluations of all the assets. The proportion of liquid
asset to total asset indicates the overall liquidity position of the bank.
Liquidity Asset/ Total Asset
 Government Securities to Total Asset:

Government Securities are the most liquid and safe investments. This ratio measures the
government securities as a proportion of total assets. Banks invest in government
securities primarily to meet their SLR requirements, which are around 25% of net
demand and time liabilities. This ratio measures the risk involved in the assets hand by a
bank
Government Securities/ Total Asset
 Approved Securities to Total Asset:

Approved securities include securities other than government securities. This ratio
measures the Approved Securities as a proportion of Total Assets. Banks invest in
approved securities primarily after meeting their SLR requirements, which are around
25% of net demand and time liabilities. This ratio measures the risk involved in the assets
hand by a bank.
Approved Securities/ Total Asset

 Liquidity Asset to Demand Deposit:
This ratio measures the ability of a bank to meet the demand from deposits in a particular
year. Demand deposits offer high liquidity to the depositor and hence banks have to
invest these assets in a highly liquid form.
Liquidity Asset/ demand Deposit
 Liquidity Asset to Total Deposit:

This ratio measures the liquidity available to the deposits of a bank. Total deposits
include demand deposits, savings deposits, term deposits and deposits of other financial
institutions. Liquid assets include cash in hand, balance with the RBI, balance with other
banks (both in India and abroad), and money at call and short notice.
Liquidity Asset/ Total Deposit

3.1: PRIVATE BANKS
3.1.1: KARUR VYSYA BANK LIMITED
Karur Vysya Bank Limited, universally known as KVB has made a mark in commercial
banking arena right from 1916 when it was set up by two great visionaries and famous
sons of Karur, Late M A Venkatarama Chettiar and Late Athi Krishna Chettiar. The main
aim for setting up this bank was to instill the habit of savings and also for providing
financial support to traders and small agriculturists in and around Karur (the textile town
in Tamil Nadu). The journey for the bank started off with a meager capital of Rs.1 lakh.
But over the years, KVB has met all the market dynamics and challenges and created a
strong base for itself.
Presence of Karur Vysya Bank
The Bank, in its initial days, bore a regional flavor in its transactions but slowly made a
mark and expanded. At present, it has around 285 branches spanning 13 States and 2
Union Territories. The Bank has been prudential and has followed all the statutory
regulations to make a mark in its area of operations. They have been maintaining a strong
Capital Adequacy Ratio of more than 15% as against the compulsory rule of 9% set by
the RBI. This is sure to take care of the asset growth of the bank.
Financial highlights of the KVB
 Total business of KVB stood at Rs.25664.29 cr., with total deposits of Rs.
15101.39 cr. and total advances of Rs. 10562.90 cr. as at 31.03.2009. It was the
first
 Tamil Nadu based private sector bank to have crossed the Rs. 25000 cr. total
business mark.
 The net owned funds of KVB stood at Rs. 1350.16 cr with healthy capitalization
levels, with high share of Tier I capital at 96.53%. This indicates that they have

strength on owned funds. The Tier II capital forms only a paltry part (3.47%),
having provision for standard assets only.
 It has one of the lowest net NPA ratios in India @ 0.25%
 Till date the bank has been only earning profits with no interruption in the
declaration of dividend.
 The bank has declared 100% dividend since 2003-04. For 2005-06, 2007-08 and
2008-09, the company declared a dividend of 120%
Branch and ATM network of Karur Vysya Bank
The bank has a branch network of 312 and an ATM network of 322. The bank plans to
improve the branch network to over 350 by the end of 2009 -10.
Contact details of Karur Vyasa Bank Limited
Chennai Divisional Office

KVB Towers
I Floor
568, Anna Salai
Teynampet,
Chennai - 600 018 (T.N.)
STD: 044 - 24314418 044 - 24314418 , 24314421, 24347250
Website: www.kvb.co.in
3.1.2: KOTAK MAHINDRA BANK
Kotak Mahindra Bank is one of India's leading financial private banking institutions. It
offers banking solutions that covers almost every sphere of life. Some of its financial
services include commercial banking, stock broking, mutual funds, life insurance and
investment banking. Established under the brand of Kotak Mahindra Finance Ltd in 1984,
it was given the license to carry on with banking business by the Reserve Bank of India
in February 2003. It is the first company in the Indian banking history to convert to be
converted from a private financial institution to a bank.

Kotak Mahindra Bank: Branches and Business
Within a small span of 6 years, the bank has spread it wings in several sphere of finances.
Presently, spread in 82 cities in India, the bank caters to the needs of its 5.9 million
customers spread throughout the length and breadth of country and even abroad. By the
end of FY 2007-2008, the Kotak Mahindra Bank had about 178 branches spread all over
the country and it plans to add some more branches by the end of FY 2010.
The entire Kotak Mahindra group has a net worth of over Rs. 6,327 crore and at the end
of FYP 2007-2008,it was reported that the consolidated profit of Kotak Mahindra Bank
individually was Rs 991.2 crore which was 84% higher than the consolidated profit of Rs
538.2 crore in FY07. Kotak Mahindra Bank has 75 ATMs at 41 locations in the country
which are 24x7 accessible. Before the free transactions facility of RBI was made
mandatory to all the ATM operating banks in India from April 1, 2009, Kotak Mahindra
Bank had underwent under a treaty with the HDFC Bank to provide free network free of
cost to most of its customers through its 1335 ATMs spread in the country to ensure
comfort to its customers.
Kotak Mahindra Bank: Facilities and Customer Care

The facilities of Kotak Mahindra Bank are wide spread. It's banking sector acts as a
central platform for customer relationships across the entire Kotak Mahindra group's
various businesses. The bank marks its presence in the commercial vehicles, retail
finance, corporate banking and treasury and housing finance segments. It offers you
several facilities like personal banking, commercial banking, insurance and investment
banking.
Apart from traditional facilities like deposits accounts, savings account, current account,
term deposits, personal loans, home loans the bank has spread its wing in the investment
services by providing its customer facilities like Demat, mutual fund and insurance. The
bank has also opted for net banking, mobile banking and phone banking for convenience
of its customers.

Contact details of Kotak Mahindra Bank Limited
Registered Office
Kotak Mahindra Bank Limited
36-38A, Nariman Bhavan,
227 Nariman Point,
Mumbai - 400 021
E-mail: service.bank@kotak.com

3.2. PUBLIC BANKS
3.2.1: BANK OF BARODA
Bank of Baroda (BoB) is the third largest Public Sector bank in India, after State Bank
of India and Punjab National Bank. BoB has total assets in excess of Rs. 2.27 lakh
crores, or Rs. 2,274 billion, a network of over 3000 branches and offices, and about
1100+ ATMs. It offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, credit cards and
asset management.
It all started with a visionary Maharaja's uncanny foresight into the future of trade and
enterprising in his country. On 20th July 1908, under the Companies Act of 1887, and
with a paid up capital of Rs 10 Lacs started the legend that has now translated into a
strong, trustworthy financial body, THE BANK OF BARODA.
It has been a wisely orchestrated growth, involving corporate wisdom, social pride and
the vision of helping others grow, and growing itself in turn.
The founder, Maharaja Sayajirao Gaekwad, with his insight into the future, saw "a
bank of this nature will prove a beneficial agency for lending, transmission, and deposit
of money and will be a powerful factor in the development of art, industries and
commerce of the State and adjoining territories."
MISSION
“To be a top ranking National Bank of International Standards committed

to augmenting stake holders' value through concern, care and
competence.”

By December 1996, Bank of Baroda penetrated the equity market by successfully
implementing the Follow on Public Offer' of around 71 million equity shares in January
2006. In the present scenario, Bank of Baroda's public shareholding is as high as 46.19
percent with a total equity capital of 365.53 crore. This is held by Retail Investors, Banks
and Financial Institutions, Employees, FIIs and OCBs, Mutual Funds, Insurance
Companies and Others.
3.2.2: CORPORATION BANK
The Corporation Bank in India started its journey in the name of the Canara Banking
Corporation (Udupi) Ltd in 1906 with a sum of Rs. 5000 only in a small town of Udupi
near the city of Mangalore in Karnataka.
Corp Bank received RBI license in 1952 and saw a merger with the Bank of Citizens in
1961. In the month of April 1980, it was given a status of nationalized bank. From the
time of its establishment till today, the bank has never looked back. Currently it is one of
the well-recognized Public Sector Banks in India.
Today, Corporation Bank India is identified with dynamic services of its young and
dedicated staffs, who know no bounds. It runs more than 600 ATMs extending across 21
States and 2 Union Territories. It shares ATM network with Andhra Bank, ING Vysya
Bank Ltd. and IndusInd Bank Ltd.
Branches of Corporation Bank India

The branches of the Corporation Bank India are located at all the key destinations like
Bangalore, Belgaum, Bhopal, Chandigarh, Chennai, Coimbatore, Delhi, Goa, Mumbai,
Gujarat, Hassan, Hubli, Hyderabad, Kerala, Kolkata, Lucknow, Pune, Udupi and
Vijayawada.

Awards and Recognition of Corporation Bank India
In its journey to cater successfully to the needs of valuable customers, Corporation Bank
has bagged many awards and accolades. Some of them are as follows:
 National Award for Assistance to Exporters

 Gem & Jewellery Export Promotion Council Award (it won this award 5 times in
a row from 1981 to 1985)
 Shiromani Award for Banking
 Best Bank Award for Excellence in Banking Technology
 Best Bank Award for Innovative Usage and Application on INFINET (Indian
Financial Network)
 Best Bank Award for Delivery Channels
 Runner-up Awards in the categories of "Best Online and Multi-channel Banking
Team" and "Outstanding achiever of the year-corporate".
Corporation Bank has been recognized as one of the Best Public Sector Banks in India by
Business Today on 26 February 2006. Prior to this, Forbes Global announced it one of the
Best 200/100 companies in Asia/Pacific and Europe. Outlook Money called it Best Public
Sector Bank in India and The Asian Banker said it to be the strongest bank in India and
second strongest in Asia.
Contact details of Corporation Bank India:
Corporation Bank,
Mangaladevi Temple Road,
Pandeshwar,
Mangalore - 575 001
Karnataka, India

4.1 OBJECTIVE OF THE STUDY
“To study the strength of using CAMELS framework as a tool of

performance evaluation for banking institutions”
 To understand the financial performance of the banks.

 To describe the CAMELS model of ranking, banking institutions, so as to analyze
the comparative of various banks.
 To analyze the banks performance through CAMEL model and give suggestion
for improvement if necessary
4.1.1 STATEMENT OF PROBLEM
In the recent years the financial system especially the banks have undergone numerous
changes in the form of reforms, regulations & norms. The attempt here is to see how
various ratios have been used and interpreted to reveal a bank’s performance and how this
particular model encompasses a wide range of parameters making it a widely used and
accepted model in today’s scenario.
4.1.2 RESEARCH TYPE - DESCRIPTIVE RESEARCH
Here, we are under going to have descriptive research i.e. analysis of banks financial
statements which will make us understand the position of one bank in comparison of
another and their financial position.

4.2 RESEARCH METHODOLOGY
1) AREA OF SURVEY:
The survey will be done for four banks. The study environment will be the
Banking industry.
2) PLAN OF ANALYSIS:
Here, we will be using financial statements of the banks in order to calculate
different ratios required for camel rating system as it considers all areas of
banking operations and considered to be the best available method for evaluation
bank performance and bank’s health.
4.2.1 DATA SOURCE
1) PRIMARY DATA
Primary data was collected from the bank’s balance sheet and bank‘s income
statement and interview of the bank employees.
2) SECONDARY DATA
Secondary data on the subject was collected from bank’s prospectus, annual
reports and other websites.
4.2.2 CONTRIBUTION OF THE STUDY

Major issues pertaining to the preparation of a project from Start to End of Project to be
covered, Basel II norms will be taken into consideration while calculating each ratio and
this report will be provided to the bank for their future use.

4.2.3 BENEFICIARIES
CAMELS rating system help the banks to enhance required capital adequacy, strengthen
asset quality, improve management, increase earnings and reduce sensitivity to various
financial risks. Keeping this in mind, they will able to make improvements and
deteriorates the problems effectively.
It will be helpful for the reader to know the specific details of the model which in turn
lead to identify the strengths and weaknesses of the banks.
By having a standardized CAMELS model for all banks, it becomes easy to compare
different banks.
As this model uses all significant ratios of banks, it will be useful for the reader to know
how effectively bank manages each ratio and whether it meets its pre-determined criteria
for each ratio as per RBI rules and regulations.

4.3 LIMITATION OF THE STUDY
 The study was limited to four banks only.

 Time and resource constrains.
 The method discussed pertains only to banks though it can be used for
performance evaluation of other financial institutions.
 The study was completely done on the basis of ratios calculated from the balance
sheets.
 It was not possible to get a personal interview with the top management
employees of all banks under study

5.1 CALCULATIONS OF DIFFERENT RATIOS FOR

TABLE 1.1
CORPORATION BANK
CAPITAL RATIOS (Values in Lakhs)
1. Capital Adequency Ratio
Ratio (%) 13.66%
2. Debt Equity Ratio
Debt= Deposits + borrowings + unsecured debts

debt = 7855631
Equity = Capital + Reserves and surplus
equity = 489651
Ratio = Debt/ equity
Ratio (%) 16.04
3. Advances to Assets
Advances 4851216
Total assets 8690581
Ratio = Advances/ Total Assets
Ratio (%) 55.82
4. Securities To Total Investments
Securities = Government securities+ approved securities

Securities 1764165
Investments 2493777
Ratio = Securities/Total Investments
Ratio (%) 70.74

TABLE 1.2
ASSETS (Values in Lakhs)

1. Gross NPA To Net Advances
gross NPA 55922

Ratio = Gross NPA/ Net Advances
Ratio (%) 1.15
2. Net NPA to Net Advances
Net NPA 13830

Ratio = Net NPA / Net Advances
Ratio (%) 0.29
3.Total Loans To Total shares
Total loans 4892712

No. of shares 614.4
Ratio = Total Loans/ Total Shares
Ratio (Rs.) 7963.398
4.Total Loans To Total Assets

Ratio = Total Loans/Total Assets
Ratio (%) 56.30
5.Fair Market Value To Book Value

market value 176.58
Book Value 341.36
Ratio (%) 51.73
TABLE 1.3

MANAGEMENT (Values in Lakhs)
1.Market Value To Equity Capital
Face value 10
Ratio (%) Market value/Equity capital 17.66
2.Total Advances To Total Deposits
Total deposits 7398391

Ratio = Total advances/Total deposits
Ratio (%) 65.57
3.Business Per Employee
Business= Advances+ deposits

Business= 12249607
no of employees= 12465
Ratio = Business/No.of Employees
Ratio (Rs.) 982.72
4.Profit Per Employee
Profit = Net Profit

Profit 89277
Ratio = Profit/No.of Employees
Ratio (Rs.) 7.16
TABLE 1.4
EARNINGS (Values In Lakhs)

1.Operating profit To Average Working Funds
Average Working funds = 6950000

operating prfit 179661
Ratio = Operating profit/Average Working Funds
Ratio (%) 2.58505
2.Interest Spread
Interest earned 606735.2

Interest spend 437637.5
Interest Spread = Interest Earned - Interest expenditure
Spread 72.13
3.Net profit To Average Assets
Average Assets = Opening Assets+Closing Assets/2

avg.assets 7675175
Ratio = Net Profit/Average Assets
Ratio (%) 1.16
4.Interest Income To Total Income
Total income 717457

Ratio= Interest Income/Total Income
Ratio (%) 84.57
5.Non-Interest Income To Total Income
Non-interest income 110721

Ratio = Non-interest Income/ Total Income
Ratio (%) 15.43
6.Operating Expense To Average Assets
operating expenses 100158

Ratio = Operating expense/Average Assets
Ratio (%) 1.30
TABLE 1.5
LIQUIDITY (Values in Lakh)

1.Liquid Assets To Total Assets
Liquid Assets = Cash with RBI+ Cash for short notice

Liquid assets 1053970
Ratio = Liquid assets/Total assets
Ratio (%) 12.13
2.Government Securities To Total Assets
Govt. securities 1755238

Ratio = Government securities/Total assets
Ratio (%) 20.20
3.Approved Securities To Total Assets
Approved securities 1706165

Ratio = Approved securities/Total assets
Ratio (%) 19.63
4.Liquid Assets To Demand Deposits
demand deposits 1317419

Ratio = Liquid assets/Demand deposits
Ratio (%) 80.00262
5.Liquid Assets To Total Deposits

Ratio = Liquid assets/Total deposits
Ratio (%) 14.25

TABLE 2.1
KARUR VYSYA BANK (Values in lakhs)
CAPITAL
Ratio (%) 14.92%

debt 1512443
equity 135016.6
Ratio (%) 11.2019
3. Advances To Assets
Advances 1040988
Ratio (%) 61.01657

securities 382907.1
Invetments 471598
Ratio (%) 81.19354

TABLE 2.2
ASSETS (Values in lakhs)

1. Gross NPA To Net Advances
gross NPA 20586

Ratio= Gross NPA/ Net Advances
Ratio (%) 1.977544
2. Net NPA To Net Advances
Net NPA= 2582

Ratio (%) 0.248034
3.Total Loans To Total Shares
Total loans 960136.7

No. of shares 539.99
Ratio (%) 1778.064

Ratio (%) 56.27754
5.Fair market value To Book Value

market value 199.38
book value 250.3
Ratio (%) Fair market value/Book value 79.65641

TABLE 2.3
MANAGEMENT (Rupees in Lakhs)

face value 10
Ratio = Market value/Equity capital 19.938
2.Total Advances To Total Deposits
total deposits 1510139

Ratio (%) 68.93326
Business= Advances+ deposits

Business= 2551127
no of employees= 3941
Ratio (%) 647.3299
Profit = Net Profit

Profit 23584.15
Ratio (%) 5.984306
TABLE 2.4

EARNINGS (Values in Lakhs)
Average Working funds = 1576270

operating prfit 41802
Ratio (%) 2.651957
2.Interest Spread

Spread 41040.86

avg.assets 1582188
Ratio (%) 1.490603
Total Income 171129.9

Ratio (%) 84.50246
Non-interest income 26520.92

Ratio (%) 15.49754
Operating Expenses 25759.64

Ratio (%) 1.628102
TABLE 2.5

LIQUIDITY (Values in Lakhs)

Liquid Assets 137416.6
Ratio (%) 8.05455
Govt. securities 381548.1

Ratio (%) 22.3641
Approved Securities 1359.05

Ratio (%) 0.079659
4.Liquid Assets To Demand Deposits
Demand Deposits 149677

Ratio (%) 91.80877
5.Liquid Assets To Total Deposits

Ratio (%) 9.0996

TABLE 3.1

BANK OF BARODA
CAPITAL (Values in Lakhs)

Ratio (%) 14.05%

Debt 20516486
Equity 1283554
Ratio (%) 15.98412
Advances 14398590
Ratio (%) 63.31646

Securities 4084894
Invetments 5244588
Ratio (%) 77.88781

TABLE 3.2

1. Gross NPA to Net Advances
Gross NPA 184292

Ratio (%) 1.279931
Net NPA 45115

Ratio (%) 0.313329
Total Loans 13003751

No. Of Shares 227406.7
Ratio (%) 57.18
Total Assets 22740673

Ratio (%) 57.18279

Market Value 227.05
Book Value 352.37
Ratio(%) = Fair market value/Book value 64.43511
TABLE 3.3

Face Value 10
Ratio(%) = Market value/Equity capital 22.705
2.Total advances To Total Deposits
Total Deposits 19239695

Ratio (%) 74.83793
Business = Advances+ deposits

Business 33638285
No Of Employees 36838
Ratio (Rs.) 913.1409
Profit = Net Profit

Profit 222720.2
Ratio (Rs.) 6.045936
TABLE 3.4

Average Working funds 19366972

Operating Profit 334295
Ratio (%) 1.726109
2.Interest Spread
Interest earned 1509158

Spread 512341

Avg.Assets 20350312
Ratio (%) 1.094431
Total Income 1784924

Ratio (%) 84.55027
Non-interest Income 275765.8

Ratio (%) 15.44973

Operating Expenses 357606.2
Ratio (%) 1.757252
TABLE 3.5


Liquid Assets 2408712
Ratio (%) 10.59209
Govt. Securities 4084894

Ratio (%) 17.96294
Approved Securities 96665.27

Ratio (%) 0.425077
4.Liquid Assets To Demand deposits
Demand Deposits 1445122

Ratio (%) 166.6787
5.Liquid Assets To Total deposits

Ratio (%) 12.51949


TABLE 4.1
KOTAK MAHINDRA BANK
CAPITAL (Values in Lakhs)

Ratio (%) 19.86%
Debt= Deposits + borrowings +unsecured debts

Debt 2237894
Equity 390552.7
Ratio (%) 5.730071
Advances 1662534
Total Assets 2871187
Ratio (%) 57.90405

Securities 814993.3
Invetments 911018.1
Ratio (%) 89.45962
TABLE 4.2

1. Gross NPA to Net Advances
Gross NPA 73071

Ratio (%) 4.395159
Net NPA 39684

Ratio (%) 2.386959
Total loans 1619143

No. of shares 3456.69
Ratio (%) 468.4084

Ratio (%) 56.39279

Market Value 277.98
Book Value 112.98
Ratio(%) = Fair market value/Book value 246.0435
TABLE 4.3

face value 10
Ratio(%) = Market value/Equity capital 27.798
2.Total advances To Total Deposits
Total Deposits 1564493

Ratio (%) 106.2666
Business= Advances + deposits

Business 3227027
No Of Employees 8400
Ratio (Rs.) 384.1699
Profit = Net Profit

Profit 27609.72
Ratio (Rs.) 3.286871
TABLE 4.4

Average Working funds 2814695

Operating Profit 68000
Ratio (%) 2.415893
2.Interest Spread

Spread 151854.7
Average Assets = Opening Assets + Closing Assets/2

Avg.Assets 2851212
Ratio (%) 0.96835
Total Income 342300

Ratio (%) 89.54554
Non-interest Income 35786.26

Ratio (%) 10.45465
operating expenses 119642.3

Ratio (%) 4.196191
TABLE 4.5


Liquid Assets = Cash with RBI + Cash for short notice
Liquid Assets 114067
Ratio (%) 3.972815
Govt. Securities 814993.3

Ratio (%) 28.38524
Approved Securities 0
Ratio (%) 0
4.Liquid Assets To Demand deposits
Demand Deposits 341816.1

Ratio (%) 33.37086
5.Liquid Assets To Total deposits

Ratio (%) 7.290985
6.1 REASONS FOR WEIGHTAGE
1. Capital

In Capital ratios, we have given 0.5 to capital adequacy ratio as it is the most
important ratio which has significant impact on capital of the bank. Second most
important ratio which affects the capital ratio is debt – equity ratio and rest of
them are of low impact.
2. Assets
In assets Ratio, we have highest importance to Net GPA which shows clear
picture how well company is performing with its assets. Secondly Gross NPA is
given is not given so much importance compared to Net NPAs. Other ratios like
fair value to market value, totals loans to total assets are given equal importance.
3. Management
In management ratios, there is no specific ratio which has specific importance. All
ratios have equal impact so here we have equal weightage to all the ratios.
4. Earnings
In Earnings ratios, there is no specific ratio which has specific importance. All
5. Liquidity
In Liquidity ratios, there is no specific ratio which has specific importance. All

6.2 CAPITAL RATIOS
TABLE 5
CAPITAL RATIOS
Capital Debt Securities

Adequacy Equity Advances To Total
PARTICULARS Ratio Ratio to Assets Investments
CORPORATION BANK 13.66 16.04 55.82 70.74

KARUR VYSYA BANK 14.92 11.20 61.02 81.19
BANK OF BARODA 14.05 15.98 63.32 77.89
KOTAK MAHINDRA
5.73 57.90 89.46
BANK 19.86
WEIGHTAGE 0.5 0.3 0.1 0.1 TOTAL
CORPORATION BANK 6.83 4.81 5.58 7.07 14.67

KARUR VYSYA BANK 7.46 3.36 6.10 8.12 18.32
BANK OF BARODA 7.03 4.80 6.33 7.79 16.35
KOTAK MAHINDRA
BANK 9.93 1.72 5.79 8.95 22.95

CHART 1
NOTES
1. As per capital adequacy ratio, the minimum ratio is 9% i.e. every bank has to
maintain with RBI. Here Kotak Mahindra Bank out stands from other banks.
2. In case of Debt- Equity ratio, Kotak Mahindra bank has the lowest debt – equity
ratio compared to other banks.
3. Advances to Assets ratio shows how efficient capital is managed, so here we have
Bank of Baroda on the top position.
4. Securities to Total Investment show the quick fund of the bank which can be
encashed at any point of time. Here, again kotak Mahindra bank is having highest
ratio against other bank.
5. So, overall Kotak Mahindra Bank is in first position followed by Karur Vysya
bank, Bank Of Baroda and Corporation Bank.
6. If we compare only Public banks, Bank Of Baroda is on top position followed by

Corporation Bank.

6.3 ASSETS RATIOS
TABLE 6
ASSETS RATIOS
Total Fair
Gross NPA Net NPA Loans Market
PARTICULARS To Net to Net To Value To
Advances Advances Total Book
Assets Value

KARUR VYSYA BANK 1.98 0.25 56.28 79.66
BANK OF BARODA 1.28 0.31 57.18 64.44
KOTAK MAHINDRA
4.40 2.39 56.39 246.04
BANK

KARUR VYSYA BANK 0.20 0.12 11.26 15.93 26.87
BANK OF BARODA 0.13 0.16 11.44 12.89 24.04
KOTAK MAHINDRA
BANK 0.44 1.19 11.28 49.21 58.85

CHART 2
Notes:
1. The net non-performing assets to loans (advances) ratio is used as a measure of

the overall quality of the bank’s loan book. Higher ratio reflects rising bad quality
of loans. But here NPA percentage of Karur Vysya Bank is just 0.25% which
shows bank is performing well and it is able to recover its debt. The Bank has
maintained high standard in asset quality through appropriate risk management
measures and recovery measures as evidenced by lower NPA levels. Here as
compared to its peers it has lowest ratio which is better.
2. The loans to assets ratio measures the total loans outstanding as a percentage of
total assets. The higher this ratio indicates a bank is loaned up and its liquidity is
low. The higher the ratio, the more risky a bank may be to higher defaults. Here
the ratio for all the banks is almost same.

3. Market value ratios are strong indicators of what investors think of the firm’s past
performance and future prospects. It basically shows Goodwill or Reputation of
the bank in the market. Here Kotak Mahindra Bank is highly reputed in the minds
of investors.
4. So overall in Assets Ratio, Kotak Mahindra Bank is on top position as compared

to its peers.
5. If we compare only public banks, again Bank Of Baroda is ahead than

Corporation Bank.

6.4 MANAGEMENT RATIOS
TABLE 7
MANAGEMENT RATIOS MANAGEMENT RATIOS

Market Business
Total Profit Per
Value Per
Advances Employee
PARTICULARS To Employee
To Total (IN
Equity ( IN
Deposits LACS)
Capital LACS)
CORPORATION
17.66 65.57 982.72 7.16
BANK
KARUR VYSYA
19.94 68.93 647.33 5.98
BANK
BANK OF BARODA 22.71 74.84 913.14 6.05
KOTAK MAHINDRA
27.80 106.27 384.17 3.29
BANK
TOTAL
0.25 (IN
WEIGHTAGE 0.25 TOTAL 0.25 0.25 LACS) %age
CORPORATION
BANK 4.41 16.39 20.81 245.68 1.79 247.47 33.56
KARUR VYSYA
BANK 4.98 17.23 22.22 161.83 1.50 163.33 22.15
BANK OF BARODA 5.68 18.71 24.39 228.29 1.51 229.80 31.16
KOTAK MAHINDRA
BANK 6.95 26.57 33.52 96.04 0.82 96.86 13.13
737.46

PARTICULARS TOTAL 1 TOTAL 2 Final Total
CORPORATION BANK 20.81 33.56 54.37

KARUR VYSYA BANK 22.22 22.15 44.37
BANK OF BARODA 24.39 31.16 55.55
KOTAK MAHINDRA BANK
33.52 13.13 46.65
Notes:
1. Business per employee/ profit per employee

These ratios indicate the productivity level of the bank’s employees. Since state
run banks are operating with large employee base, the productivity ratio for these
banks lags behind when compared with new generation private sector banks. Here
Corporation bank has ratio of 982, Karur Vysya Bank has ratio of 647, BOB has
913 and Kotak Mahindra Bank has 384.
2. Market Value to equity Capital
This Ratio indicates the price of the shares in the market compared to the actually
face value of the shares. It shows the premium on each shares people are ready to
pay because of the reputation and value of the company. Here, Kotak Mahindra
Bank is having almost 27 times the market value whereas Corporation Bank is
having only 17 times which is lowest of all four banks.
3. Total Advances to Total Deposits
It indicates Money Lend by the Bank compared to Money borrowed by the bank.
Higher the ratio indicates the Efficiency of the Bank. Kotak Mahindra Bank is
having 106% whereas Bank of Baroda is having 74%, Karur Vysya Bank is
having 68% and Corporation Bank is having 65%.

4. Over all if we compare Management Ratio, Bank of Baroda is on the top
position where as Corporation Bank is in second position. There is very Minor
difference between the two banks. They are well performing in Profit per
employee and Business per employee.
5. If we compare only Private Banks, Kotak Mahindra Bank is performing

comparatively better than Karur Vysya Bank.

6.5 EARNINGS RATIOS
TABLE 8
EARNING RATIOS
Operating
Interest
profit To Net profit To
Interest Income To
PARTICULARS Average Average
Spread Total
Working Assets
Income
Funds

KARUR VYSYA BANK 2.65 71.62 1.49 84.50
BANK OF BARODA 1.73 66.05 1.09 84.55
KOTAK MAHINDRA
2.42 50.46 0.97 89.55
BANK

KARUR VYSYA BANK 0.66 17.90 0.37 21.13 40.07
BANK OF BARODA 0.43 16.51 0.27 21.14 38.36
KOTAK MAHINDRA
BANK 0.60 12.61 0.24 22.39 35.85

CHART 3
Notes:
1. Operating profit to Average Working Funds shows the return on working

funds. Higher the ratio indicates the profitability of the bank. Here Karur
Vysya Bank is having 2.65%, where as its peers are having lower than it has.
So Karur Vysya Bank is more profit making Bank.
2. Higher the Interest spread will be better for the bank as it shows the better
offering of bank in the market. Here Corporation Bank has the highest Interest
Spread as compared to its peers.
3. Net Profit To Average Assets shows return on assets of the banks. Higher the
return, better for the bank. Here Karur Vysya bank is having highest return on
the assets.

4. The main income of any bank is interest. This ratio shows the percentage of
income generated in bank through Interest. Here Kotak Mahindra Bank is
having 89.55% of income through interest followed by Corporation Bank,
Bank Of Baroda and karur Vysya Bank.
5. Here overall Corporation Bank is performing well in earnings ratio and it is

leading as compared to its competitors.
6. If we compare only private banks then Karur Vysya Bank is well performing
than Kotak Mahindra Bank.

6.6 LIQUIDITY RATIOS
TABLE 9
LIQUIDITY RATIOS
Liquid Liquid
Government Approved Liquid
Assets Assets
Securities Securities Assets
PARTICULARS To To
To Total To Total To Total
Total Demand
Assets Assets Deposits
Assets Deposits
CORPORATION
12.13 20.20 19.63 80.00 14.25
BANK
KARUR VYSYA
8.05 22.36 0.08 91.81 9.10
BANK
BANK OF BARODA 10.59 17.96 0.43 166.68 12.52
KOTAK MAHINDRA
3.97 28.39 0.00 33.37 7.29
BANK
WEIGHTAGE 0.2 0.2 0.2 0.2 0.2 TOTAL
CORPORATION
BANK 2.43 4.04 3.93 16.00 2.85 29.24
KARUR VYSYA
BANK 1.61 4.47 0.02 18.36 1.82 26.28
BANK OF BARODA 2.12 3.59 0.09 33.34 2.50 41.64
KOTAK MAHINDRA
BANK 0.79 5.68 0.00 6.67 1.46 14.60

Chart 4
Notes:
1. Liquid Assets To Total Assets ratio shows the percentage of liquid assets out of
the total assets. Higher the ratio indicates better liquidity of the bank. Here
Corporation Bank is having better liquidity as compared to other banks.
2. Government securities are considered to be the quick assets of the bank which can
be encashed easily. Here, kotak Mahindra bank is having 28.39% of the assets as
government securities and is the highest among others.
3. Same as government securities, approved securities also can be encashed easily.

Here Corporation bank is having highest approved securities i.e. 19.63%
compared to others. Kotak Mahindra Bnak is not having any approved securities.
4. Liquid Assets To Total Deposits ratio indicates the Percentage of liquid assets
bank against deposits. Here Bank Of Baroda is having the highest ratio i.e.
166.68% as compared to its competitors. So it shows that it is having an ample
amount of liquidity to pay the deposits.

5. Overall, Bank of Baroda is performing well i.e. 41% followed by its peers i.e.
Kotak Mahindra Bank- 14%, Karur Vysya Bank- 26% and Corporation Bank
-29%.
6. In case of Private Banks, Karur Vysya Bank is having more Liquidity as

compared to Kotak Mahindra Bank

7.1 TABLE SHOWING CAMEL RATING COMPARSION
TABLE 10
CAMEL RATING
PARTICULARS CAPITAL ASSETS MANAGEMENT EARNINGS LIQUIDITY

CORPORATION
14.67 21.35 54.37 40.11 29.24
BANK
KARUR VYSYA
18.32 26.87 44.37 40.07 26.28
BANK
BANK OF BARODA 16.35 24.04 55.55 38.36 41.64
KOTAK MAHINDRA
22.95 58.85 46.65 35.85 14.6
BANK
WEIGHTAGE 0.2 0.2 0.2 0.2 0.2 TOTAL RANK
CORPORATION
BANK 2.93 4.27 10.87 8.02 5.85 31.95 3
KARUR VYSYA
BANK 3.66 5.37 8.87 8.01 5.26 31.18 4
BANK OF BARODA 3.27 4.81 11.11 7.67 8.33 35.19 2
KOTAK MAHINDRA
BANK 4.59 11.77 9.33 7.17 2.92 35.78 1

7.2 CHART SHOWING CAMEL RATING FOR DIFFERENT
BANKS

INTERPRETATION
Rank 1 – Here kotak Mahindra Bank indicates strong performance and risk management
practices that consistently provide for safe and sound operations. The historical trend and
projections for key performance measures are consistently positive. It is not performing
well in Liquidity ratio but it performs strong in other ratios which covered up its weak
performing area.
Rank 2 – Here Bank of Baroda reflects satisfactory performance and risk management
practices that consistently provide for safe and sound operations. It maintains very well in
management and liquidity ratio which has become its strength. In order to lead, it should
focus more on Capital and Assets.

Rank 3 – Corporation Bank represents performance that is flawed to some degree and is
of supervisory concern. Performance is marginal. Risk management practices may be less
than satisfactory. In order to improve their position, it should maintain the capital and
Assets ratio so that it will be able to compete with their competitors.
Rank 4 –Karur Vysya Bank refers to poor performance that is of serious supervisory
concern. Risk management practices are generally unacceptable and the Bank should try
to improve its operations. It is performing Good in Earnings but Management and
Liquidity of the bank is not up to the mark and should give more importance to these
factors in order to be at the par with other banks.
RECOMMENDATION
 Corporation Bank is excellent in Earnings ratio but lacks in other ratio like
Capital, Assets, and Liquidity etc.
 If we compare Corporation Bank with Bank Of Baroda i.e. both Public bank,
Bank of Baroda’s Liquidity ratio is quite good. So, Corporation Bank should
improve its liquidity ratio. The Major difference is due to Liquid assets to
Demand Deposits ratio.
 Corporation bank’s fair market value to book value ratio is the lowest of the entire
banks. This shows Corporation Bank should create more awareness among the
people through Targeting youngsters as well as providing new schemes in order to
attract more customers.
 The banks should adapt themselves quickly to the changing norms.

 The system is getting internationally standardized with the coming of BASELL II
accords so the Indian banks should strengthen internal processes so as to cope
with the standards.
 The banks should try to maintain a 0% NPA by always lending and investing or
creating quality assets which earn returns by way of interest and profits.
 Corporation bank is performing well in Management, earnings and Liquidity but
lacking in Capital and Assets Management.
 The Bank should focus more on managing Asset as it is at the last position
compared to other banks.
 Even in Capital Management, Kotak Mahindra Bank is having almost 22% capital
adequency ratio whereas corporation bank is having 13.66% which is lowest of all
banks mentioned in the report.
CONCLUSION
The current Banking Crisis, which is quite unprecedented, underlines the importance of
regulatory issues and the effects of incompetence in this area. CAMEL, as a rating system
for judging the soundness of Banks is a quite useful tool, that can help in mitigating the
conditions and risks that lead to Bank failures.
The report makes an attempt to examine and compare the performance of four different
banks of India i.e. Corporation Bank, Kotak Mahindra Bank, Karur Vysya Bank and Bank
Of Baroda. The analysis is based on the CAMEL Model. The study has brought many
interesting results, some of which are mentioned as below:

All the three banks have succeeded in maintaining CRAR at a higher level than the
prescribed level, 9%. But KOTAK MAHINDRA BANK has maintained highest
i.e.19.86%. It is very good sign for the bank to survive and to expand in future.
In Management Quality, we have found that Business per Employee Ratio and Profit per
Employee Ratio is more in CORPORATION BANK AND BANK OF BARODA. This
shows the growth of the bank as well as efficiency of the employee, which is very good
in both the banks and they will help to the bank to grow in future.
After evaluating all the ratios, calculations and ratings we have given 1st Rank to
KOTAK MAHINDRA BANK, 2nd Rank to BANK OF BARODA, 3rd Rank to
CORPORATION BANK and 4th to KARUR VYSYA BANK.

BIBLIOGRAPHY
www.bankofbaroda.com
www.kotak.com/bank/personal-banking
www.corpbank.com
www.kvb.co.in
www.allbankingsolutions.com
www.wikinvest.com
www.rbi.org.in
www.basel2implementation.com
http://ezinearticles.com/?Banks-and-Camels&id=2565867
Annual Reports
1. Corporation Bank 2008-09
2. Bank of Baroda 2008-09
3. Karur Vysya Bank 2008-09
4. Kotak Mahindra Bank 2008-09

KOTAK MAHINDRA BANK LIMITED
BALANCE SHEET AS AT 31st MARCH, 2009
(Rupees in 000)
As at 31st
Sche- As at 31st
PARTICULARS MARCH,
dule MARCH, 2008
2009
CAPITAL AND LIABILITIES
Capital 1 34,56,689 34,46,728
Reserves and Surplus 2 3,46,79,490 3,19,08,220
Employees' Stock Options
9,19,086 5,82,140
(Grants) Outstanding
Deposits 3 15,64,49,336 16,42,36,456
Borrowings 4 5,90,40,706 5,11,92,532
Other Liabilities and Provisions 5 3,25,73,432 3,17,57,539
Total 28,71,18,739 28,31,23,615
ASSETS
Cash and Balances with
6 99,53,533 1,68,34,945
Reserve Bank of India
Balances with Banks and Money
7 14,53,164 43,91,790
at Call and Short Notice
Investments 8 9,11,01,805 9,14,19,885
Advances 9 16,62,53,371 15,55,22,232
Fixed Assets 10 21,33,560 21,02,487
Other Assets 11 1,62,23,306 1,28,52,276
Total 28,71,18,739 28,31,23,615

Contingent Liabilities 12 57,95,42,087 1,21,62,75,762
Bills for Collection 31,75,756 29,08,837

BALANCE SHEEET OF BANK OF BARODA
Balance Sheet as on 31st March, 2009

(Rs.In 000's)
Schedules As on 31.3.2009 As on 31.3.2008
Capital & Liabilities

Capital 1 365,52,77 365,52,77
Reserves & Surplus 2 124700135 10678,39,91
Deposits 3 1923969517 152034,12,72
Borrowings 4 5636,08,59 3927,04,80
Other Liabilities & Provisions 5 16538,14,66 12594,41,42
Total 227406,72,54 179599,51,62
Assets
Cash and balances with Reserve Bank of 6 10596,34,35 9369,72,34
India
Balances with Banks and Money at Call and 7 13490,77,35 12929,56,33
Short Notice
Investments 8 52445,87,58 43870,06,78
Advances 9 143985,89,61 106701,32,41
Fixed Assets 10 2309,71,93 2427,00,81
Other Assets 11 4578,11,72 4301,82,95
Total 227406,72,54 179599,51,62
Contingent Liabilities 12 73386,09,83 82362,32,83

Bills for Collection 13963,99,04 8315,01,73
Significant Accounting Policies 17
Notes on Accounts 18


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SOM- LALIT INSTITUTE OF MANAGEMENT STUDIES (SLIMS)

CAMEL Framework Page 1

CAMEL Framework Page 2

CAMEL Framework Page 3

Banking is a highly information intensive activity that relies heavily on information

CAMEL Framework Page 4

WITH SINCERE THANKS,

CAMEL Framework Page 5

Ranking as per our analysis,

1. Kotak Mahindra Bank

CAMEL Framework Page 6

2.1 Capital Adequacy

3.1 Private sector Banks

CAMEL Framework Page 7

4.1 Objective of the study

5.1 Corporation Bank Ratios

6 FINDING AND ANALYSIS

6.1 Reasons for weightage

7.1 Table showing rating

TABLE PARTICULARS PAGE

CAMEL Framework Page 8

2 Karur Vysya Bank

4 Kotak Mahindra Bank

5 Comparison of Capital adequacy ratios

CAMEL Framework Page 9

1.2 The Origin and Use of Banks

CAMEL Framework Page 10

1.3 THE BANKING REFORMS

CAMEL Framework Page 11

CAMEL Framework Page 12

1.4 BASEL II ACCORD

CAMEL Framework Page 13

1. Ensuring that capital allocation is more risk sensitive;

CAMEL Framework Page 14

The Three Pillars of Basel II

The First Pillar

CAMEL Framework Page 15

The Second Pillar

The Third Pillar

CAMEL Framework Page 16

1.5 CAMEL RATING SYSTEM

CAMEL Framework Page 17

CAMEL Framework Page 18

 Capital level and trend analysis;

CAMEL Framework Page 19

 Capital Risk Adequacy Ratio:

CAMEL Framework Page 20

 Total Advance to Total Asset Ratio:

 Government Securities to Total Investments:

CAMEL Framework Page 21

There is, no doubt, merit in recognizing the importance of diversification in the

CAMEL Framework Page 22

NPA: Non-Performing Assets

An NPA is a loan or an advance where:

CAMEL Framework Page 23

Asset quality is rated in relation to:

 Total Loans/Total Shares

CAMEL Framework Page 24

 Net NPA ratio:

CAMEL Framework Page 25

Management of financial institution is generally evaluated in terms of capital adequacy,

Management is the most forward-looking indicator of condition and a key determinant of