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ISSN: 2278-4853. Vol 8, Issue 5, May 2019. Impact Factor: SJIF 2018 = 6.053

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ISSN: 2278-4853. Vol 8, Issue 5, May 2019. Impact Factor: SJIF 2018 = 6.053

Asian Journal of
Multidimensional
Research (AJMR)
( Dou b l e B li n d Ref e r e e d & Re vi e we d I nt e r n a ti on a l J ou r n a l )

UGC APPROVED JOURNAL

DOI NUMBER: 10.5958/2278-4853.2019.00197.6

COMPARATIVE ANALYSIS OF HDFC BANK AND ICICI BANK BY USING
CAMEL MODEL
Dr. Pravin Narayan Mahamuni*; Dr. Rahul More**
*Associate Professor,
ZES’s Zeal Institute of Business Administration,
Computer Application & Research,
Formerly Dnyanganga Institute of Career Empowerment & Research,
Narhe, Pune, INDIA
Email id: pravinmahamuni@gmail.com
**Assistant Professor
ZES’s Zeal Institute of Business Administration,
Computer Application & Research
Formerly Dnyanganga Institute of Career Empowerment & Research,
Narhe, Pune, INDIA
Email id: morerp1@gmail.com
ABSTRACT

In Economic Development in India banking sectors plays a very important role Banks square
measure accepts the savings of the individuals and distributes loan and advances to the business,
business banks square measure the banks square measure the backbone of the business, industry.
Banks square measure the backbone of the business in addition as country conjointly .banks square
measure the lifeline of the country dealer of the economic development banks square measure the
go-between loaner and money receiver. The present study attempts to evaluate &compare the
performance of selected private sector banks in India i.e. ICICI Bank & HDFC Bank by using
CAMEL Model during the period 2013-14 to 2017-18.

KEYWORDS: CAMEL Model, Performance Evaluation ICICI Bank, HDFC Bank

INTRODUCTION TO CAMEL MODEL
In the 1980s, CAMEL rating system was first introduced by U.S. supervisory authorities as a system
of rating for on-site examinations of banking institutions. Under this system, each banking institution
subject to on-site examination is evaluated on the basis of five (now six) critical dimensions relating
to its operations and performance, which are referred to as the component factors. These are Capital,
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Asset Quality, Management, Earnings and Liquidity used to reflect the financial performance,
financial condition, operating soundness and regulatory compliance of the banking institution. A
sixth component relating to Sensitivity to market risk has been added to the CAMEL rating to make
the rating system more risk-focused. Each of the component factors is rated on a scale of 1 (best) to
5 (worst). A composite rating is assigned as an abridgement of the component ratings and is taken as
the prime indicator of a bank’s current financial condition. The composite rating ranges between 1
(best) and 5 (worst), and also involves a certain amount of subjectivity based on the examiners‟
overall assessment of the institution in view of the individual component assessments.
SIGNIFICANCE OF THE STUDY
In banking there square measure four sectors that plays a really immense role in economic
development that’s square measure public sectors banks, non-public sectors banks, and Indian
foreign banks, co-operative and regional rural banks. Indian economic accepts relaxation,
privatization and economic process in 1991. Since the beginning of 1991, there are respectable
changes within the rules and rules, organization, scope and activity level of Indian banking sector.
Currently, banks square measure continuous path of growth, growth and development. Therefore,
this study is necessitated to evaluate and compare the performance of selected Indian Private Sector
Banks i.e. ICICI Bank & HDFC Bank by using CAMEL Model during the period 2013-14 to 2017-
18.
LITERATURE REVIEW
Sushendra Kumar Misra and Parvesh Kumar Aspal (2013) studied the financial healthyness and
performance of State Bank Group using CAMEL approach.
CA. Ruchi Gupta (2014) used CAMEL Approach to analyse the perofmance of Indian Public Sector
Banks during the period 20029 to 2013.
K.V.N. Prasad & G. Ravinder (2012) they chosen 20 nationalized banks. The result reveled that
Andhra Bank was at the top most positioned followed by Bank of Baroda and Punjab National Bank
whereas Canara Bank was the last position.
K. V. N. Prasad, Dr. D. Maheshwara Reddy & Dr. A. A. Chari (2011) decided to evaluate the
performance of all public sector banks of India for study and results shown that on average Andhra
Bank was at the top most position followed by Bank of Baroda and Indian Bank also it is observed
that Central Bank of India was at the bottom most position followed by UCO bank, Bank of Mysore.
The largest Public sector bank in India availed only 20 th position.
Said and Saucier (2003) examined the liquidity, solvency and efficiency of Japanese Banks using
CAMEL rating methodology, for a representative sample of Japanese banks for the period 1993-
1999, they evaluated capital adequacy, assets and management quality, earnings ability and liquidity
position.
Prasuna (2003) analyzed the performance of Indian banks by adopting the CAMEL Model. The
performance of 65 banks was studied for the period 2003-04. The author concluded that the
competition was tough and consumers benefited from better services quality, innovative products
and better bargains.
Bhayani (2006) analyzed the performance of new private sector banks through the help of the
CAMEL model. Four leading private sector banks – Industrial Credit & Investment Corporation of

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India, Housing Development Finance Corporation, Unit Trust of India and Industrial Development
Bank of India - had been taken as a sample.
Gupta and Kaur (2008) conducted the study with the main objective to assess the performance of
Indian Private Sector Banks on the basis of Camel Model and gave rating to top five and bottom five
banks. They ranked 20 old and 10 new private sector banks on the basis of CAMEL model. They
considered the financial data for the period of five years i.e., from 2003-07.
Objectives of the Study:
7. To evaluate and compare the performance of ICICI and HDFC Banks using CAMEL model.
METHODOLOGY
This study is an attempt to evaluate & compare the performance of selected Indian Private Sector
Banks namely; ICICI Bank & HDFC Bank. This is an analytical research, were researcher used
secondary data for the evaluating & comparing the result. The required data has been collected from
the annual reports of the selected banks for the period of 5 years i.e. 2013-14 to 2017-18. The
researcher adopted CAMEL approach for the study and 10 parameters were used for the analysis.
Data Analysis & Interpretation
6- Capital Adequacy Ratio (CRAR)
TABLE NO. 01: CRAR COMPARATIVE ANALYSIS
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFC 14.82 14.55 15.53 16.79 16.07 15.55
ICICI 17.70 17.02 16.64 17.39 18.42 17.43
Source: Authors calculation
The above Table No.01 shows that, the Capital Adequacy Ratio (CRAR) of HDFC bank and ICICI
bank under study set by RBI. The highest CRAR of the both banks are 16.79 % & 18.42%
respectively whereas the lower CRAR of the both banks are 14.45% & 17.02% respectively. Also
the above table shows us the Mean of the HDFC & ICICI banks that are 15.55% & 17.43% so ICICI
bank mean is higher than HDFC bank by 2%.
7- Net NPA to Net Advances
TABLE NO. 02: ANALYSIS OF NET NPA TO NET ADVANCES
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFC 0.27 0.24 0.28 0.33 0.39 0.302
ICICI 0.97 1.61 0.029 5.43 5.43 2.69
Source: Authors calculation
It is observed that, the highest Net NPA to Net Advances of both HDFC and ICICI were 0.39 and
5.43 respectively in the year 2017-18&2016-2017, whereas the lowest Net NPA to Net Advances of
HDFC and ICICI was registered in the year 2014-15and 2015-2016were 0.24 and 0.029 respectively.
The mean Net NPA to Net Advances of ICICI Bank (2.69%) is higher than that of HDFC (0.302%),
which implies that ICICI Bank has higher level of Net NPA to Net Advances than that of HDFC
bank.

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8- Return on Assets Ratio
TABLE NO. 03: RETURN ON ASSETS RATIO (%)
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFC 0.27 0.24 0.28 0.33 0.39 0.302
ICICI 0.97 1.61 0.029 5.43 5.43 2.69
Source: Authors calculation
Return on Assets may be alive of plus quality and management potency of an establishment and also
the higher the quantitative relation, higher is alleged to be the performance of the firm. It’s quite
clear from this table that for each the banks, come back on Assets is at a really low level. the best
come back on Assets (%) of HDFC was 0.39% in 2017-18 which of ICICI was 5.43% within the
year 2016-17, & 2017-18 wherever because the lowest come back on Assets (%) of each HDFC and
ICICI was registered within the year 2014-15 and were 0.24% and 2013-14 were 0.97% severally.
Mean come back on Assets (%) of ICICI Bank (2.69%) is above that of HDFC (0.302%) bank.
which suggests that ICICI Bank scores over HDFC in terms of come back on assets.
9- Return on Net-worth Ratio
TABLE NO. 04: COMPARISON OF RETURN ON NET-WORTH RATIO (%)
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFS 19.50 16.47 16.91 16.26 16.45 17.11
ICICI 13.40 13.89 11.19 10.11 6.63 11.04
Source: Authors calculation
Return on Net-worth Ratio help organization to find out the net Surplus and efficiency of the both
banks, in the above table, the highest Return on Net worth of HDFC bank is i.e. 19.50 % was in
2013-14 year and highest return of ICICI is 13.89% in 2014-15 and lowest return was HDFC&
ICICI banks in 2016-17 & 2017-18 (16.26 & 6.63) respectively and mean of both banks are (17.11%
& 11.04%)
10- Credit Deposit Ratio Analysis
TABLE NO. 05: CREDIT DEPOSIT RATIO ANALYSIS (%)
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFC 81.79 85.64 83.24 81.71 81.79 82.82
ICICI 100.71 104.17 105.08 98.69 92.92 100.3
Source: Authors calculation
In the above table No. 05 shows that, 85.64 and 105.08 is the Credit Deposit Ratio (%) of both the
banks for the last five years from 2013-14 to 2017-18. The highest Credit Deposit Ratio of HDFC
banks was 85.64 in 2014-15& ICICI bank was105.08.and lowest was 81.7 in 2017-18, and 92.92 in
2017-18 respectively. Also mean of both banks are 82.82% & 100.3% so ICICI banks have more
capacity to created more loan.
11- Debt Equity Ratio
TABLE NO. 06: ANALYSIS OF DEBT EQUITY RATIO
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFC 11.30 9.52 9.75 9.65 10 10.00
ICICI 8.12 8.03 8.03 7.72 8.36 8.05

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Source: Authors calculation
Debt Equity Ratio of HDFC and ICICI Bank for the study period are exhibited in Table No.06. Debt
equity ratio is a measure of the solvency and management efficiency of company the highest debt
equity ratio of HDFC bank was 11.30 in 2013-14 and in case ICICI bank, it was 8.36 in 2017-18,
whereas lowest ratio of both banks was 9.52 in 2014-15, & 7.72 in 2017-18. It also indicates that the
mean Debt Equity Ratio of HDFC (10) is higher than that ICICI bank (8.05).
12- Net Interest to Fund Ratio
TABLE NO. 07: NET INTEREST TO FUND RATIO (%) COMPARATIVE ANALYSIS
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFC 4.14 4.14 4.25 4.21 4.16 3.33
ICICI 2.91 3.07 3.11 2.92 2.80 2.96
Source: Authors calculation
As indicated in above table, the heights interest to fund ratio, across the 5 years ,is of HDFC that is
4.25 in 2015-16, and ICICI that is 3.11 in 2015-16, and lowest ratio of both banks are in 2013 14 &
2014-15,(4.11), HDFC. In 2017-18 of ICICI bank were 2.80.
Mean of both banks are 3.33 & 2.96 respectively.
13- Return on Equity
TABLE NO. 08: COMPARATIVE ANALYSIS OF RETURN ON EQUITY (%)
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFC 19.90 16.47 16.91 16.26 16.45 13.81
ICICI 13.40 13.89 11.19 10.11 6.63 10.99
Source: Authors calculation
Table No. 08 demonstrates that, Return on Equity is the ratio of net earnings of company. The
highest return on Equity of HDFC bank was 15.9 % in the year 2012-13 and in case of ICICI Bank,
it was 14.30 % in HDFC the year 2014-15, whereas lowest of HDFC was 7.74 % in 2015-16 and that
of ICICI was 11.10% in 2011-12. Whereas the mean of both banks are 13.81 & 10.99 respectively.
14- Current Ratio
TABLE NO. 09: COMPARATIVE ANALYSIS OF CURRENT RATIO
Banks 2013-14 2014-15 2015-16 2016-17 2017-18 Mean
HDFC 0.4 0.6 0.7 0.4 0.6 0.54
ICICI 0.9 0.6 0.13 0.12 0.12 0.37
Source: Authors calculation
Table No.09 show that, the both bank have very low level current Ratio 0.4 & 0.6 in the year of
2017-18& 2014-15 respectively and mean of the HDFC & ICICI banks are 0.54 & 0.37
respectively.

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15- Quick Ratio
TABLE NO. 10: ANALYSIS OF QUICK RATIO
Banks 2013-14 2014-15 2015-16 2017-18 2018-19 Mean
HDFC 8.55 12.59 14.51 11.19 17.48 12.86
ICICI 11.31 13.81 14.97 16.31 20.44 15.36
Source: Authors calculation
Table No.10 exhibits the Quick Ratio of HDFC and ICICI Bank. It is quite clear that both banks
have a very high level of quick ratio. Quick Ratio is another measure of the liquidity position, was n
of a firm and is determined by the ratio of Quick assets to Quick Liabilities. From the above table
shows highest Quick Ratio of HDFC, 17.48, was observed in i.e. in 2018-19. And that of ICICI
Bank, i.e. 20.44, was in 2018-19. Whereas, the lowest Ratio Quick Ratio of HDFC, i.e. 8.55 in 2013-
14 and that of ICICI Bank were 11.31 in 2013-14. It is also clear that the mean Quick Ratio of
HDFC (12.86) lower than that if ICICI (15.36) and as such, it may be concluded that ICICI Bank has
maintained a higher Quick Ratio than HDFC for the period under study.
CONCLUSION
Indian Banking Sector is currently going into a difficult time due to continuously increase in their
non performing assets. Therefore is necessary to evaluate performance by using CAMEL model of
top Indian Private Sector Banks i.e. ICICI & HDFC. After evaluating and comparing the
performance of both banks on selected parameters, it is concluded that, ICICI Bank’s performance in
CRAR, NPA & ROI whereas HDFC Banks shown performance in ROE, RONW, DER, Net Interest
Fund Ratio and Current Ratio. Also it can said that both banks has to focuses on how to increase the
ROI and utilization of its assets more efficiently to generate the revenue
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Webliography
 https://www.hdfcbank.com
 https://www.icicibank.com

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