A Comparative Study of Public and Private Sector Banks using Camel Model

A Comparative Study of Public and Private Sector Banks using Camel Model Jagjeet Kaur 1 and Harsh Vineet Kaur 2 1 Research scholar, Sri Guru Granth Sahib World University, Fatehgarh Sahib, Punjab, Email: jagjeet6633@gmail.com 2 Assistant Professor, Sri Guru Granth Sahib World University, Fatehgarh Sahib, Punjab, Email: harsh_vineet@yahoo.co.in Abstract: Banks are the pillars for the development of the economy. They are the storehouse of money. The main aim of this study is to analyseand compares the financialresults of Indian public and private sector banks using the camel model. The CAMEL stands for various criteria through which bank performance will be measured.c represents the capital adequacy; A denotes the assets quality of banks. E denotes the earning and profitability & L represents the liquidity indicators. For the purpose of the study ten years data (2005-06 to 2014-15) of ten public and private sector banks will be taken. The banks will be selected on the basis of market capitalisation BSE. Keywords: financial performance, public sector bank, private sector bank, camel model. 1. INTRODUCTION Banks are the pillars for the development of the economy. Banks are the storehouse of the money. The primary function of the banks is to accept money as deposit from those who have surplus money and want to save it. In return bank provides interest to the deposit holder s.bank also provide cash to those who need money for investment and for other economic purposes in form of loans. The bank charges interest from the borrowers. This interest is the main source of bank s income. The strength of the economy depends upon the fact that how efficiently bank is able to mobilise the savings in the productive channel. The main task of the bank is to take care of its client money and use it in the best way that is helpful to the society as well as to customer. Banking as the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise. (Section (5) (1) (b) of the Banking Regulation Act 1934) 2. IMPORTANCE OF BANKS IN ECONOMIC DEVELOPMENT Banks are very important in the economic development of a country as they save community s savings in form of deposits and provide credit for productive and consumption purpose. The banking sector has introduced many attractive schemes to fulfil the requirements of all the sectors of the economy. The role of modern commercial banks in the development of the economy of India can be summarised as:- 249 International Journal of Applied Business and Economic Research

Mobilisation of the savings Capital formation Innovations Monetary policy Priority sector finance Agricultural finance Industrial finance Export finance Promotion of banking habit Promotion of regional development Jagjeet Kaur and Harsh Vineet Kaur No doubt, commercial banks have very crucial role to play in the economy. If bank succeed in mobilising the savings of the people and further allocate these funds in proper channels with the main aim of promoting regional development and balanced development of all the sectors then it will result in the sustainable development of the banks as well as of the economy. 3. OBJECTIVE OF THE STUDY To make comparative analysis of performance of public sector and private sector commercial banks. 4. REVIEW OF LITERATURE Wrinker, Iraker & Tanko (2008) had undertaken the study of commercial banks of Nigeria. The findings revealed that Camel Model is insufficient to show the complete picture of the performance of banks. They also identified the one best ratio in each acronym of the CAMEL. The studies also said that the acronym should be changed from CAMEL to CLEAM. Mihir Dash & Annyesha Das(2009) undertook the study of public, private and foreign banks using camel analysis. The study concluded that private and foreign banks are performing well as compared to public sector banks in respect to management, earnings and profitability. Tabbusum Nazir(2010) had evaluated the Punjab National bank and Jammu and Kashmir bank on the basis of camel analysis. It has been concluded that both banks are performing well but Jammu and Kashmir bank is performing bit better than PNB bank in regard to asset quality, earning ability management efficiency in regard to business per employee and profit per employee but income ratio of PNB is better. Aswini(2012) conducted the study on twelve public and private sector banks. The time span for 11 years was taken. The study concluded that private sector banks are performing better than public sector banks. Kabir (2012) studied the two banks EXIM and IFIC and concluded that none of these bank is perfectly good in all aspects of CAMEL. IFIC bank is good in capital adequacy and asset quality ratios then EXIM bank is good in management ratios. Both the banks are giving average performance in regard to earning capacity and liquidity. Prasad & Ravinder(2012) had evaluated twenty nationalized banks on the basis of CAMEL analysis. The results revealed the best performance is given by Andhra bank. The next positions are hold by bank of Baroda, Punjab & Sindh Bank, Indian bank, corporate bank. It is also observed that Central Bank of India was at the last position. International Journal of Applied Business and Economic Research 250

S. M. Tariq Zafar, Adeel Maqbool & Syed Imran Nawab Ali (2012) had evaluated the financial results of ten Indian commercial banks during the period of 2005-10. The study concluded that the banks had improved their performance in all the aspects from the year 2005-06 to 2009-10. Further in comparison to public and private sector banks, the public sector banks were showing better performance as compared to the private sector banks. Misra & Aspal(2013) had seen the performance of State Bank of India and its subsidiaries using CAMEL approach. The study revealed that State bank of Bikaner and Jaipur is at top in terms of capital adequacy ratios and have good asset quality but need to improve management skills. The State Bank of Patiala had adequate capital base but earning capacity is not good. Similarly, SBI had good liquidity position but need to asset quality. State Bank of Travancore had efficient management and good earnings ratios but need adequate capital base. At last State Bank of Mysore had good earning capacity but lack in liquidity ratios. Vincent Okoth Ongore & Gemechu Berhanu Kusa (2013)had undertaken the study of domestic and foreign commercial banks in Kenya. The author included both micro and macro variables as independent variables and (ROA, ROE & NIM) as a proxy of profitability as dependent variables. The study revealed that the variables of the CAMEL model significantly affect the performance of banks. But liquidity did not very much affect the performance as compare to other factors like capital adequacy, asset quality, management qualities & earning efficiency. Deepti Tripathi, Kishore Meghani & Swati Mahajan(2014) took the comparative study of Axis bank & Kotak Mahindra bank using camels approach after the reforms. The study revealed that no bank is perfect in the all parameters of the camel model. But an overall result concluded that comparatively Axis bank s performance is better that the performance of Kotak Mahindra bank. Golam Mohiuddin(2014) had selected two major banks of Bangladesh for his studies. The data for 5 years studies revealed that the performance of both the banks was quite satisfactory as per the acronym of CAMEL model. Krupa R, Trivedi(2014) had applied the Camel analysis on the scheduled co-operatives of the Surat city and diagnosed that capital adequacy was satisfactory and they had very good recovery system. The co-operative banks were also using their assets efficiently but return on equity ratio was not very satisfactory. The management is efficient but overll liquidity position is not very good. S.K Khatik & Amit kr Nag(2014) had analysed five nationalised banks using CAMEL approach. They ranked the banks according to their performance under each acronym of CAMEL. As per their ranking Bank of Baroda performed the best followed by Union Bank of India, Dena Bank andthe State Bank of India. In the last positionthere was the UCO Bank. Sushendra Kumar Misra &Parvesh Kumar Aspal(2014) had applied Camel model on sbi group. He concluded that SBBJ need to improve management eficiency, SBP need to work on their earning capabilities, SBI should improve their asset quality, SBM need to improve liquidity position. Palaneswri and Suriya(2015) had evaluated financial performance of Tamilnadu Mercantile banks using camel rating system. The study concluded that overall performance and financial position is quite satisfactory. 5. RESEARCH DESIGN 5.1. Database This research is based on the secondary data available on RBI website, IBA website, Money Control and annual reports of various banks. The study will be based on the analysis of the last ten financial year s i.e 2005-06 to 2014-15. The top ten Banks both in public sector based on Market Capitalisation BSE (Available on money control.com) has been taken as database. 251 International Journal of Applied Business and Economic Research

5.2. Research technique Jagjeet Kaur and Harsh Vineet Kaur CAMEL Model is used for measuring the financial performance of the public sector banks. CAMEL is a basically, a ratio based model to evaluate the performance of bank under various criteria. Soundness of a bank measured on a scale of 1(strongest) to 5(weakest).The CAMELS ratings is a supervisory rating system originally developed in the U.S. to classify a bank s overall condition. It s applied to every bank and credit union in the U.S. supervisory regulators. Bank examiners (trained and employed by the country s central bank) award these ratings. The CAMEL stands for various criteria through which bank performance is measured. 5.2.1. C stands for the Capital Adequacy This ratio is used measure the capital requirement of the banks. The banks having sufficient capital can absorb sufficient losses in case of any risk faced by banks due to internal or external changes. The various agencies have given guidelines for minimum requirement of CAR ratio. These are as follows:- Minimum Basel II Recommendation - 8 % RBI guidelines - 9 % Banks undertaking insurance - 10 % Local Areas Bank - 15 % Under capital adequacy further three ratios are taken in this study. These are:- 1. CAR RATIO:- it is the combination of Tier I and Tier II capital. Formula for calculating this ratio is: Tier I capital + Tier II capital CAR = *100 Risk Weighted Assets Analysis:- The higher ratio is preferable. It shows that the bank is adequately capitalized. 2. DEBT/EQUITY RATIO:- This ratio is used to measure the company s financial leverage. It shows that how much outside funds are used by the banks to finance its assets. Total Liabilities D/E Ratio = *100 Shareholder s Equity Analysis: -The lower D/E ratio is preferable. 3. ADVANCES TO TOTAL ASSETS RATIO:- This ratio indicates that how many assets has been given as the advances. Advances *100 Total Assets Analysis: - The higher ratio for advances to total assets is preferable. A stands for the Assets Quality of Banks Assets quality highlights the quality of loans made by the banks. The non- performing assets gives the picture of types of loans provided as these are the main source of banks s income. The non-performing loans are recognised on the basis of number of days, the interest or principal amount remained outstanding International Journal of Applied Business and Economic Research 252

The ratio selected under the acronym A are:- 1. NET NPA TO TOTAL ASSETS:- Formula:- Net NPA *100 Total Assets Analysis:- Lower ratio is preferable as non-payments leads to losses to the bank and poor quality of assets but sometimes increased assets is the cause of lower ratio. 2..GROSS NPA TO GROSS ADVANCES:- This ratio represents the status of NPA without deducting the provision. Analysis: - Lower ratio is preferable. Gross NPA *100 Gross Advances 3. NET NPA TO NET ADVANCES:- This ratio shows how much loans has been turned to bad debts as against total amount given as loan. Net NPA *100 Net Advances Analysis: - Higher ratio represents that the bad quality of loans are increasing thus lower ratio is preferable. M stands for the Management Capability of the Banks The M component represents the ability of the management to generate profits by identifying and controlling risk factors. The ratios calculated under the acronym M are:- 1. BUSINESS PER EMPLOYEE: -This ratio indicates how well the employees of the banks are working. Basically it shows input output relationship of employee and business. Total Business (Deposits + Advances) No. of Employees Analysis: -Higher ratio indicates the greater efficiency of the employees. 2. RETURN ON ASSETS (ROA):- It indicates how much returns are received by the bank against its assets. Analysis: - The higher ROA is better. Net Income *100 Total Assets 3. RETURN ON EQUITY (ROE):- This ratio indicates ability of the banks to generate profits from its shareholder s wealth. Analysis: - The higher ratio is preferable. Net Income *100 Shareholder s Wealth 253 International Journal of Applied Business and Economic Research

E stands for the Earning Jagjeet Kaur and Harsh Vineet Kaur Under the acronym E, ratios will be calculated to see stability in bank s earnings. The following four ratios will be calculated to check the earning of the banks. 1. DIVIDEND PAYOUT RATIO: - The dividend payout ratio will show thepercentage ofearnings paid as dividend to the shareholders. Dividend per share *100 Earning per share Analysis: - Higher ratio is preferable as more shareholders will be satisfied if regular dividend will be paid. 2. OPERATING PROFITS TO TOTAL ASSETS: -This ratio indicates how much operating profits are generated through utilising assets of the bank. EBIT Total Assets Analysis: - The higher ratio is preferable as it indicates the assets the being utilised to full capacity thus giving maximum profits. 3. NET INTEREST TO TOTAL INCOME:- As the main source of income of the banks is the interest income. Thus this ratio indicates how much part of the total income comprised of interest income. Here net interest will be taken i.e. interest earned - interest paid. Interest Earned - Interest Paid *100 Total Income Analysis: - The higher ratio is preferable as it indicates that bank is working very well. L stands for the Liquidity Liquidity refers to the capacity of the banks to meet their short term liabilities. These ratios are used by the persons who provide short term credit to the banks. The following four ratios are selected to check the liquidity position of the banks. These ratios measure the overall liquidity position of the bank. 1. LIQUID ASSETS TO TOTAL ASSETS:- This ratio indicates the % of liquid assets in the total assets of the bank balance sheet. The liquid assets include cash in hand, money at call and short notice, balance with Reserve bank of India and balance with banks. The total assets include the revaluation of all the assets. Liquid Assets *100 Total Assets Analysis: - Higher ratio will be considered better. 2. LIQUID ASSETS TO TOTAL DEPOSITS: - This ratio measures the liquid assets against the total deposits. It is calculated by dividing the liquid assets with total deposits. Liquid assets *100 Total Deposits Analysis:- Higher ratio will be preferable. International Journal of Applied Business and Economic Research 254

3. CREDIT DEPOSITRATIO: - This ratio indicates how much bank has lend out of the deposits it has mobilized. This ratio should neither be too high nor too low. Low ratio indicates that the bank is not making full use of its resources. High ratio indicates more reliance on deposits for lending. Thus disturb liquidity of banks. Formula:- Total Advances *100 Total Deposits Analysis:-This ratio varies from bank to bank. But for the purpose of lending higher ratio is preferable. Banks with a rating of 1 are considered the most stable banks; banks with a rating of 2 or 3 are considered average, and those with rating of 4 or 5 are considered below average, and are closely monitored to ensure their viability. These ratings are disclosed only to the bank s management and not to other banks or to general public. 6. DATA ANALYSIS AND INTERPRETATION Table 1 Capital adequacy ratios of Private Sector Banks CAR% RANK D/E RATIO% RANK AD 2T.A.% RANK COMPOSITE C RANK CITY UNION 11.94 10 11.95 9 0.63 2 7.00 8 DCB 13.369 7 10.35 6 0.57 6 6.33 6 FEDERAL BANK 16.70 2 9.44 4 0.60 3 3.00 2 HDFC BANK 15.36 5 8.75 3 0.5562 9 5.67 5 ICICI 16.64 3 5.19 1 0.5567 8 4.00 3 INDUSIND BANK 13.39 9 11.89 8 0.5837 4 7.00 8 J & K BANK 13.372 8 12.49 10 0.5607 7 8.33 10 KARUR VSAYA BANK 14.18 6 11.09 7 0.64 1 4.67 4 KOTAK MAHINDRA 17.12 1 5.27 2 0.5836 5 2.67 1 YES BANK 16.35 4 9.66 5 0.5489 10 6.33 6 Table 1 represent that Kotak Mahindra bank has highest CAR ratio followed by Federal and Yes bank. The City Union bank has the least CAR ratio in comparison to the other banks. All the banks are meeting the minimum requirement of the Basel II norms i.e. 8%. and RBI 9%. In regard to debt equity (D/E) ratio the minimum debt as against equity is used by the ICICI bank followed by Kotak Mahindra bank (5.27) and then HDFC bank (5.19). The Federal bank ranks 4th in regard to D/E ratio and the maximum debt is used by the J&K bank. in regard to the lending activities Karur Vsaya bank,city Union Bank and Federal Bank have almost same lending ratio followed by Indusind bank, Kotak Mahindra bank and DCB (0.58,0.58,0.57).The least advances are provided by the Yes bank(0.55). Based on the composite ranking of all three ratios of capital adequacy ratios the best performer is Kotak Mahindra bank though their advances are not very high as compared to other banks but it has better CAR and D/ E ratio. The next best performer is Federal bank (3.00), ICICI bank (4.00), Karur vsaya bank(4.67). The bank which is not performing well is J& K bank (8.33 Table 2 shows that Bank of Baroda has highest capital adequacy ratio. The least capital adequacy ratio is of Central Bank of India but still it is meeting the requirement of the minimum Basel II recommendations i.e. 8%. So all the banks under study meeting the minimum requirement as specified by the Basel II. In regard to Debt Equity ratio, IDBI bank is using minimum debt to run their business whereas CBI India is using maximum debt and their CAR ratio is also low. In regard to the ratio advances to total 255 International Journal of Applied Business and Economic Research

Jagjeet Kaur and Harsh Vineet Kaur Table 2 Capital Adequacy Ratios of Public Sector Banks CAR% RANK D/E RATIO% RANK AD 2T.A.% RANK COMPOSITE C RANK SBI 12.90 2 12.67 2 0.6111 6 3.33 1 BANK OF BARODA 13.55 1 14.58 5 0.6050 8 4.67 4 PNB 12.83 3 14.27 4 0.62 5 4.00 2 CANARA BANK 11.80 6 17.32 6 0.650 2 4.67 4 CENTRAL BANK 10.46 10 28.87 10 0.5975 10 10.00 10 BANK OF INDIA 11.78 7 17.50 7 0.66 1 5.00 6 IDBI 11.94 5 11.74 1 0.6106 7 4.33 3 UNION BANK 10.95 8 18.07 8 0.636 4 6.67 8 INDIAN BANK 12.02 4 14.05 3 0.6045 9 5.33 7 SYNDICATE BANK 10.89 9 21.72 9 0.648 3 7.00 9 author s own work assets, shows that Bank of India is very aggressive in lending. The next best performer in lending activities are Canara bank (.650) and Syndicate Bank(.648) followed by Union Bank (.63). In fact all the banks have almost near about ratio of lending. Based on group average of three sub-parameters of capital adequacy, SBI( 3.33) ranked number 1 followed by PNB(4.00), IDBI (4.33).Bank of Baroda and Canara Bank has same standing.(4.67).thus at last it can be concluded that CBI is the only bank which is not performing well either individually or as a composite. Table 3 represents the that Yes bank has least nonperforming assets against total assets, gross advances and net advances followed by HDFC bank and Karur Vsaya bank. The maximum nonperforming assets are of DCB in all the three parameters In the aggregate of asset quality ratios the least nonperforming assets are of Yes bank followed by HDFC bank(2),karur Vsaya bank(3.3),indusind bank(5.00).the most of the advances are provided by the DCB bank are not recovering as it has maximum nonperforming assets. Table 3 Asset Quality Ratios of Private Sector Banks NET. NPA RANK G.NPA 2 RANK N.NPA RANK COMPOSITE A RANK 2 T.A. G.AD 2 N.AD CITY UNION 0.63 7 1.91 5 1.24 8 6.7 7 DCB 1.18 10 5.95 10 1.80 10 10.0 10 FEDERAL BANK 0.36 4 3.111 8 0.60 4 5.3 5 HDFC BANK 0.18 2 1.27 2 0.34 2 2.0 2 ICICI 0.71 9 3.114 9 1.27 9 9.0 9 INDUSIND BANK 0.55 6 1.69 3 1.00 6 5.0 4 J & K BANK 0.47 5 2.58 7 0.83 5 5.7 6 KARUR VSAYA NBANK 0.23 3 1.90 4 0.37 3 3.3 3 KOTAK MAHINDRA 0.69 8 2.30 6 1.21 7 7.0 8 YES BANK 0.12 1 0.48 1 0.21 1 1.0 1 author s own work International Journal of Applied Business and Economic Research 256

Table 4 Asset Quality Ratios of Public Sector Banks BANKS NET. NPA RANK G.NPA 2 RANK N.NPA RANK COMPOSITE A RANK 2 T.A. G.AD 2 N.AD SBI 1.16 9 3.74 9 1.64 9 9.3 9 BANK OF BARODA 0.49 1 2.31 3 0.82 1 1.7 1 PNB 0.87 5 3.46 8 1.12 5 6.0 7 CANARA BANK 0.89 7 2.03 1 1.24 6 4.7 4 CENTRAL BANK 1.32 10 4.36 10 1.79 10 9.7 10 BANK OF INDIA 0.92 8 2.89 6 1.2510 8 7.3 8 IDBI 0.84 4 2.70 5 1.2500 7 5.3 5 UNION BANK 0.88 6 3.05 7 1.11 4 5.7 6 INDIAN BANK 0.60 2 2.21 2 0.84 2 2.0 2 SYNDICATE BANK 0.77 3 2.65 4 0.90 3 3.3 3 Table 4 shows that Bank of Baroda (.49) is having the least net non-performingassets against total assets. The highest net non-performingassets are of CBI (1.32). It shows that quality of CBI advances is not very good. In regard to gross NPA to gross advances, Canara Bank is at good position followed by Indian Bank (2.21) and Bank of Baroda (2.31). The worst gross NPA to gross advances ratio is of CBI (4.36). The next ratio under the parameter A is net NPA TO net advances ratio. This ratio shows that Bank of Baroda have least NPA against the net advances and then comes Indian bank (2.0), Syndicate bank (3.3), Canara bank (4.7). The study also showed that NPA s of all the banks reduce during the period 2007-2011. After 2011 it again started the increasing trend. Based on the group of averages of four parameters of asset quality, the Bank of Baroda(1.7) is at the top position followed by Indian Bank (2.0), Syndicate Bank(3.3), Canara bank(4.7), IDBI Bank(5.3),Union bank(5.7),pnb(6.00), Bank of India(7.3), SBI(9.3) &CBI(9.7). Table 5 shows that Business per employee is maximum of Yes bank followed by ICICI (86.16) and Indusind bank (85.66). J& K and Karur Vsaya bank shows almost same B.P.E i.e (80.36 & 80.68).DCB bank, Federal and Table 5 Management Efficiency Ratios of Private Sector Banks BANKS B.P.E. IN RANK ROA % RANK ROE % RANK COMPOSITE M RANK MILLIONS CITY UNION 58.58 7 1.55 3 21.21 1 3.67 3 DCB 48.06 9 0.08 10 5.51 10 9.67 10 FEDERAL BANK 46.20 10 1.33 7 13.19 6 7.67 9 HDFC BANK 68.64 6 1.61 2 18.48 2 3.33 2 ICICI 86.16 2 1.38 6 11.74 8 5.33 5 INDU SIND BANK 85.66 3 1.10 9 12.49 7 6.33 7 J & K BANK 80.36 5 1.19 8 15.99 5 6.00 6 KARUR VSAYA BANK 80.68 4 1.44 5 16.68 4 4.33 4 KOTAK MAHINDRA 51.71 8 1.54 4 11.52 9 7.00 8 YES BANK 136.60 1 1.65 1 17.33 3 1.67 1 257 International Journal of Applied Business and Economic Research

Jagjeet Kaur and Harsh Vineet Kaur Kotak Mahindra bank does not show very good B.P.E. In respect to Return on Equity (ROE), Yes bank is showing best results followed by HDFC bank, City Union bank and Kotak mahindra bank. The least ROE is earned by DCB. When analysing results in aggregate, yes bank shows that they have best management skills. J&K and Indusind bank are having almost same management skills. The least performer is DCB bank. The variation of DCB bank is very high both individually and in aggregate. Table 6 Management Efficiency Ratios of Public Sector Banks BANKS B.P.E. IN RANK ROA % RANK ROE % RANK COMPOSITE M RANK MILLIONS SBI 70.49 9 0.85 6 14.55 7 7.33 9 BANK OF BARODA 116.94 2 0.95 3 16.13 3 2.67 1 PNB 73.40 7 1.02 2 16.33 2 3.67 2 CANARA BANK 87.91 4 0.90 5 15.17 6 5.00 5 CENTRAL BANK 60.25 10 0.43 10 8.60 9 9.67 10 BANK OF INDIA 96.70 3 0.75 7 14.50 8 6.00 7 IDBI 192.81 1 0.57 9 8.44 10 6.67 8 UNION BANK 79.65 5 0.92 4 15.30 5 4.67 4 INDIAN BANK 73.13 8 1.20 1 15.61 4 4.33 3 SYNDICATE BANK 76.67 6 0.74 8 16.54 1 5.00 5 Table 6 shows that sub parameters of the management efficiency ratios. Under the parameter Business per employee IDBI bank is able to secure maximum B.P.E. In fact no any other bank is able to show such a good performance followed by Bank of Baroda and Bank of India. The least B.P.E is of CBI. In regard to return on assets (ROA), Indian bank is most profitable bank in relation to its assets followed by PNB and Bank of Baroda. The last ratio calculated under this parameter is Return on Equity(ROE) the syndicate bank is the best performer followed by PNB(16.33), BOB (16.13). The minimum ROE is of IDBI bank. On the basis of group average of the acronym M, the Bank of Baroda and PNB are the best banks followed by Indian bank.union bank and Syndicate bank have same rank followed by BOI, IDBI, SBI and CBI. Table 7 shows that ICICI bank has highest dividend payout ratio followed by the karur vsaya bank. The J&K bank ranks 3rd in paying dividend followed by HDFC bank, Federal bank and Indusind bank. The dividend payout ratio of ICICI and Karur vsaya bank is very high as compared to other selected private sector banks. DCB bank is not paying any dividend to its shareholders during the selected ten years of period. In regard to the operating profit to total assets ratio, HDFC bank is earning maximum profits with large contribution of net interest in total income, followed by Kotak mahindra, city union bank and yes bank. the least operating profits are generated by the DCB bank and in regard to contribution of net interest in its total income DCB ranks 7th. Yes bank is the such bank is the such bank that ranks 4th in operating profits but net interest to total income ratio shows that this bank is earning income from other sources more than from interest income. The J&K is the bank that ranks 7th in operating profits but most of the contribution is from the interest sources. Another probable reason of yes bank andj&k bank is that they are either paying more interest or less interest. In the composite E, HDFC bank(2.00) ranks 1st in earning capacity followed by the J&K(4.00), Federal bank(4.33), City union bank(5.00). The least earning capacity is of DCB bank International Journal of Applied Business and Economic Research 258

Table 8 Earning Efficiency Ratios of Public Sector Banks BANKS D.P.O. RATIO RANK OP/T.A. % RANK NET INT/ RANK COMPOSITE E RANK ` T.I. % SBI 20.27 1 2.10 3 31.99 3 2.33 1 BANK OF BARODA 19.96 2 1.89 5 31.34 4 3.67 2 PNB 18.03 9 2.38 1 35.40 1 3.67 2 CANARA BANK 18.08 8 1.79 6 25.29 9 7.67 9 CENTRAL BANK 17.59 10 1.29 10 27.14 8 9.33 10 BANK OF INDIA 18.26 6 1.77 7 28.18 7 6.67 7 IDBI 19.46 4 1.37 9 14.59 10 7.67 8 UNION BANK 19.26 5 1.98 4 29.34 5 4.67 5 INDIAN BANK 18.21 7 2.36 2 33.02 2 3.67 2 SYNDICATE BANK 19.82 3 1.65 8 29.27 6 5.67 6 Author sown work Table 7 Earning Efficiency Ratios of Private Sector Banks BANKS D.P.O. RANK OP/T.A. % RANK NET INT/ RANK COMPOSITE E RANK RATIO T.I. % CITY UNION 16.41 7 2.66 3 29.00 5 5.00 4 DCB 0.00 10 1.11 10 26.83 7 9.00 10 FEDERAL BANK 18.12 5 2.645 5 32.53 3 4.33 3 HDFC BANK 19.35 4 3.16 1 40.64 1 2.00 1 ICICI 29.57 1 2.47 6 25.24 8 5.00 4 INDU SIND BANK 17.41 6 2.14 9 23.95 10 8.33 9 J & K BANK 20.80 3 2.31 7 34.70 2 4.00 2 KARUR VSAYA BANK 28.30 2 2.30 8 27.96 6 5.33 7 KOTAK MAHINDRA 7.72 9 2.83 2 30.09 4 5.00 4 YES BANK 9.02 8 2.648 4 24.04 9 7.00 8 Table 8 shows liquidity ratios of public sector banks. It shows that SBI(20.27) is paying maximum dividend followed by the Bank of Baroda (19.96), Syndicate bank(19.82), IDBI(19.46) and Union bank(19.26). Bank of India, Indian bank, Canara bank and PNB are paying almost same dividend to its shareholders. In regard to the operating profit ratios PNB has maximum % of operating profits followed by Union bank1.98), Bank of Baroda (1.89) and Canara bank (1.79). In public sector banks the banks that has maximum operating profits are having interest their main source of income in total income though it does not hold same in case of private sector banks. The composite E shows that the best earning capacity is of SBI bank (2.33). Bank of Baroda, Indian bank and PNB have same earning capacity followed by Union bank and Syndicate bank. Table 9 shows the liquidity ratios of the private sector banks. ICICI bank having maximum liquid assets against total assets followed by the HDFC bank (.0915), Indusind bank (.0903) and J&k bank (.09). Infact all these banks have almost same ratios. In regard to the liquid assets to total deposits the ICICI bank has better position followed by the HDFC bank and Indusind bank. In regard to credit deposit ratio, ICICI bank ranks at the 259 International Journal of Applied Business and Economic Research

Jagjeet Kaur and Harsh Vineet Kaur top position followed by the Kotak Mahindra bank (having almost same ratio i.e 95.91 & 95.87 respectively). After this Yes bank And Indusind bank have almost same ratio (i.e 76.99 &76.50 respectively) But variation is quite high. In the composite Liquidity ratios, ICICI bank has strongest position to pay its short term debts. The HDFC bank and the Indusind bank has the same standing (i.e 3.33) followed by the J& K bank. The least liquidity is maintained by the Karur Vsaya and the Federal bank. Table 10 Liquidity Ratios of Public Sector Banks BANKS L.A./T.A. RANK L.A./T.D. RANK CDR RANK COMPOSITE L RANK SBI 0.0881 6 0.1149 4 79.58 2 4.00 3 BANK OF BARODA 0.15 1 0.17 1 78.27 3 1.67 1 PNB 0.0904 4 0.1080 5 73.87 7 5.33 5 CANARA BANK 0.0882 5 0.1011 7 70.53 8 6.67 7 CENTRAL BANK 0.073 9 0.08 10 68.64 10 9.67 10 BANK OF INDIA 0.11 3 0.13 3 74.33 6 4.00 3 IDBI 0.06 10 0.1079 6 105.76 1 5.67 6 UNION BANK 0.14 2 0.16 2 74.76 4 2.67 2 INDIAN BANK 0.076 8 0.09 9 69.33 9 8.67 9 SYNDICATE BANK 0.0874 7 0.1003 8 74.65 5 6.67 7 Table 9 Liquidity Ratios of Private Sector Banks BANKS L.A./T.A. RANK L.A./T.D. RANK CDR RANK COMPOSITE L RANK CITY UNION 0.0874 4 0.0981 5 71.79 9 6.00 5 DCB 0.077 6 0.0975 6 73.00 7 6.33 7 FEDERAL BANK 0.072 7 0.0867 9 72.50 8 8.00 9 HDFC BANK 0.0915 2 0.1214 2 73.93 6 3.33 2 ICICI 0.083 5 0.14 1 95.91 1 2.33 1 INDUSIND BANK 0.0903 3 0.1176 3 76.50 4 3.33 2 J & K BANK 0.0919 1 0.1044 4 63.72 10 5.00 4 KARUR VSAYA BANK 0.063 9 0.07 10 74.41 5 8.00 9 KOTAK MAHINDRA 0.056 10 0.0918 8 95.87 2 6.67 8 YES BANK 0.068 8 0.0945 7 76.99 3 6.00 5 Table 10 shows the liquidity ratios of the public sector banks. It indicates the maximum liquid assets are available with Bank of Baroda (.15) followed by the Union bank (.14), Bank of India (.11). the least liquidity is maintained by the IDBI bank(.06). The liquid assets to total deposits indicate that again Bank of Baroda is having maximum liquid assets against total deposits. The least liquidity against total deposits of CBI bank. The last ratio is of CDR. this ratio indicates that IDBI followed by SBI rely on deposits for their lending activities followed by Bank of India. The bank which is not adequately using its deposits is CBI. International Journal of Applied Business and Economic Research 260

On the basis of composite L, it is observed that maximum liquidity to meet their short term debts is maintained by the Bank of Baroda(1.67) followed by the Union bank(2.67), Bank of India (4.0), SBI, IDBI,PNB, Syndicate bank, Canara bank. Table 11 Overall Performance of private sector banks C A M E L AVG RANK CITY UNION 7.00 6.7 3.67 5.00 6.00 5.7 5 DCB 6.33 10.0 9.67 9.00 6.33 8.3 10 FEDERAL BANK 3.00 5.3 7.67 4.33 8.00 5.7 5 HDFC BANK 5.67 2.0 3.33 2.00 3.33 3.3 1 ICICI 4.00 9.0 5.33 5.00 2.33 5.1 3 INDUSIND BANK 7.00 5.0 6.33 8.33 3.33 6.0 9 J & K BANK 8.33 5.7 6.00 4.00 5.00 5.8 8 KARUR VSAYA BANK 4.67 3.3 4.33 5.33 8.00 5.1 3 KOTAK MAHINDRA 2.67 7.0 7.00 5.00 6.67 5.7 5 YES BANK 6.33 1.0 1.67 7.00 6.00 4.4 2 Table 11 shows the composite ranking that has been calculated from the group ranking of the private sector banks in India for the period of 2006-2015 and results show that HDFC bank is at the top position followed by the Yes bank. The average performance of ICICI bank and Karur Vsaya bank is same. Further Kotak Mahindra, City Union bank and Federal bank are giving same performance followed by J&K, Indusind and DCB bank. On the basis of Camel rating, HDFC bank and Yes bank are considered to be the most stable bank; ICICI bank, Karur Vsaya bank, Kotak Mahindra, City Union bank, J&K bank, Indusindbank and Federal bank are the average performer whereas DCB is considered to be below average. DCB bank is not performing well even it is not paying any dividend to its shareholders Table 12 Overall performance of public sector banks C A M E L AVG Rank SBI 3.33 9.3 7.33 2.33 4.00 5.3 5 BANK OF BARODA 4.67 1.7 2.67 3.67 1.67 2.9 1 PNB 4.00 6.0 3.67 3.67 5.33 4.5 2 CANARA BANK 4.67 4.7 5.00 7.67 6.67 5.7 7 CENTRAL BANK 10.00 9.7 9.67 9.33 9.67 9.7 10 BANK OF INDIA 5.00 7.3 6.00 6.67 4.00 5.8 8 IDBI 4.33 5.3 6.67 7.67 5.67 5.9 9 UNION BANK 6.67 5.7 4.67 4.67 2.67 4.9 4 INDIAN BANK 5.33 2.0 4.33 3.67 8.67 4.8 3 SYNDICATE BANK 7.00 3.3 5.00 5.67 6.67 5.5 6 261 International Journal of Applied Business and Economic Research

Jagjeet Kaur and Harsh Vineet Kaur Table 12 shows the composite ranking that has been calculated from the group ranking of the public sector banks in India for the period of 2006-2015 and results show that Bank of Baroda is at the top position followed by the PNB, Indian Bank, Union bank, IDBI bank, SBI bank. Central Bank of India secured the least position. On the basis of Camel rating, Bank of Baroda is to be considered the most stable banks; PNB bank, Indian Bank, Union bank,sbi bank,syndicate bank,canara bank, Bank of Indiaand IDBI banks are to be considered average banks. CBI is considered below average, and is closely monitored to ensure their viability Table 13 Comparative analysis of public and private sector banks C A M E L Average PVT 25.03 3.83 89.96 48.59 77.64 49.01 PUBLIC 29.51 5.73 107.74 49.31 77.19 53.90 Table 13 shows the comparative performance of public and private sector banks. Under the acronym C i.e capital adequacy ratios shows that public sector banks has better capital adequacy ratio. In regard to the asset quality of the banks, the lower value will be considered better so the data shows that private sector banks has less nonperforming assets as compared to the nonperforming assets of the public sector banks. The management efficiency of public sector bank is also better than private sector banks. The earning capacity of the public sector banks is also better than private sector banks. The last acronym is liquidity which shows almost same results i.e both the sector are almost at the same position to meet the short term obligations. CONCLUSION The paper shows the financial performance of both the public sector and private sector banks individually as well as comparatively. In the private sector banks the HDFC bank performs the best while performance of DCB bank is not satisfactory and whilebank of Baroda is at the top position from public sector banks and CBI is not performing well (Prasad & Ravinder(2012)). Though ranks does not show any significant difference between private sector banks and public sector banks. When going through the comparative analysis by taking absolute figures the public sector banks shows better performance as compared to the private sector banks (S. M. Tariq Zafar, Adeel Maqbool & Syed Imran Nawab Ali (2012)). The private sectors banks are good in asset quality as compared to public sector banks. Both the sectors have almost same liquidity. BIBLIOGRAPHY Aswini, M.K.(2012), Analyzing soundness in Indian Banking: A CAMEL Approach. Research Journal of Commerce and Behavioural Science, 1(3), 9-14. Dash, Mihir& Das, Annyesha.(2009), A camel s analysis of the Indian banking industry. Retreived on April 28,2016, from http:// ssrn.com/abstract=1666900 Gupta, Ruchi.(2014), An analysis of indian public sector banks using camel approach. IOSR Journal of Business and Managment,16(1),94-102. Khatik,S.K. & Nag, Amit.kr. (2014), Analyzing soundness of nationalised banks in India: A camel approach. Applied studies in agribusiness and commerce,8(1).retrieved on Sep 9,2015, from http://ageconsearch.umn.edu/bitstream/187531/2/ 10S.K.Khatik.pdf. Misra,S.K&Aspal, P.K.(2013), A camel model analysis of State Bank Group.World journal of social sciences,3(4),36-55. Mohiuddin, Golam.(2014), Use of CAMEL model: A study of financial performance of selected commercial banks in Bangladesh. Universal journal of accounting and finance, 2(5), 151-160. International Journal of Applied Business and Economic Research 262

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