DISSERTATION

ON
“A STUDY ON THE COMPARATIVE ANALYSIS OF FIANACIAL
PERFORMACE OF PRIVATE SECTOR BANK USING CAMEL
MODEL.”

Submitted to

Faculty of Management

In partial fulfilment of the requirement of the award for the degree of

Integrated Masters of Business Administration
GLS University

Under the guidance of:

DR. JAINEEL SHAH
Submitted by:
ACHARYA MAHI 201800510010121

MANDAL ABHIJEET 201800510010153

Batch: 2018-23
IMBA Semester VI

1
A STUDY ON THE COMPARATIVE ANALYSIS OF FIANACIAL
PERFORMACE OF PRIVATE SECTOR BANK USING CAMEL MODEL

INTRODUCTION

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and
well-regulated. The financial and economic conditions in the country are far superior to any
other country in the world. Credit, market and liquidity risk studies suggest that Indian banks
are generally resilient and have withstood the global downturn well.

Indian banking industry has recently witnessed the roll out of innovative banking models like
payments and small finance banks. RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry.

The digital payments system in India has evolved the most among 25 countries with India’s
Immediate Payment Service (IMPS) being the only system at level five in the Faster Payments
Innovation Index (FPII).

Market Size

The Indian banking system consists of 20 public sector banks, 22 private sector banks, 44
foreign banks, 44 regional rural banks, 1,542 urban cooperative banks and 94,384 rural
cooperative banks in addition to cooperative credit institutions. As on January 31, 2020, the
total number of ATMs in India increased to 210,263 and is further expected to increase to
407,000 by 2021.

Public sector banks’ assets stood at Rs 72.59 lakh crore (US$ 1,038.76 billion) in FY19.

During FY16-FY20, credit off-take grew at a CAGR of 13.93 per cent. As of FY20, total credit
extended surged to US$ 1,936.29 billion.

During FY16-FY20, deposits grew at a CAGR of 6.81 per cent and reached US$ 1.90 trillion
by FY20. Credit to non-food industries increased 3.3 per cent y-o-y, reaching US$ 1.26 trillion
on February 28, 2020 and US$ 1.42 trillion on March 13, 2020.

2
Banking sector plays an important role in the economic development of a country. The banking
sector reforms in India were started as a follow up measure of economic liberalization and
financial sector reforms in the country. The banking sector being the life line of the economy
was treated with utmost importance in the financial sector reforms. The reforms were aimed at
to make the Indian banking industry more competitive, productive and efficient and to follow
international accounting standards.

In today’s scenario, the banking sector is one of the fastest growing sectors and many funds
are invested in Banks. Also today’s banking system is becoming more complex.

Enhanced spending on infrastructure, speedy implementation of projects and continuation of

reforms are expected to provide further impetus to growth in the banking sector. All these
factors suggest that India’s banking sector is poised for a robust growth as rapidly growing
businesses will turn to banks for their credit needs.

Also, the advancement in technology has brought mobile and internet banking services to the
fore. The banking sector is laying greater emphasis on providing improved services to their
clients and upgrading their technology infrastructure to enhance customer’s overall experience
as well as give banks a competitive edge.

CAMEL Model Rating:

CAMEL model of rating was first developed in the 1970s by the three federal banking
supervisors of the U.S (the Federal Reserve, the FDIC and the OCC) as part of the regulators’
“Uniform Financial Institutions Rating System”, to provide a convenient summary of bank
condition at the time of its on-site examination. The banks were judged on five different
components under the acronym C-A-M-E-L:

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C – Capital Adequacy

A – Asset Quality

M – Management Soundness

E – Earnings Capacity and

L – Liquidity

The banks received a score of ‘1’ through ‘5’ for each component of CAMEL and a final
CAMEL rating representing the composite total of the component CAMEL scores as a measure
of the bank’s overall condition. The system of CAMEL was revised in 1996, when agencies
added an additional parameter ‘S’ for assessing “sensitivity to market risk”, thus making it
‘CAMELS’ that is in vogue today. Based on the recommendations of the Padmanbhan
Committee, the commercial banks incorporated in India are presently rated on the ‘CAMELS’
model (Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Systems &
control), while foreign banks’ branches operating in India are rated under the ‘CALCS’ model
(Capital adequacy, Asset quality, Liquidity, Compliance, and Systems & control). As
mentioned above, the Committee had originally recommended a CACS model, which was
subsequently modified to also include Liquidity (L) as an additional parameter. Further
modifications, in the form comprising additional granularities in the rating scale of parameters
under CAMELS have since been introduced by RBI. Presently, each of the components of
CAMELS is rated on a scale of 1-100 in ascending order of performance. The score of each
CAMELS element is arrived by aggregating (by assigning proportionate weights) the scores of
various sub-parameters that constitute the individual CAMELS parameter. Each parameter is
awarded a rating A-D (AGood, B – Satisfactory, C -unsatisfactory, and D-poor). Further, to
bring granularity in rating, there are modifiers by way of (+) and (-) under each of A, B and C
making a total of ten scales A+ through to D. The composite “CAMELS rating” is arrived by
aggregating each of the component weights as indicated in the table below. Further 62 the
overall composite score is adjusted downwards for poor performance in one or more
components.

Banks that are given an average score of less than two are considered to be high-quality
institutions. Banks with scores greater than three are considered to be less-than-satisfactory

4
institutions. The acronym CAMELS stands for the following factors that examiners use to rate
bank institutions:

Capital Adequacy

Examiners assess institutions 'capital adequacy through capital trend analysis. Examiners also
check if institutions comply with regulations pertaining to risk-based net worth requirements.
To get a high capital adequacy rating, institutions must also comply with interest and dividend
rules and practices. Other factors involved in rating and assessing an institution's capital
adequacy are its growth plans, economic environment, ability to control risk, and loan and
investment concentrations.

Asset Quality

Asset quality covers an institutional loan's quality, which reflects the earnings of the institution.
Assessing asset quality involves rating investment risk factor the bank may face and balance
those factors against the bank's capital earnings. This shows the stability of the bank when
faced with particular risks. Examiners also check how companies are affected by the fair market
value of investments when mirrored with the bank's book value of investments. Lastly, asset
quality is reflected by the efficiency of an institution's investment policies and practices.

Management

Management assessment determines whether an institution is able to properly react to financial

stress. This component rating is reflected by the management's capability to point out, measure,
look after and control risks of the institution's daily activities. It covers management's ability
to ensure the safe operation of the institution as they comply with the necessary and applicable
internal and external regulations.

Earnings

A bank's ability to produce earnings to be able to sustain its activities, expand, remain
competitive are a key factor in rating its continued viability. Examiners determine this by
assessing the bank's earnings, earnings' growth, stability, valuation allowances, net margins,
net worth level, and the quality of the bank's existing assets.

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Liquidity

To assess a bank's liquidity , examiners look at interest rate risk sensitivity, availability of assets
that can easily be converted to cash, dependence on short-term volatile financial resources and
ALM technical competence.

Sensitivity

Sensitivity covers how particular risk exposures can affect institutions. Examiners assess an
institution's sensitivity to market risk by monitoring the management of credit concentrations.
In this way, examiners are able to see how lending to specific industries affects an institution.
These loans include agricultural lending, medical lending, credit card lending, and energy
sector lending. Exposure to foreign exchange, commodities , equities, and derivatives are also
included in rating the sensitivity of a company to market risk.

CAMELS MODEL INDICATORS

1. CAPITAL ADEQUACY - C

1 Capital Risk Adequacy Ratio:

CRAR = Capital/ Total Risk Weighted Credit Exposure
2 Debt Equity Ratio:
Borrowings/ (Share Capital + reserves)
3 Total Advance to Total Asset Ratio:
Total Advances/ Total Asset
4 Government Securities to Total Investments:
Government Securities/ Total Investment

2. ASSET QUALITY – A

1 Gross NPA ratio:

Gross NPA/ Total Loan
2 Net NPA ratio:
Net NPA/ Total Loan

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3. MANAGEMENT – M
1 Total Advance to Total Deposit Ratio:
Total Advance/ Total Deposit
2 Business per Employee:
Total Income/ No. of Employees
3 Profit per Employee:
Profit after Tax/ No. of Employees

4. EARNINGS & PROFITABILITY – E

1. Dividend Pay-out Ratio:
Dividend/ Net profit
2. Return on Asset:
Net Profit/ Total Asset
Operating Profit by Average Working Fund:
Operating Profit/ Average Working Fund
Net Profit to Average Asset:
Net Profit/ Average Asset
3. Interest Income to Total Income:
Interest Income/ Total Income
4. Other Income to Total Income:
Other Income/ Total Income

5. LIQUIDITY – L
1. Liquidity Asset to Total Asset:
Liquidity Asset/ Total Asset
2. Government Securities to Total Asset:
Government Securities/ Total Asset
3. Approved Securities to Total Asset:
Approved Securities/ Total Asset
4. Liquidity Asset to Demand Deposit:
Liquidity Asset/ demand Deposit
5. Liquidity Asset to Total Deposit:
Liquidity Asset/ Total Deposit

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Top Private Sector Bank Of India

1. HDFC Bank
HDFC bank is the Largest Private Banks in India by Total sales during the Year. It was
amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to
set up a bank in the private sector, as part of RBI’s liberalization of the Indian Banking Industry
in 1994. The bank was incorporated in August 1994 in the name of ‘HDFC Bank Limited’,
with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995 and also top private banks in India.

• Revenue: Rs 105,161 Cr

• Employees: 98,061

• NIM: 4.3%

• CASA: 48%

• ATMs: 13,160

• Branches: 5,103

• Gross NPA: 1.36%

• Customer Base: Over 49 Million.

2. ICICI Bank
ICICI Bank is a leading private Bank in India ICICI Bank was originally promoted in 1994 by
ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. It is one
of the best private banks in IndiaICICI Bank offers a wide range of banking products and
financial services to corporate and retail customers through a variety of delivery channels and
through its group companies.

• Revenue: Rs 84,353 Cr

• NIM: 3.61%

• CASA: 45.2%

• ATMs: 14,987

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• Branches: 4,874

• Gross NPA: 6.7%

• Customer Base

3. Axis Bank Ltd

Axis Bank is the third-largest Private Banks in India and also the best private bank in India.
The Bank offers the entire spectrum of financial services to customer segments covering Large
and Mid-Corporates, MSME, Agriculture, and Retail Businesses.The Bank has a large
footprint of 4,050 domestic branches (including extension counters) with 11,801 ATMs &
4,917 cash recyclers spread across the country as on 31st March 2019.

• Revenue: Rs 56,044 Cr

• NIM: 3.56%

• CASA: 43.2%

• ATMs: 11,801

• Branches: 4,094

• Gross NPA: 5.25%

The overseas operations of the Bank are spread over nine international offices with branches
at Singapore, Hong Kong, Dubai (at the DIFC), Colombo and Shanghai; representative offices
at Dhaka, Dubai, Abu Dhabi and an overseas subsidiary at London, UK. The international
offices focus on corporate lending, trade finance, syndication, investment banking, and liability
businesses.

4. Kotak Mahindra Bank Ltd

In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group’s flagship company,
received a banking license from the Reserve Bank of India (RBI), becoming the first non-
banking finance company in India to convert into a bank – Kotak Mahindra Bank Ltd. Kotak
is the Fourth-Largest Private Banks in India. It is Among the Top private bank in
India.Effective April 1, 2015, ING Vysya Bank Ltd. merged with Kotak Mahindra Bank Ltd.
The Bank has four Strategic Business Units – Consumer Banking, Corporate Banking,

9
Commercial Banking, and Treasury, which cater to retail and corporate customers across urban
and rural India.

• Revenue: Rs 31,346 Cr

• NIM: 4.3%

• CASA: 52.5%

• ATMs: 2,352

• Branches: 1,500

• Gross NPA: 1.9%

• Customer Base: 17 million+

5. IDFC First Bank Ltd

IDFC Limited was set up in 1997 to finance infrastructure focusing primarily on project finance
and mobilization of capital for private sector infrastructure development.Dr. Rajiv Lall joined
the company in 2005 and successfully expanded the business to Asset Management,
Institutional Broking and Infrastructure Debt Fund. He applied for a commercial banking
license to the RBI in 2013. Owing to his efforts, in 2014, the Reserve Bank of India (RBI)
granted in-principle approval to IDFC Limited to set up a new bank in the private sector.Thus
Erstwhile IDFC Bank was created by the demerger of the infrastructure lending business of
IDFC to IDFC Bank in 2015. The parent entity, IDFC Limited, retained businesses of AMC,
Institutional Broking, and Infrastructure Debt Fund business through IDFC Financial Holding
Company Limited (NOFHC).

• Revenue: Rs 9,098 Cr

• NIM: 3.15%

• CASA: 15.08%

• ATMs: 199

• Branches: 279

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• Gross NPA: 2.66%

• Customer Base: 4 million live customers

The shares of Erstwhile IDFC Bank Limited were listed in the exchanges in November 2015.
During the subsequent three years, the bank developed a strong and robust framework
including strong IT capabilities and infrastructure for scaling up the banking operations. The
Bank designed an efficient treasury management system for its own proprietary trading, as well
as for managing client operations.

6. IndusInd Bank Ltd

IndusInd Bank is ranked 19th amongst the Top 50 Most Valuable Indian Brands 2014 as per
the BrandZ Top 50 rankings powered by the WPP and Millward Brown. Also, the Bank has
bagged the 39th rank in The Economic Times and Interbrand Best Indian Brands Study – 2014.
IndusInd is the Fifth Largest Private Banks in India.
• Revenue: Rs 24,154 Cr
• NIM: 4.05%
• CASA: 43.1%
• ATMs: 2,605
• Branches: 1,938
• Gross NPA: 2.15%
• Customer Base: 9 million+
IndusInd Bank stands tall today as one of the reputed banking brands in the country. The Bank
has combined responsiveness with innovation to launch a wide range of banking products and
services which are unique, convenient and very relevant to the Indian consumer.

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LITERATURE REVIEW:

Kiran Kajal(2018), studied the camel model analysis of selected public and private sector
banks in India. Banking is one of the fastest growing sectors in India. Banking sector helps in
boosting capital formation, innovation and monetization along with facilitation of monetary
policy. Not only the depositors treat sound financial health of a bank as the guarantee but it is
equally significant for the shareholders, employees and whole economy of a country as well.
The present study measures the financial health of top public sector and private sector banks
operating in India using CAMEL Analysis. In the study, seven public sector bank namely State
Bank of India, Bank of Baroda, Bank of India, PNB Bank, Union Bank of India, Canara Bank
and IDBI Bank and four private sector Banks namely ICICI Bank, HDFC Bank, AXIS Bank
and IndusInd Bank have been selected as a sample. Data used for the study pertains from 2013–
14 to 2016–17 and has been collected from the annual reports of respective banks. To study
every major variable use of various ratios have been made which helps to analyse the variable
in better way.

Kumar Kankipati Ajay(2017), studied the financial performance of selected public and
private sector banks based on camel model with reference to Indian banking sector. The
Banking sector is the backbone of the Indian economy and it helps to the growth and
development of the country. This paper analysis at the financial soundness of selective public
sector banks under globally accepted CAMEL framework. This paper observes the behaviour
of various parameters of CAMEL approach model and their ability over the study period. The
financial analysis finds the overall soundness of selective public sector banks with certain five
parameters. Present study analyses the performance of two private sector and two public sector
banks for the period 2012–2016 using CAMEL model. The research aims to evaluate Capital
adequacy, Asset quality, Management, Earnings and Liquidity parameters for the sake of
understanding of soundness of banks. The application of CAMEL approach to both private and
public sector bank for the period 2012 to 2016 allows us to out the performance of banks. We
use debt equity ratio for the analyse of capital adequacy parameter, loan loss provisions to total
loans for the analyse of assets quality parameter, return on equity for analysing management
quality side, return on assets to analyse earnings parameter and deposits on total assets ratios
to analyse liquidity capability.

12
Dr. Srinivasan(2016), studied the Camel Model Analysis of Public, Private and Foreign
Sector Banks in India. To look at the financial soundness of the selected commercial banks in
India, they use a very simplified approach using internationally accepted CAMEL rating
parameters. CAMEL is an acronym for five parameters. CAMEL rating is a subjective model
which indicates financial strength of a bank, whereas CAMEL ranking indicates the banks
relative position with reference to other banks. The finding of the study shows that public sector
banks, viz. Andhra Bank, Bank of Baroda, Allahabad Bank, Punjab National Bank IDBI Bank
and UCO Bank has been ranked at the top positions in their financial performance during the
study period. The private sector banks, namely, , HDFC Bank, Axis Bank, Karur Vysya Bank,
ICICI Bank, Citi Union Bank and IndusInd Bank shared the top five positions. The foreign
banks such as Bank of Bahrain & Kuwait, HSBC Bank, The Royal Bank of Scotland, Deutsche
Bank, CTBS Bank, Citi Bank, DBS Bank and Royal Bank of Scotland secured the top five
positions during the study period. The empirical results show that there is a statistically
significant difference between the CAMEL ratios of the selected Public Sector Banks, Private
Sector Banks and Foreign Banks in India.

Dr. Apoorva Trivedi (2015), studied a comparative analyse of performance of public and
private sectors banks in India through CAMEL model rating system. The main objectives of
the study are to comprehend the financial performance of the banks and also to analyse the
banks performance through CAMEL model and give suggestion for improvement. The period
for evaluating performance through CAMELS in this study is five years, i.e. from financial
year 2009 to 2013. The report makes an effort to inspect and distinguish the performance of
four banks of India i.e. from private sector banks, Axis Bank and Kotak Mahindra Bank and
from the public sector banks, Bank of Baroda and State Bank of India. The analysis is based
on the CAMEL Model. The study has brought many interesting results such as that for the
capital adequacy, all banks have capital above the required level of capital required. This
proves that the risk of default of these banks is less. Furthermore Bank of Baroda has the highest
capital base reinforcement the confidence of the depositors.

Prabhjot Kaur(2015), studied the financial performance analysis of the Indian banking sector
using CAMEL model. The main objectives of the study was to analyse the financial
performance of the selected public and private sector banks in India using CAMEL mode. The
results show that profit per employee, total advances-to-total deposits ratio, debt-equity ratio,

13
capital adequacy ratio and total investments-to-total assets ratio are the most impacting factors
on the performance of the banks, causing 96% of the variance in the return on assets of the
banks. However, profit per employee is the most impacting factor as it individually contributes
67.5% variance in the return on assets of the banks.

Ch Balaji and Dr. G. Praveen Kumar(2015), studied the performance evaluation of the selected
public and private sector bank in India by using camel model. The major objective of the study
was to compare the performance of private sector and public sector banks on the basis of
CAMEL parameters. The main objectives of the study are to analyse the financial performance
of Indian commercial banks by using CAMEL Model. And to also compare the performance
of new private sector and public sector banks. It was concluded that selected private sector
banks were having more capital adequacy ratio, profit per employee, return on assets and
current ratio and less of net NPA/NA and business per employee compared to the selected
public sector banks.

Dr T Rajasekar(2015), studied the analysis of Financial of the New Private Sector Banks in
India through CAMEL Rating System. The major objectives of the study are to understand the
various theoretical aspects relating to the measurement of financial soundness of the
commercial banks and to analyse the financial soundness of the new private sector banks in
India. The study concluded that the measurement and analysis of financial health of the India’s
new private sector banks reveals that Kotak Mahindra Bank is at the top position under the
capital adequacy parameter, while the Development Credit Bank at the bottom. Under the asset
quality parameter, the YES Bank holds the top rank while the DCB holds the lowest rank.
Under the management efficiency parameter, top rank is achieved by AXIS Bank and the
lowest rank by DCB. In terms of earning quality parameter the ICICI Bank is on top, while the
DCB at bottom. Under the liquidity parameter, the Kotak Mahindra Bank stands on the top
position and the ICICI Bank is on the lowest position.

Dr. Sneha S. Shukla (2015), studied an Analysing Financial Strength of Public and Private
Sector Banks: A CAMEL Approach. CAMEL approach is a useful tool to examine the safety
and soundness of banks. It also highlights the risks being faced by banks and help mitigate the
potential risks which may lead to bank failures. In the present study, an attempt is made to
evaluate the performance & financial soundness of selected various public & private sector

14
banks using CAMEL approach. In the process of evaluation of performance of various banks,
our study concluded that, different banks have obtained different performances with respect to
CAMEL ratios. The study also concluded the following: The HDFC Bank & BOB stood at top
position in terms of capital adequacy. In terms of asset quality, the HDFC Bank was at top most
position. In context of management quality, HDFC Bank & ICICI Bank positioned at first.

M. Gowri(2015), studied an Empirical Study On Banking Sector With The Use Of CAMEL
Model. The main objectives of the study were to analyse the financial performance of the
banks chosen for the study and also to identify factors which have led to the current financial
performance. The performance of the selected commercial banks was evaluated and compared
by the CAMEL model. The study concluded that in the liberalized environment the private
sector banks gave a very tough competition to the public sector bank in terms of Asset quality,
Management efficiency, Earning Capacity.

Deepti Tripathi and Kishore Meghani (2014), studied the Financial Performance Of Axis
Bank And Kotak Mahindra Bank In The Post Reform Era: Analysis On CAMEL Model. The
objectives of the study was to Analyse the Financial Position and Performance of the Axis and
Kotak Mahindra Bank by Applying CAMEL Modal and to give recommendation and
suggestion for improvement of efficiency in Axis and Kotak Mahindra Bank. To evaluate the
comparative financial performance of Axis Bank and Kotak Mahindra Bank, the study adopted
the world-renowned: Capital Adequacy, Asset Quality, Management, Earning Quality and
Liquidity CAMEL model with t test. From the CAMELS’ analysis it clears that there is no
significance difference between the AXIS and KOTAK MAHINDRA bank’s financial
performance but we conclude that the KOTAK MAHINDRA bank performance is slightly less
compared with AXIS Bank.

CA. Ruchi Gupta(2014), studied an analysis of Indian public sector banks using Camel
approach. The main objective of the study is to analyse the financial position and performance
of the Public Sector banks in India using CAMEL model. CAMEL is a ratio-based model used
to evaluate the performance of banks with the help of different criteria, i.e.Capital Adequacy,
Asset Quality, Management Quality, Earnings and Liquidity. The present study is a descriptive

15
research study based on analytical research design. In evaluating the function of the banks,
many of the developed countries are now following uniform financial rating system along with
other existing procedures and techniques. Various studies have been conducted in India as well
on various banks using CAMEL framework. Different banks are ranked according to the
ratings obtained by them on the five parameters. The results show that there is a statistically
significant difference between the CAMEL ratios of all the Public Sector Banks in India, thus,
signifying that the overall performance of Public Sector Banks is different. Also, it can be
concluded that the banks with least ranking need to improve their performance to come up to
the desired standard

Mishra Aswini Kumar(2012),studied and analysed the Soundness in Indian Banking: A

CAMEL Approach. The objective of this paper is to analyse the performance of 12 public and
private sector banks over a period of eleven years in the Indian banking sector. For this purpose,
CAMEL approach has been used and it is established that private sector banks are at the top of
the list, with their performances in terms of soundness being the best. They concluded that
looking at the trend, can say that private banks are growing at a faster pace than public sector
banks and will head towards convergence faster than the PSBs. This particular data set, it can
be established that private sector banks are at the top of the list with their performances in terms
of soundness being the best. Public sector banks like Union Bank and SBI have taken a backseat
and display low economic soundness in comparison. They also concluded that Government
needs to focus more on the Public Sector Banks in order to increase the net profit to average
assets ratio, profit per employee.

Sangmi and Nazir (2010) have taken two major banks of north India namely, Punjab national
bank and Jammu and Kashmir Bank on the basis of their role and participation in influencing
the financial condition of North India. They applied the Camel Model on these two banks by
taking the annual report data from 2001- 2005, and found out that both the banks were
financially sound and suitable as far as their capital adequacy, asset quality, management
capability and liquidity is concerned.

Singh and Mogla (2010), In this paper, they have taken both pre and post-merger profitability
of acquiring firms. They take a sample of 153 merged corporate firms from 1993 to 2003, in
this the firm will be categorized as loss-incurring firms and financially healthy firms that are

16
38 and 115 acquisitions respectively. The parameters considered for the study such as operating
profit margin, net profit margin, return on net capital employed, return on net worth and net
asset turnover ratio to know the profitability of acquiring firms. To evaluate the differences in
the performance between pre and post-merger period’s t-test is used.

Sumeet Gupta(2008), studied the Comparative Analysis of Financial Performance of Private

Sector Banks in India: Application of CAMEL Model Banking in India is mature in terms of
supply, product range and reach-even in rural India through rural banking and remote banking.
In terms of quality of assets and capital adequacy, Indian banks are considered to have clean,
strong and transparent balance sheets. The present research work analyses the overall financial
performance of major private sector banks in India through application of CAMEL Model.
Besides it also attempts to compare the performance of these Banks with the help of Composite
Ranking Method

Veni(2004), conducted a study on “Capital Adequacy Requirement of Commercial Banks: A

Study in Indian Context”, and analyzed the capital competence conditions of banks and the
methods implemented by the banks to build up their capital ratios. The researcher highlighted
that various rating agencies by using CAMEL model had given due importance to Capital
Adequacy Ratio of the bank for rating fixed deposits and bonds of the bank.

OBJECTIVES OF THE STUDY

1. PRIMRY OBJECTIVE:
✓ The main objective of the study is to analyse and compare the financial performance
and position of the chosen private sector bank by applying the CAMEL model.
2. SECONDARY OBJECTIVES:
✓ An another objective of the study is to analyse and evaluate the performance of the
chosen bank from the data of 5 years.
✓ To compare the financial position of the private sector bank.
✓ To assess the asset quality of selected banks
✓ To evaluated the management efficiency of selected banks
✓ To identify the liquidity position of selected banks
✓ To analyse the capital adequacy of selected banks

17
SCOPE OF STUDY
The study only focuses on the top five private sector banks and evaluate their financial
performance as well as to compare the banks performance. This study will use financial ratios
to investigate the banking performance namely: capital adequacy ratios, asset quality ratios,
management efficiency ratios, earnings quality ratios and liquidity ratios. All the required data
will be collected through annual reports published by the selected banks and websites and also
from the financial market like BSE and NSE.

RESEARCH DESIGN:
The study will done by using the descriptive design research design as it provides the
opportunity to cover all the aspects that are required to conduct the research.
To study and to make comparative analysis we will be using the CAMEL model rating system.
CAMELS is an acronym for six measures (capital adequacy, assets quality, management
soundness, earnings, liquidity, and sensitivity to market risk). In this analysis the six indicators
which reflect the soundness of the institution framework are considered.
The banks selected for the purpose of the study are Axis Bank Ltd, HDFC Bank Ltd (HDFC),
ICICI Bank Ltd (ICICI), IDBI Bank Ltd (IDBI), Kotak Mahindra Bank Ltd (KMB)

DATA COLLECTION SOURCES

The data will be collected from the secondary source of data. As these is a secondary data
research the data would be obtained for these research would be from many other secondary
sources :
• Money control
• NSE
• BSE
• Online research value
• IBEF.ORG
SAMPLING PLAN:

• The top five Private Sector Banks in India will be analysed for the purpose of the study.

18
RESEARCH TIMELINE:

14th October • Detailed Litreature Review

• Desigining Research
17th October

27th October • Secondary Data Collection

7th Decemeber • Data Analysis And Interpretation

26th December • Submission Of The Final Repot

EXPECTED CONTRIBUTION:
The purpose of the study is to analyse the financial performance of the chosen private sector
bank and to compare them in terms of financial soundness. By doing the research we will came
to know about the current financial position of the private sector banks. It will be useful to the
people who wants to invest in the chosen banks and it will also benefits the stakeholders of the
banks. It will also strengths the CAMEL model rating system. The current study will also create
a base for future research studies. Thus , it will helpful for all the people who are related or
wants invest in the banks and I wills also helpful for the government to know about the
performance of the banks.

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LIMITATIONS:
• The Limitation of the present study is that the analysis is restricted to only five major
private banks.
• The inherent limitation is secondary data.
• The published data is not uniform and not properly disclosed by the banks.
• The study will be conducted considering the present environment without considering
the future development.

REFRENCES/ BIBLOGRAPHY

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34 Pages · Posted: 28 Oct 2014

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ur Rehman14, A. T. D. A., & Elahi15, Y. A. A COMPARATIVE ANALYSIS OF PERFORMANCE OF

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Kaur, P. (2015). A Financial Performance Analysis of the Indian Banking Sector Using CAMEL
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Kiran, K. (2018). A Camel Model analysis of selected public and private sector banks in
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Tripathi, D., Meghani, K., & Mahajan, S. (2014). Financial performance of Axis bank and
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Gupta, S., & Verma, R. (2008). Comparative Analysis of Financial Performance of Private Sector Banks
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https://indiancompanies.in/top-10-private-banks-in-india/

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