A STUDY OF FINANCIAL PERFORMANCE: A COMPARATIVE ANALYSIS OF CO- OPERATIVE BANKS IN BIJAPUR DISTRICT (KARNATAKA STATE)

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1 A STUDY OF FINANCIAL PERFORMANCE: A COMPARATIVE ANALYSIS OF CO- OPERATIVE BANKS IN BIJAPUR DISTRICT (KARNATAKA STATE) Ms. Bharati R. Hiremath Research Scholar Research and Development Centre, Bharathiar University, Coimbatore bharatirhiremath@rediffmail.com Mobile No: Abstract: Financial performance of a bank indicates the strengths and weakness of that particular bank by properly establishing the association between the items of the balance sheet and profit & loss account. The researcher has undertaken the study of financial performance of all the 20 Co-operative Banks in Bijapur District, Karnataka State for the period from to The research is descriptive and analytical in nature. The data used for the study was secondary in nature. The data used for the study was to compare the financial performance of all co-operative banks on the basis of Profitability ratios such as : Interest Income to Working Fund Ratio, Interest Expended to Working Fund Ratio, Spread to Working Fund Ratio, Non Interest Income to Working Fund Ratio, Non Interest Expenditure to Working Fund Ratio, Burden to Working Fund Ratio, Net Profit to Working Fund Ratio, Interest Income to Total Income Ratio, Interest Expenditure to Total Expenditure Ratio & Return on Capital Employed Ratio. The study found that SSCB & BDCCB banks were the best performing bank. The result of the ANOVA test disclosed that there is a significant difference in all the profitability ratios among different co-operative banks under study. The study concluded that there is statistically significant difference in the financial performance of the co-operative banks in Bijapur district, Karnataka state, but still there is a need for overall improvement in the co-operative banks to make their position strong in the competitive market. Keywords: Co-operative banks, financial performance, profitability ratios 1. Introduction A co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank. Co-operative banks are often created by persons belonging to the same local or professional community or sharing a common interest. Co-operative banks generally provide their members with a wide range of banking and financial services (loans, deposits, banking accounts etc.). Co-operative banks differ from stockholder banks by their organization, their goals, their values and their governance. In most countries, they are supervised and controlled by banking authorities and have to respect prudential banking regulations, which put them at a level playing field with stockholder banks. Depending on countries, this control and supervision can be implemented directly by state entities or delegated to a co-operative federation or central body. The present study deals with a study of financial performance: A comparative analysis of cooperative banks in Bijapur District, (Karnataka state), which are organized in financial services. All the co-operatives banks of Bijapur District are selected for the study. For analyzing the performance of Co-operative Banks the data related to all the Cooperative banks for the past five years viz to have been collected and various techniques of measuring performance like Ratio Analysis and statistical techniques have been applied to analyze and drew conclusion. 2. Need for the Study Due to certain changes in the banking sector and new economic policies, the co-operative sectors underwent a crisis. At the same time the failure of some good Schedule Banks and Urban Banks has also attracted the attention of the people and raised the question of security of their funds. So, there is a need to the find actual financial stability of the Co-operative banks and assure investors about the operational as well as financial efficiency of the Co-operative banks. These distinctive features of the Cooperative Banks as compared to other banks have motivated the researcher to undertake research on the financial position of the CBs. In fact, no research has been undertaken in relation to financial aspects of Co-operative Banks which are operating in Bijapur District, Karnataka. 3. Statement of the Problem The Co-operative credit institutions have been facing innumerable prominent problems. Huge administrative expenses and lack of management skill of the employee are the major problems of the co-operative banks in India. This is because of lack of training and education to the employees. They are expected to provide better services on par with the nationalized banks and even better than them. AARMSS INTERNATIONAL PUBLISHERS Page 25

2 Competition is another force that makes the problem more acute. Emergence of the private banks including the foreign banks made the accesses to banking services easier than before especially to the urban people. It makes the competition stiffer than before at least to retain the people who have been banking with the co-operative banks. However co-operative banks have had an edge over others in terms of their nearness with the customers. It is necessary for them to provide efficient services and also to win the confidence of the shareholders, depositors and the common public by making their financial position lucrative. But the prevailing situation reveals a different condition. Poor performance is recovery of loans and sanction of loans without proper security, changing government policies relating to the sanction and recovery of loans given to the people attitude of the debtors also pose a major hurdle to the growth and development of co-operative banking system in India. 4. Research Questions The researcher has addressed the following questions : 1. What extent does the financial performance affect the co-operative banks in Bijapur District? 2. Whether the Co-operative Banking sector in Bijapur District is financially efficient or not? 5. Objectives of the Study The broader objectives of the study are as under: 1. To examine the profitability efficiency of co-operative banks in Bijapur district. 2. To suggest to improve efficiency of Co-operative Banks of Bijapur district 6. Hypothesis Testing: Null Hypothesis There is no significant difference in profitability efficiency of all the Co-operative banks of Bijapur district. 7. Scope of the Study: The scope of the study is defined in terms of financial aspects and period under focus. 1. The researcher has taken up 20 co-operative banks for her study. These 20 banks are drawn from 5 Talukas in Bijapur district. 2. The study is based on the annual reports of the banks for a period of 5 years from to The performance of the co-operative banks was measured through profitability ratios. 8. Limitations of the Study: 1. It only considered a sample of co-operative banks in Bijapur District, Karnataka; public, private & foreign banks were not considered for the present study. 2. The study is based on secondary data; no primary data has been used for the present study. 3. Only quantitative factors (such as manager competency, market share of banks, exposure to international markets) were ignored. 9. Research Methodology: Sources of Data: The study is based on secondary data. The secondary data consists of the annual reports of co-operative banks in Bijapur district. Also, various other reports like co-operative journals, co-operative diary and from the web sites available on the internet have been referred. Period of Study: The present study covers the span of five years i.e. from to Sampling Design: In this study, all 20 co-operative banks (population study/census survey) in Bijapur district have been included for the study. A. Bijapur City: 1. The Bijapur District Central Co-operative Bank Ltd. Bijapur (BDCCB). 2. Shri Shiddheshwar Co-operative Bank Ltd., Bijapur (SSCB). 3. Bijapur Sahakari Bank Niyamit, Bijapur (BSBN). 4. Bijapur Zilla Sarakari Naukarar Sahakari Bank Niyamit, Bijapur (BZSNSBN). 5. The Bijapur Mahalaxmi Urban Co-operative Bank Ltd., Bijapur (BMUCB). 6. Bijapur District Mahila Co-operative Bank Ltd., Bijapur (BDMCB). 7. The Deccan Urban Co-operative Bank Ltd., Bijapur (DUCB). AARMSS INTERNATIONAL PUBLISHERS Page 26

3 8. Chaitanya Mahila Sahakari Bank Ltd. Bijapur (CMSB). B. Muddebihal Taluk 1. The Karnataka Co-operative Bank Ltd., Muddebihal (KCB). 2. The Talikoti Sahakari Bank Niyamit, Talikoti (TSBN). 3. The Muslim Co-operative Bank Ltd., Talikoti (MCB). 4. The Bhavasar Kshatriya Co-operative Bank Ltd., Talikoti (BKCB). 5. Shri Sharana Veereshwar Sahakari Bank Niyamita, Nalatwad (SSVSBN). C. Sindagi Taluk 1. Sindgi Urban Co-operative Bank Sindgi (SUCB). 2. Basaveshwar Pattan Co-operative Bank, Sindgi (BPCB). 3. Shree Pragati Pattan Sahakari Bank Niyamit, Devar Hipparagi (SPSBN). 4. Almel Co-operative Bank, Almel (ACB) D. Basavan Bagewadi 1. Shri Basaveshwar Co-operative Bank Ltd., Basavanbagewadi (SBCB). 2. Swami Vivekanand Co-operative Bank, Nidagundi (SVCB). E. Indi Taluk 1. Shri Revansidddheshwar Pattan Sahakari Bank Niy. Indi (SRPSBN). Framework Analysis: The performance of the co-operative banks was measured through 2 different techniques they are as follows: A. Accounting Techniques: The performance of banks was measured through different ratios. These ratios were selected on the basis of their popularity in literature. Profitability Ratios: Interest Income to Working Fund Ratio, Interest Expended to Working Fund Ratio, Spread to Working Fund Ratio, Non-Interest Income to Working Fund Ratio, Non Interest Expenditure to Working Fund Ratio, Burden to Working Fund Ratio, Net Profit to Working Fund Ratio, Interest Income to Total Income Ratio, Interest Expenditure to Total Expenditure Ratio & Return on Capital Employed Ratio. B. Statistical techniques: ANOVA test was applied for evaluating the performance of Co-operative banks of Bijapur District, Karnataka. 9. Profitability Ratio: Interest Income to Working Fund Ratio Interest income to working fund is an important ratio of measuring the efficiency of management regarding employing its working funds in an optimum manner. This ratio indicates the interest earned on each rupee of working funds employed. As interest income is a major source of income in the CBs. They should try to earn maximum returns on employed funds. But at the same time, they should make safer advances and try to reduce the proportion of NPA. They should also invest their funds in Government securities. As interest earned has direct effect on profitability of the CBs, the management should be efficient in taking decision about how much funds should be advanced, how much should be invested and how much should be remain as liquid assets so that optimum level of liquidity can be maintained. The ratio is calculated by using following equation. Interest Income = Interest on loans and advances, plus interest on Govt. securities plus interest on other securities and income from bills discounted. Working Fund = Working Funds are the funds deployed by a bank in its business. The amount of working funds so deployed is usually arrived at by subtracting the aggregate amount of contra items from the total liabilities of the balance sheet. Interest Paid to Working Fund Ratio Interest paid to working funds ratio is an important ratio for measuring the profitability of the CBs. In banking sector interest paid occupies a major portion of total operating cost and affects profitability. As each fund has its own procurement cost, if interest paid is higher, it reduce profitability and indicates failure of management in obtaining low cost deposits. The bank should always AARMSS INTERNATIONAL PUBLISHERS Page 27

4 try to get maximum deposits at a lower cost and should advance at a higher rate, because difference between cost of deposits and return on advance is the profit margin for bank. Interest paid is always compared with interest earned. There should be enough margins between these two variables i.e. the growth of interest paid should be less than interest earned so that the bank can maintains its profit. This ratio is calculated as follows. Interest Paid= interest paid on deposits and borrowings. Spread to Working Funds Ratio: Spread is the difference between interest earned and interest paid by the bank. It is difference between the income earned by deployment of funds and the cost of funds. Spread plays an important role in determining the profitability of banks. It is the amount available to the banks for meeting their administrative, operating and miscellaneous expenses. Generally every bank tries to increase spread volume, so that spread is more enough available to meet the non-interest expenses and remaining part contributes to the profit. This ratio is calculated as follows. Spread = Interest earned Interest paid Non-Interest Income to Working Fund Ratio The other operational income of a bank is Non-Interest Income, which includes commission, brokerage, gains on revaluation of assets etc. This ratio measures the income from operations, other than lending of the total income The operational efficiency of a bank will be high if this ratio is high. The formula of this ratio is This ratio denotes a bank s ability to earn from nonconventional sources. In a liberalized environment, this ratio assumes greater significance for; it mirrors a bank s ability to take full advantage of its operational freedom. Non-Interest Expenditure to Working Funds Ratio This ratio represents the share of manpower expenses and other contingent expenses from the working fund. Burden to Working Funds Ratio Burden means the difference between non-interest expenditure and non-interest income of a bank. Burden represents the amounts of non-interest expenditure, which is not covered by non-interest income of a bank. Burden is the combination of establishment expenditure and other expenses of banks minus other incomes Consisting of commission, exchange, brokerage and other miscellaneous receipts). It means that burden represents non-interest expenditure not covered by non-interest income. Profit may also be defined as the difference between spread and burden. Hence higher the burdens of co-operative banks lower the profitability. Net Profit to Working Funds Ratio Net profit to working fund ratio measures overall profitability of the Co-operating Banks. This ratio reveals net earnings of the CBs by utilizing funds. It gives earning per rupee of funds invested. Higher earnings indicate control of management on its operating cost or efficient utilization of funds. The formula for calculation of this ratio is as follows: AARMSS INTERNATIONAL PUBLISHERS Page 28

5 Interest Income to Total Income Ratio: Interest Income to Total Income shows the proportionate contribution of interest income in total income. Banks lend money in the form of loans and advances to the borrowers and receive interest on it. This receipt of interest is called interest income. Total income includes interest income, non-interest income and operating income. Interest Expended to total Expenditure Ratio Interest Expenses to Total Expenses reveals the expenses incurred on interest in proportion to total expenses. Banks accepts deposits from savers and pay interest on these accounts. This payment of interest is known as interest expenses. Total expenses include the amount spent in the form of staff expenses, interest expenses, overhead expenses and other operating expenses etc. Return on Capital Employed Ratio The primary objective of making investment in any business is to obtain adequate return on capital invested. Therefore, to measure the overall profitability of the bank, it is essential to compare profit with capital employed. It is also called Return on Investment (ROI) In relation to banking sector return on capital employed is an important ratio for measuring the efficiency of management in utilization of funds supplied by depositors and owners. It expresses profitability on overall investment viz. total resources utilized by the bank. The capital employed is equal to owner s funds plus long-term deposits. Thus capital employed basis provide a test of profitability related to the long-term funds. The formula used is as follows: Capital Employed = Owners Funds plus long- term deposits. The higher the ratio, more efficiency of the management in utilizing funds entrusted to them and better is the financial position of bank. This ratio indicates the earning power of the bank on each rupee invested. This ratio is useful for management to take investment decisions in form of deposits in a particular bank and judging the prospects or stability of the bank. 10. Analysis of Profitability of the Units under Study It is an indicator of the rate at which a bank earns by lending various funds. Interest income is the primary source of income of a co-operative bank. The ratio of interest income as a percentage of working funds for all the 20 CBs for the time period under study i.e to has been shown in Table In the year , this ratio was the highest in SSCB i.e per cent followed by SVCB i.e per cent. In this ratio was the lowest in the case of BDCCB i.e.6.63 per cent followed by SBI i.e per cent. In , this ratio was highest in the case of BZSNSB i.e per cent followed by MCB i.e per cent. In , this ratio was the lowest in the case of BDCCB i.e per cent followed by SBCB i.e per cent. As far as bank wise statistical analysis is concerned, the maximum average ratio is in the case of SSCB i.e per cent followed by SVCB i.e per cent, while the ratio was minimum for BDCCB i.e per cent followed by SBCB i.e per cent. Therefore the ratio had changed from 7.20 per cent to per cent over 5 years period i.e. from to The maximum standard deviation is in the case of SSCB i.e while the standard deviation was minimum for SSVSB i.e., Year wise the average ratio which was 9.70 per cent in became 9.65 per cent in Ho: There is no significant difference of Interest Income to Working Fund ratio among the different banks HI: There is a significant difference of Interest Income to Working Fund ratio among the different banks To see the significant difference among the banks about Interest Income to Working Fund ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table AARMSS INTERNATIONAL PUBLISHERS Page 29

6 value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded that there is a significant difference of Interest Income to Working Fund ratio among the selected banks under study Table 10.1: Interest Income to Working Fund Ratio BDCCB SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB SRPSB Average Interest Income to Working Fund Ratio: ANOVA TEST Between the Banks Within Banks Total It is a measure of the cost of funds incurred by the CBs. Lesser the ratio, greater shall be the profit margin of the bank. The interest expended to working fund position of CBs during to depicted in table 10.2 and discussed below. Table 10.2 shows that in the year this ratio was the highest in SSCB i.e per cent followed by SVCB i.e per cent. In this ratio was the lowest in the case of BPCB i.e per cent followed by DUCB i.e per cent. In this ratio was the highest in the case of BZSNSB i.e per cent followed by TSB i.e per cent. In this ratio was the lowest in the case of DUCB i.e per cent followed by SRPSB i.e per cent. As far as bank-wise statistical analysis is concerned, the maximum average ratio is in the case of SSCB i.e per cent followed by BZSNSB i.e per cent, while the ratio was minimum for BPCB i.e per cent followed by DUCB i.e per cent. Therefore, the ratio had changed from 3.73 per cent to 7.88 per cent over 5 years period i.e to The maximum standard deviation is in the case of SSCB i.e while the standard deviation was minimum for SSVSB i.e., Year wise the average ratio shows a mixed trend which was 5.60 per cent in became 5.86 per cent in which is not a good sign for profitability. Table 10.2: Interest Expended to Working Fund Ratio BDCCB SSCB BSB AARMSS INTERNATIONAL PUBLISHERS Page 30

7 BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB SRPSB Average Interest Expended to Working Fund ratio: ANOVA TEST Between the Banks Within Banks Total Ho: There is no significant difference of Interest Expended to Working Fund ratio among the different banks. HI: There is a significant difference of Interest Expended to Working Fund ratio among the different banks. To see the significant difference among the banks about Interest Expended to Working Fund ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded that there is a significant difference of Interest Expended to Working Fund ratio among the selected banks under study This ratio is a measure of operational profitability and serves as the cushion for making various administrative and management expenses. The higher the ratio, greater shall be profit margin of the bank. The ratio of spread as a percentage of working funds for all the 20 CBs for the time period under study i.e. from to has been shown in Table In the year this ratio was the highest in BPCB i.e followed by AUCB i.e per cent. In this ratio was the lowest in the case of SBCB i.e.0.85 per cent followed by BDCCB i.e per cent. In this ratio was the highest in the case of AUCB i.e.5.39 per cent followed by MCB i.e.4.89 per cent. In this ratio was the lowest in the case of SBCB i.e per cent followed by BDCCB i.e per cent. As far as bank wise statistical analysis is concerned, the maximum average ratio is in the case of AUCB i.e per cent followed by DUCB i.e per cent, while the ratio was minimum for SBCB i.e per cent followed by BDCCB i.e per cent. Therefore, the ratio had changed from 1.39 per cent to 5.74 per cent over 5 years period i.e. from to The maximum standard deviation is in the case of BPCB i.e while the standard deviation was minimum for BSB i.e., Year wise the average ratio which was 4.10 per cent in became 3.79 per cent in AARMSS INTERNATIONAL PUBLISHERS Page 31

8 Table 10.3: Spread to Working Fund Ratio BDCCB SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB SRPSB Average Spread to Working Fund ratio: ANOVA TEST Between the Banks Within Banks Total Ho: There is no significant difference of Spread to Working Fund ratio among the different banks. HI: There is a significant difference of Spread to Working Fund ratio among the different banks. To see the significant difference among the banks about Spread to Working Fund ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded that there is a significant difference of Spread to Working Fund ratio among the selected banks under study Table 10.4: Non-Interest Income to Working Fund Ratio BDCCB AARMSS INTERNATIONAL PUBLISHERS Page 32

9 SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB SRPSB Average The ratio of Non-Interest income as a percentage of working funds for all the 20 CBs for the time period under study i.e to has been shown in Table In the year this ratio was the highest in SBCB i.e per cent followed by BPCB i.e per cent. In this ratio was the lowest in the case of BDCCB, BMUCB & BDMCB with 0.11 per cent followed by BZSNSB & MCB with 0.15 per cent. In this ratio was the highest in the case of SBCB i.e per cent followed by BPCB i.e.0.96 per cent. In this ratio was the lowest BDCCB i.e per cent followed by SUCB i.e per cent. As far as bank wise statistical analysis is concerned, the maximum average ratio is in the case of SBCB i.e per cent followed by BPCB i.e per cent, while the ratio was minimum for BDCCB i.e per cent followed by MCB i.e per cent. Therefore the ratio had changed from 0.11 per cent to 3.19 per cent over 5 years period i.e. from to The maximum standard deviation is in the case of SBCB i.e while the standard deviation was minimum for MCB i.e., 0.02.Year wise average ratio which was 0.58 per cent in became 0.49 per cent in Non-interest Income to Working Fund ratio: ANOVA TEST Between the Banks Within Banks Total Ho: There is no significant difference of Non-interest Income to Working Fund ratio among the different banks. HI: There is a significant difference of Non-interest Income to Working Fund ratio among the different banks. To see the significant difference among the banks about Non-interest Income to Working Fund ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded that there is a significant difference of Non-interest Income to Working Fund ratio among the selected banks under study AARMSS INTERNATIONAL PUBLISHERS Page 33

10 The ratio of Non-Interest expenditure as a percentage of working funds for all the 20 CBs for the time period under study i.e. from to has been shown in Table In the year this ratio was the highest in BPCB i.e per cent followed by AUCB i.e.5.04 per cent. In this ratio was the lowest in the case of BMUCB i.e per cent followed by BDCCB i.e per cent. In this ratio was the highest in the case of MCB i.e per cent followed by SRPSB i.e per cent. In this ratio was the lowest in the case of BDCCB i.e per cent followed by KCB i.e per cent. As far as bank-wise statistical analysis is concerned, the maximum average ratio is in the case of DUCB i.e per cent followed by BPCB i.e per cent, while the ratio was minimum for BDCCB i.e per cent followed by KCB i.e per cent. Therefore, the ratio had changed from 2.07 per cent to 4.86 per cent over 5 years period i.e. from to The maximum standard deviation is in the case of BPCB i.e while the standard deviation was minimum for BDCCB i.e Year wise the average ratio which was 3.88 per cent in became 3.33 per cent in Table 10.5: Non interest expenditure to Working Fund Ratio BDCCB SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB SRPSB Average Non Interest Expenditure to Working Fund Ratio: ANOVA TEST Between the Banks Within Banks Total Ho: There is no significant difference of Non-interest Expenditure to Working Fund ratio among the different banks. AARMSS INTERNATIONAL PUBLISHERS Page 34

11 HI: There is a significant difference of Non-interest Expenditure to Working Fund ratio among the different banks. To see the significant difference among the banks about Non-interest Expenditure to Working Fund ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded that there is a significant difference of Non-interest Expenditure to Working Fund ratio among the selected banks under study. Table 10.6: Burden to Working Fund Ratio BDCCB SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB SRPSB Average The ratio of burden as a percentage of working funds for all the 20 CBs for the time period under study i.e. from to has been shown in Table In the year this ratio was the highest in BPCB i.e per cent followed by AUCB i.e per cent. In this ratio was the negative in the case of SBCB i.e per cent followed by BMUCB i.e per cent. In this ratio was the highest in the case MCB i.e per cent followed by SUCB i.e per cent. In this ratio was the lowest in the case of SBCB i.e per cent followed by BDCCB i.e per cent. As far as bank wise statistical analysis is concerned, the maximum average ratio is in the case of DUCB i.e per cent followed by AUCB i.e per cent, while the ratio was minimum for SBCB i.e per cent followed by BDCCB i.e per cent. Therefore, the ratio had changed from 0.30 per cent to 4.35 per cent over 5 years period i.e to The maximum standard deviation is in the case of BPCB i.e while the standard deviation was minimum for SSCB i.e Year wise the average ratio which was 3.30 per cent in became 2.83 per cent in Burden to Working Fund Ratio: ANOVA TEST Between the Banks AARMSS INTERNATIONAL PUBLISHERS Page 35

12 Within Banks Total Ho: There is no significant difference of Burden to Working Fund ratio among the different banks. HI: There is a significant difference of Burden to Working Fund ratio among the different banks. To see the significant difference among the banks about Burden to Working Fund ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded that there is a significant difference of Burden to Working Fund ratio among the selected banks under study Table 10.7: Net Profit to Working Fund Ratio BDCCB SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB SRPSB Average This ratio indicates efficiency with which a bank deploys its total working funds in order to increase its profitability. In other words, net profit to working funds ratio shows an index to the degree of asset utilization by the bank. The ratio of Net Profit as a percentage of working funds for all the 20 CBs for the time period under study i.e. from to has been shown in Table In the year this ratio was the highest in SVCB i.e per cent followed by SBCB i.e per cent. In this ratio was the lowest in the case of SSCB i.e per cent followed by BZSNSB i.e per cent. In this ratio was the highest in the case of AUCB i.e per cent followed by SRPSB i.e per cent. In this ratio was the lowest in the case of BDCCB i.e per cent followed by BZSNSB i.e per cent. As far as bank wise statistical analysis is concerned, the maximum average ratio is in the case of AUCB i.e per cent followed by SRPSB i.e per cent, while the AARMSS INTERNATIONAL PUBLISHERS Page 36

13 ratio was minimum for BZSNSB i.e per cent followed by BDCCB i.e per cent. Therefore, the ratio had changed from 0.36 per cent to 1.69 per cent over 5 years period i.e. from to The maximum standard deviation is in the case of SRPSB i.e while the standard deviation was minimum for BDCCB i.e Year wise the average ratio which was 0.80 per cent in became 0.96 per cent in Net Profit to Working Fund Ratio: ANOVA TEST Between the Banks Within Banks Total Ho: There is no significant difference of Net Profit to Working Fund ratio among the different banks. HI: There is a significant difference of Net Profit to Working Fund ratio among the different banks. To see the significant difference among the banks about Net Profit to Working Fund ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded there is a significant difference of Net Profit to Working Fund ratio among the selected banks under study. Table 10.8: Interest Income to Total Income Ratio BDCCB SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB SRPSB Average The ratio of Interest income as a percentage of total income for all the 20 CBs for the time period under study i.e. from AARMSS INTERNATIONAL PUBLISHERS Page 37

14 to has been shown in Table In the year this ratio was the highest in BDMCB i.e per cent followed by SSCB i.e per cent. In this ratio was the lowest in the case of SBCB i.e per cent followed by BPCB i.e per cent. In this ratio was the highest in the case of MCB i.e per cent followed by BDCCB i.e per cent. In this ratio was the lowest in the case of SBCB i.e per cent followed by BPCB i.e per cent. As far as bank wise statistical analysis is concerned, the maximum average ratio is in the case of MCB i.e per cent followed by BDCCB i.e per cent, while the ratio was minimum for SBCB i.e per cent followed by BPCB i.e per cent. Therefore, the ratio had changed from 70.55% to 98.51% over 5 years period i.e. from to The maximum standard deviation is in the case of SBCB i.e while the standard deviation was minimum for BDCCB i.e Year wise the average ratio which was per cent in became per cent in Interest Income to Total Income ratio: ANOVA TEST Sum of Squares df Mean Square F Sig. Between the Banks Within Banks Total Ho: There is no significant difference of Interest Income to Total Income ratio among the different banks. HI: There is a significant difference of Interest Income to Total Income ratio among the different banks. To see the significant difference among the banks about Interest Income to Total Income ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded there is a significant difference of Interest Income to Total Income ratio among the selected banks under study Table 10.9: Interest Expenditure To Total Exp. Ratio BDCCB SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB BPCB SPPSB AUCB SBCB SVCB AARMSS INTERNATIONAL PUBLISHERS Page 38

15 SRPSB Average The ratio of interest expended as a percentage of total expenditure for all the 20 CBs for the time period under study i.e. from to has been shown in Table In the year this ratio was the highest in SSCB i.e per cent followed by BMUCB i.e per cent. In this ratio was the lowest in the case of BPCB i.e per cent followed by DUCB i.e per cent. In this ratio was the highest in the case of KCB i.e per cent followed by TSB i.e per cent. In this ratio was the lowest in the case of DUCB i.e per cent followed by SRPSB i.e per cent. As far as bank wise statistical analysis is concerned, the maximum average ratio is in the case of TSB i.e per cent followed by BDCCB i.e per cent, while the ratio was minimum for BPCB i.e per cent followed by DUCB i.e per. Therefore, the ratio had changed from per cent to per cent over 5 years period i.e. from TO The maximum standard deviation is in the case of BPCB i.e while the standard deviation was minimum for SUCB i.e Year wise the average ratio which was per cent in became per cent in Interest Expenditure to Total Expenditure: ANOVA TEST Between the Banks Within Banks Total Ho: There is no significant difference of Interest Expenditure to Total Expenditure ratio among the different banks. HI: There is a significant difference of Interest Expenditure to Total Expenditure ratio among the different banks. To see the significant difference among the banks about Interest Expenditure to Total Expenditure ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded there is a significant difference of Interest Expenditure to Total Expenditure ratio among the selected banks under study. Table 10.10: Return on Capital Employed Ratio BDCCB SSCB BSB BZSNSB BMUCB BDMCB DUCB CMSB KCB TSB MCB BKCB SSVSB SUCB AARMSS INTERNATIONAL PUBLISHERS Page 39

16 BPCB SPPSB AUCB SBCB SVCB SRPSB Average The ratio of interest expended as a percentage of total expenditure for all the 20 CBs for the time period under study i.e. from to has been shown in Table In the year this ratio was the highest in SVCB i.e. 2% per cent followed by SBCB i.e per cent. In this ratio was the lowest in the case of SSCB i.e per cent followed by BZSNSB i.e per cent. In this ratio was the highest in the case of AUCB & DUCB i.e per cent followed by SRPSB i.e per cent. In this ratio was the lowest in the case of BZSNSB i.e per cent followed by TSB i.e per cent. As far as bank wise statistical analysis is concerned, the maximum average ratio is in the case of AUCB i.e per cent followed by SRPSB i.e per cent, while the ratio was minimum for BZSNSB i.e per cent followed by CMSB i.e.0.61 per. Therefore, the ratio had changed from 0.40 per cent to 2.21 per cent over 5 years period i.e. from TO The maximum standard deviation is in the case of DUCB i.e while the standard deviation was minimum for SUCB i.e Year wise the average ratio which was 1.03 per cent in became 1.30 per cent in Return on Capital Employed Ratio: ANOVA TEST Between the Banks Within Banks Total Ho: There is no significant difference of Return on Capital Employed ratio among the different banks. HI: There is a significant difference of Return on Capital Employed ratio among the different banks. To see the significant difference among the banks about Return on Capital Employed ratio ANOVA test is applied to analyze the difference due to the effect factors simultaneously a null hypothesis is taken that difference appeared is not significant. Alternative hypothesis is taken that the difference appeared is significant. The calculated F value is greater than table value, hence null hypothesis is rejected and alternative hypothesis is accepted. It can be concluded there is a significant difference of Return on Capital Employed ratio among the selected banks under study 11. Suggestions & Conclusion On the basis of findings emanated from the present micro level research study on CBs in North Karnataka, Bijapur district it is found that the CBs are facing problems of high cost of business operations, low capital base, inadequate loan appraisal and credit planning, poor recovery performance, dual control, mounting overdue, high level of non performing assets, political influence, lack of professional skills and relatively low level of customer satisfaction, etc. But some of the new challenges are external; for example, the phenomenal growth in volume of financial institution. These are big hurdle in the development of the CBs. Therefore a modest attempt has been made in this section to suggest a good number of feasible ways and means in order to improve the financial strength as well as the overall efficiency in both administration and operational management and to overcome the existing deficiency and irregularities of the selected CBs in Bijapur district. References: 1. Anita Makkar & Shveta Singh (May 2013). Analysis of the Financial Performance of Indian Commercial Banks: A Compatative Study. Indian Journal of Finance, 7(5), pp Neeta Maheshwari & Neha Agarwal (Oct 2013). Evaluating Financial `Performance of SBI through Financial Ratios. Indian Journal of Finance, 7(10), pp AARMSS INTERNATIONAL PUBLISHERS Page 40