SEEKING THE BEST INDIAN BANK: AN IMPLEMENTATION TO CAMEL

MODEL
Dr. Amit Joshi
1

2
Lakhvendra Dutt Sharma
3
Indira

ABSTRACT
The present study is an attempt to rank Indian commercial banks in terms
of CAMEL Model on the basis of their overall performance over a period of
five years (2010 to 2014). For this purpose forty two Indian banks (both
public and private) were analysed on the basis of capital adequacy, asset
quality, management efficiency, earnings quality and liquidity position.
Otherwise, there are a variety of factors which should be measured to
analyse the performance of banks. In this study the factors suggested by
CAMEL model are taken care of for performance analysis. According to the
importance of study each parameter is given equal weights. Results
shown that on an average Yes Bank was at the top most position followed
by HDFC Bank and Indian Bank. The study will be useful for the
researchers, academicians, students and industry experts who wish to
seek the best bank.
Keywords: Nationalized Banks, Performance Evaluation, CAMEL Model
and Ranking Method.

INTRODUCTION
The banking sector has been undergoing a comprehensive phase of
restructuring since 1991, with a view to make it more effective, efficient,
sound, and at the same time forging its links firmly with the real sector for
promotion of savings, investment and growth. Although an overall
turnaround in performance of this sector is not expected till the
completion of reforms, signs of improvement are visible in some indicators
like under the CAMEL framework.
Under this framework every bank is required to enhance capital adequacy,
strengthen asset quality, improve management, increase earnings and
reduce sensitivity to various financial risks. The almost simultaneous
nature of these developments makes it difficult to separate the positive
impact of reform measures. Keeping this in mind, signs of improvements

1 Associate Professor, Guru Gobind Singh Institute of Technology and

Management Studies, Yamuna Nagar, Haryana.

2 Dy. Superintendent (Retd.), HSMIT Corporation, Haryana.

3 Assistant Professor, Maharishi Markandeshwar Institute of Management,

Mullana (Ambala)
and deteriorations are discussed in the present study for forty two private
and public in the following sections.

CAMEL Framework
CAMEL models framework is Supervisory in nature, consistent with
international norms, covers risk-monitoring factors for evaluating the
performance of banks. This framework involves the analyses of five
indicators that are bound in a group which reflects the position of financial
institutions. The indicators are as follows:
C- CAPITAL ADEQUACY
A- ASSET QUALITY
M- MANAGEMENT SOUNDNESS
E- EARNINGS & PROFITABILITY
L- LIQUIDITY

The whole banking scenario has changed in the very recent past on the
recommendations of Narasimham Committee. Further BASELL II Norms
were introduced to internationally standardize processes and make the
banking industry more adaptive to the sensitive market risks. The fact
that banks work under the most volatile conditions and the banking
industry as such in the booming phase makes it an interesting subject of
study. Amongst these reforms and restructuring the CAMELS Framework
has its own contribution to the way modern banking is looked up on now.
The attempt here is to see how various ratios have been used and
interpreted to reveal a banks performance and how this particular model
encompasses a wide range of parameters making it a widely used and
accepted model in todays scenario.

Review of Literature:
In order to evaluate the financial performance of banking and financial
sector the researchers, academicians and policy makers have investigated
several studies in different perspectives and in different time periods.
Cole et al. (1995) conducted a study on A CAMEL Rating's Shelf Life
and their findings suggest that, if a bank has not been examined for more
than two quarters, off-site monitoring systems usually provide a more
accurate indication of survivability than its CAMEL rating.
Barr et al. (2002) in their study Evaluating the Productive Efficiency and
Performance of U.S. Commercial Banks viewed that CAMEL rating criteria
has become a concise and indispensable tool for examiners and
regulators. This rating criterion ensures a banks healthy conditions by
reviewing different aspects of a bank based on variety of information
sources such as financial statement, funding sources, macroeconomic
data, budget and cash flow.
Godlewski (2003) tested the validity of the CAMEL rating typology for
bank's default modelisation in emerging markets. He focused explicitly on
using a logical model applied to a database of defaulted banks in
emerging markets.
Said and Saucier (2003) used CAMEL rating methodology to evaluate
the liquidity, solvency and efficiency of Japanese Banks, the study
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.
Sarker (2005) in Bangladesh examined the CAMEL model for regulation
and supervision of Islamic banks by the central bank. This study enabled
the regulators and supervisors to get a Shariah benchmark to supervise
and inspect Islamic banks and Islamic financial institutions from an Islamic
perspective.
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 India, Housing Development
Finance Corporation, Unit Trust of India and Industrial Development Bank
of India - had been taken as a sample.
Nurazi and Evans (2005) investigated whether CAMEL(S) ratios could
be used to predict bank failure. The results suggested that adequacy ratio,
assets quality, management, earnings, liquidity and bank size are
statistically significant in explaining bank failure.
Derviz et al. (2008) investigated the determinants of the movements in
the long term Standard & Poors and CAMEL bank ratings in the Czech
Republic during the period when the three biggest banks, representing
approximately 60% of the Czech banking sector's total assets, were
privatized (i.e., the time span 1998-2001).
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.

Research Methodology:
In real senses, the CAMEL model is a ratio-based model to evaluate the
performance of banks. It is an analytical tool that measures capital
adequacy, assets quality, and efficiency of management, quality of
earnings and liquidity of financial institutions. It is an instrument to
rate/rank the banks. The present study is a descriptive research study
based on analytical research design. Forty two nationalized and private
commercial banks working in India are taken for the present study. The
period for evaluating performance through CAMEL in this study ranges
from 2009-10 to 2013-14, i.e., for 5 years. The absolute data for these
banks on capital adequacy, asset quality, management efficiency, earning
quality and liquidity ratios is collected from various sources such as
annual reports of the banks, Prowess, Analyst journal and average of each
ratio calculated for the period 2010-14. All the banks were first
individually ranked based on the sub-parameters of each individual
parameter. The sum of these ranks was then taken to arrive at the group
average of individual banks for each parameter. Finally, the composite
rankings for the banks were arrived at after computing the average of
these group averages. Banks were ranked in the ascending/descending
order based on the individual sub-parameter.

Objectives of the Study:

The present study is conducted to satisfy following objectives:
1) To assess financial position of selected forty two nationalized and
private sector Indian commercial banks using CAMEL model.
2) To identify best bank out of selected banks on the basis of composite
averaging.

Analysis and Interpretation:

Performance analysis of selected banks is done on the basis of CAMEL
analysis. For the purpose individual parameter is analysed as below:

A) CAPITAL ADEQUACY:
It is important for a bank to maintain depositors confidence and
preventing the bank from going bankrupt. It reflects the overall financial
condition of banks and also the ability of management to meet the need
of additional capital. The following ratios measure capital adequacy:
Table 1: Individual and Group Ratings based on Capital Adequacy
Capital Adequacy Debt Equity Ratio Total Advances to
Sr. Group Rank
Name of Bank Ratio (%) (times) Total Asset Ratio
No.
Average Rank Average Rank Average Rank Average Rank
1 Allahabad Bank 13.23 24 17.45 23 0.603 21 22.67 25
2 Andhra Bank 13.84 15 16.03 20 0.640 4 13.00 4
3 Axis Bank Ltd. 14.05 14 10.09 8 0.573 32 18.00 15
4 Bank of Baroda 14.31 11 15.17 17 0.633 5 11.00 2
5 Bank of India 12.71 40 17.59 25 0.617 9 24.67 28
6 Bank of Maharashtra 12.73 39 24.86 40 0.587 27 35.33 42
7 Canara Bank 14.30 12 17.91 27 0.633 5 14.67 6
8 Central Bank of India 12.33 41 16.01 19 0.593 25 28.33 37
9 City Union Bank Ltd. 12.97 33 21.51 34 0.610 16 27.67 34
10 Corporation Bank 14.36 10 23.84 39 0.580 30 26.33 30
11 Dena Bank 12.75 38 12.21 10 0.617 9 19.00 18
 12 Development Credit Bank Ltd. 13.80 16 9.17 7 0.563 36 19.67 20
13 Dhanalakshmi Bank Ltd. 13.39 22 21.44 33 0.610 16 23.67 26
14 Federal Bank Ltd. 18.46 2 23.41 37 0.607 19 19.33 19
15 HDFC Bank Ltd. 16.45 5 8.58 5 0.563 36 15.33 9
16 ICICI Bank Ltd. 18.16 3 4.14 2 0.537 41 15.33 9
17 IDBI Bank Ltd. 12.17 42 16.57 21 0.603 21 28.00 35
18 Indian Bank 13.42 21 13.35 16 0.613 14 17.00 12
19 Indian Overseas Bank 14.18 13 17.36 22 0.617 9 14.67 6
20 Indusind Bank Ltd. 14.52 9 12.28 11 0.573 32 17.33 13
21 ING Vysya Bank Ltd. 13.17 28 13.10 14 0.560 38 26.67 31
22 Jammu & Kashmir Bank Ltd. 14.70 7 12.60 13 0.540 40 20.00 21
23 Karnataka Bank Ltd. 13.06 31 12.39 12 0.533 42 28.33 37
24 Karur Vysya Bank Ltd. 14.61 8 11.59 9 0.617 9 8.67 1
25 Kotak Mahindra Bank Ltd. 19.43 1 4.52 3 0.570 34 12.67 3
26 Lakshmi Vilas Bank Ltd. 12.77 37 6.70 4 0.613 14 18.33 16
27 Oriental Bank of Commerce 13.25 23 23.53 38 0.603 21 27.33 33
28 Punjab & Sind Bank 13.46 19 3.67 1 0.600 24 14.67 6
29 Punjab National Bank 13.54 18 20.96 32 0.633 5 18.33 16
30 South Indian Bank Ltd. 14.72 6 21.78 35 0.560 39 26.67 31
31 State Bank of Bikaner & Jaipur 13.17 28 19.07 30 0.583 29 29.00 39
32 State Bank of Hyderabad 13.56 17 18.39 29 0.607 19 21.67 22
33 State Bank of India 13.21 25 13.12 15 0.590 26 22.00 23
34 State Bank of Mysore 13.19 26 17.47 24 0.643 3 17.67 14
35 State Bank of Patiala 13.09 30 18.10 28 0.623 8 22.00 23
36 State Bank of Travancore 13.44 20 17.80 26 0.653 1 15.67 11
37 Syndicate Bank 12.81 36 22.67 36 0.653 1 24.33 27
38 UCO Bank 12.95 34 32.97 42 0.610 16 30.67 40
39 Union Bank of India 12.91 35 19.08 31 0.617 9 25.00 29
40 United Bank of India 13.04 32 15.29 18 0.570 34 28.00 35
41 Vijaya Bank 13.18 27 26.06 41 0.587 27 31.67 41
42 YES Bank Ltd. 17.90 4 8.79 6 0.577 31 13.67 5
Source: Compiled by Researcher

It is evident from the above table that all banks have maintained their
Capital Adequacy Ratio very well ranging in between 12.17% to 19.43%,
which is far above the minimum requirement of 9%. Kotak Mahindra Bank
Ltd. Secured the first position by maintaining 19.43% CAR followed by
Federal Bank Ltd. (18.46%) and ICICI Bank Ltd. (18.16%). IDBI Bank Ltd.
was at the bottom most position with least CAR of 12.17% followed by
Central Bank of India (12.33%) and Bank of India Ltd. (12.71%).
In terms of Debt equity ratio Punjab and Sindh Bank was at the top most
position with least average of 3.67, followed by ICICI Bank (4.14) and
Kotak Mahindra Bank (4.52). In case of Total Advances to Total Assets ratio
State Bank of Travancore and Syndicate Bank jointly shared the number
one position as they both have highest ratio (0.653), followed by State
Bank of Mysore (0.643) and Andhra Bank (0.640).
Making the group rankings of sub parameters as base, Karur Vysya Bank
Ltd. stood at number one position with group average of 8.67, followed by
Bank of Baroda (11.00) and Kotak Mahindra Bank (12.67). Bank of
Maharashtra stood at last place with group average of 35.33.
B) ASSETS QUALITY:
The quality of assets in an important parameter to gauge the strength of
bank. The prime motto behind measuring the assets quality is to ascertain
the component of non-performing assets as a percentage of the total
assets. This indicates what types of advances the bank has made to
generate interest income. The ratios necessary to assess the assets
quality are:

Table 2: Individual and Group Ratings based on Asset Quality

Net NPAs Investments Net NPAs
Change in
Sr. to to to Group Rank
NPAs
No Name of Bank Net Advances Total Assets Total Assets
. Avera Ran Averag Ran Avera Ran Avera Ran Avera Ran
ge k e k ge k ge k ge k
1 Allahabad Bank 0.0072 17 0.3018 31 0.0044 17 -34.00 20 21.75 23
-
2 Andhra Bank 0.0024 0.2334 0.0016 39
3 4 3 103.37 6 1
3 Axis Bank Ltd. 0.0036 7 0.3067 36 0.0021 6 -13.01 28 23.75 19
4 Bank of Baroda 0.0033 5 0.2164 1 0.0021 8 -32.41 24 33.5 4
-
5 Bank of India 0.0089 0.2406 0.0055 29
23 6 24 119.75 3 8
6 Bank of Maharashtra 0.0125 33 0.3019 32 0.0073 33 -68.53 11 15.75 33
7 Canara Bank 0.0109 30 0.2584 11 0.0069 30 -24.92 26 18.75 27
8 Central Bank of India 0.0086 22 0.2761 20 0.0051 21 7.55 31 19.5 25
9 City Union Bank Ltd. 0.0073 18 0.2616 14 0.0045 18 6.51 30 23 21
10 Corporation Bank 0.0035 6 0.2996 30 0.0020 5 -72.13 9 30.5 5
11 Dena Bank 0.0117 31 0.2650 17 0.0072 32 -32.41 23 17.25 29
Development Credit Bank
12 0.0265 0.3043 0.0148 38.48 3.75
Ltd. 42 34 42 39 42
13 Dhanalakshmi Bank Ltd. 0.0067 16 0.2612 13 0.0040 16 -6.17 29 24.5 16
14 Federal Bank Ltd. 0.0046 10 0.2978 29 0.0028 10 -68.56 10 28.25 10
15 HDFC Bank Ltd. 0.0038 8 0.2800 22 0.0021 7 30.96 37 24.5 16
16 ICICI Bank Ltd. 0.0177 40 0.3120 38 0.0095 39 26.49 36 4.75 41
17 IDBI Bank Ltd. 0.0100 28 0.2912 25 0.0060 27 -33.75 21 17.75 28
-
18 Indian Bank 0.0031 0.2785 0.0019 34.75
4 21 4 114.22 4 3
19 Indian Overseas Bank 0.0168 39 0.2723 18 0.0103 40 -33.13 22 13.25 35
20 Indusind Bank Ltd. 0.0064 15 0.2946 26 0.0037 14 35.82 38 19.75 24
21 ING Vysya Bank Ltd. 0.0094 25 0.3070 37 0.0051 22 25.46 35 13.25 35
22 Jammu & Kashmir Bank Ltd. 0.0062 13 0.3343 41 0.0034 12 47.44 41 16.25 32
23 Karnataka Bank Ltd. 0.0130 34 0.3749 42 0.0070 31 -55.54 16 12.25 37
24 Karur Vysya Bank Ltd. 0.0019 2 0.2835 24 0.0011 2 17.66 32 28 11
25 Kotak Mahindra Bank Ltd. 0.0161 38 0.3294 40 0.0092 38 25.30 34 5.5 40
-
26 Lakshmi Vilas Bank Ltd. 0.0208 0.2577 0.0126 19
41 9 41 112.89 5 26
27 Oriental Bank of Commerce 0.0083 21 0.2581 10 0.0050 20 -46.61 18 25.75 13
28 Punjab & Sind Bank 0.0041 9 0.2976 28 0.0025 9 -76.74 8 29.5 7
-
29 Punjab National Bank 0.0051 0.2568 0.0033 35.25
11 8 11 189.86 1 2
30 South Indian Bank Ltd. 0.0106 29 0.3276 39 0.0056 25 -63.98 12 16.75 30
State Bank of Bikaner &
31 0.0063 0.2349 0.0039 22.07 26.25
Jaipur 14 5 15 33 12
32 State Bank of Hyderabad 0.0058 12 0.2531 7 0.0036 13 -46.21 19 30.25 6
33 State Bank of India 0.0145 36 0.2747 19 0.0085 36 40.51 40 10.25 38
34 State Bank of Mysore 0.0096 27 0.2609 12 0.0063 29 -94.17 7 24.25 18
35 State Bank of Patiala 0.0095 26 0.2319 2 0.0059 26 -55.85 15 25.75 13
36 State Bank of Travancore 0.0082 20 0.2632 15 0.0054 23 -57.36 14 25 15
37 Syndicate Bank 0.0094 24 0.2320 3 0.0061 28 -29.74 25 23 21
38 UCO Bank 0.0140 35 0.2809 23 0.0085 35 -53.86 17 15.5 34
-
39 Union Bank of India 0.0078 0.2644 0.0049 29
19 16 19 141.49 2 8
40 United Bank of India 0.0158 37 0.3063 35 0.0090 37 -22.80 27 9 39
41 Vijaya Bank 0.0125 32 0.2957 27 0.0073 34 -63.22 13 16.5 31
42 YES Bank Ltd. 0.0014 1 0.3035 33 0.0008 1 49.00 42 23.75 19
Source: Compiled by Researcher

Yes Bank is at the top position with an average NNPAs to Net Advances of
0.0014, followed by Karur Vysya Bank (0.0019) and Andhra Bank (0.0024).
Development Credit Bank was at the last position with an average of
0.0265. In case of Investments to Total Assets Bank of Baroda stood at
number one position with an average of 0.2164, followed by State Bank of
Patiala (0.2319) and Syndicate Bank (0.2320). Yes Bank again registered
least NNPAs against total assets and secured number one position. This
rank was followed by Karur Vysya Bank (0.0011) and Andhra Bank
(0.0016). Punjab National Bank was at first position with -189.86 percent
change in NPA. Union Bank of India and Bank of India hold second and
third position respectively.
Group average of sub parameters of asset quality indicates that Andhra
Bank holds first position, followed by Punjab National Bank, Indian Bank
and Bank of Baroda.
C) MANAGEMENT EFFICIENCY:
Management efficiency is another important element of the CAMEL Model.
The ratio in this segment involves subjective analysis to measure the
efficiency and effectiveness of management. The management of bank
takes crucial decisions depending on its risk perception. The ratios used to
evaluate management efficiency are described as:
Table 3: Individual and Group Ratings based on Management
Efficiency
Total Advance Business per Profit per Profit/
to Total Employee Employee Branch Group Rank
Sr.
Name of Bank Deposit Ratio (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs)
No.
Avera Ran Avera Ran Avera Ran Avera Ran Avera Ran
ge k ge k ge k ge k ge k
1 Allahabad Bank 0.693 29 871.33 16 5.40 24 49.57 30 24.75 28
2 Andhra Bank 0.747 11 944.08 10 6.97 13 64.13 23 14.25 10
1179.0
3 Axis Bank Ltd.
0.727 20 0 5 12.01 2 245.78 2 7.25 4
1076.0
4 Bank of Baroda
0.743 13 0 6 8.35 6 100.65 10 8.75 5
1042.6
5 Bank of India
0.730 18 7 7 6.03 20 78.48 16 15.25 12
6 Bank of Maharashtra 0.667 38 740.87 28 2.78 38 26.41 37 35.25 37
7 Canara Bank 0.727 20 996.98 8 7.36 10 99.56 11 12.25 7
8 Central Bank of India 0.673 37 702.40 31 2.99 37 26.41 38 35.75 39
9 City Union Bank Ltd. 0.690 33 665.71 34 6.26 17 71.12 21 26.25 30
1296.9
10 Corporation Bank
0.693 29 3 4 9.36 5 102.26 9 11.75 6
11 Dena Bank 0.687 35 872.67 15 5.10 25 45.18 32 26.75 31
Development Credit Bank
12
Ltd. 0.727 20 466.67 41 -2.67 42 -59.43 42 36.25 40
13 Dhanalakshmi Bank Ltd. 0.690 33 514.90 40 1.63 41 16.96 41 38.75 42
14 Federal Bank Ltd. 0.730 18 828.67 20 6.72 14 76.83 17 17.25 16
15 HDFC Bank Ltd. 0.737 15 563.00 39 5.84 22 177.44 5 20.25 21
16 ICICI Bank Ltd. 0.953 2 972.67 9 11.00 3 236.04 3 4.25 3
2264.7
17 IDBI Bank Ltd.
0.870 3 2 1 9.60 4 174.10 6 3.50 2
18 Indian Bank 0.707 26 769.33 26 7.68 8 87.44 14 18.50 18
19 Indian Overseas Bank 0.743 13 802.17 22 4.00 33 51.12 29 24.25 26
20 Indusind Bank Ltd. 0.747 11 839.15 19 6.08 19 145.50 7 14.00 9
21 ING Vysya Bank Ltd. 0.723 23 634.99 36 3.81 34 52.28 28 30.25 34
Jammu & Kashmir Bank
22
Ltd. 0.613 41 695.67 32 6.67 15 103.38 8 24.00 24
23 Karnataka Bank Ltd. 0.607 42 715.67 30 4.00 32 45.66 31 33.75 36
24 Karur Vysya Bank Ltd. 0.703 28 787.33 24 7.71 7 97.55 12 17.75 17
25 Kotak Mahindra Bank Ltd. 0.977 1 456.33 42 6.00 21 201.34 4 17.00 14
26 Lakshmi Vilas Bank Ltd. 0.710 25 596.33 38 2.35 39 23.18 39 35.25 37
Oriental Bank of 1297.7
27
Commerce 0.693 29 0 3 7.54 9 76.82 18 14.75 11
28 Punjab & Sind Bank 0.693 29 936.19 11 5.68 23 55.25 26 22.25 22
29 Punjab National Bank 0.753 8 826.89 21 7.10 11 81.89 15 13.75 8
30 South Indian Bank Ltd. 0.703 27 778.05 25 4.77 27 41.95 33 28.00 32
State Bank of Bikaner &
31
Jaipur 0.787 4 644.69 35 4.17 31 53.41 27 24.25 26
32 State Bank of Hyderabad 0.733 17 877.71 14 6.11 18 76.59 19 17.00 14
33 State Bank of India 0.750 10 632.22 37 4.35 29 71.86 20 24.00 24
34 State Bank of Mysore 0.777 6 689.67 33 4.30 30 62.38 25 23.50 23
35 State Bank of Patiala 0.737 15 920.48 12 4.78 26 63.01 24 19.25 20
36 State Bank of Travancore 0.777 6 747.25 27 6.45 16 88.48 13 15.50 13
37 Syndicate Bank 0.753 8 790.98 23 3.60 36 39.23 34 25.25 29
38 UCO Bank 0.680 36 900.67 13 3.67 35 38.84 35 29.75 33
39 Union Bank of India 0.717 24 863.33 17 7.08 12 69.57 22 18.75 19
40 United Bank of India 0.653 40 719.67 29 2.27 40 22.53 40 37.25 41
41 Vijaya Bank 0.663 39 840.00 18 4.38 28 37.32 36 30.25 34
42 YES Bank Ltd. 0.783 5 1578.4 2 16.01 1 304.03 1 2.25 1
 5
Source: Compiled by Researcher

Kotak Mahindra Bank stood at first position in terms of Total Advances to

Total Deposit Ratio with ratio of 0.977 followed by ICICI Bank (0.953) and
IDBI Bank (0.870). Karnataka Bank Ltd. secured last position by
maintaining this ratio of 0.607. IDBI Ltd. generated maximum business per
employee amongst the selected 42 banks (Rs. 2264.72 Lakhs) and took
lead from Yes Bank (Rs. 1578.45 Lakhs) and Oriental Bank of Commerce
(Rs. 1297.70 Lakhs). Kotak Mahindra Bank managed to generate least
business per employee (Rs. 456.33 lakhs). In terms of Profit per employee,
Yes Bank attained first position and on an average every employee
contributed a profit of Rs. 16.01 lakhs. This position is followed by Axis
bank (Rs.12.01 lakhs) and ICICI Bank (Rs.11 lakhs). Finally, on checking
efficiency by business per branch, Yes Bank secured first position (Rs.
304.03 lakhs).
On the basis of group averages of sub-parameters, Yes Bank was at the
top position with group average 2.25, followed by IDBI Bank (3.50) and
ICICI Bank (4.25). Dhanlaxmi Bank positioned at last due to its poor
performance in all sub parameters of management efficiency.
D) Earnings Quality:
The quality of earnings is a very important criterion that determines the
ability of a bank to earn consistently. It basically determines the
profitability of bank and explains its sustainability and growth in earnings
in future. The following ratios explain the quality of income generation.
Table 4: Individual and Group Ratings based on Earnings Quality
Interest Other
Net Profit to
Dividend Return on Income to Income to
Average Group Rank
Sr. Payout Ratio Assets Total Total
Name of Bank Asset
No. Income Income
Avera Ra Avera Ra Avera Ra Avera Ra Avera Ra Avera Ra
ge nk ge nk ge nk ge nk ge nk ge nk
0.010
1 Allahabad Bank
21.38 21 1.06 21 4 26 0.870 25 0.13 16 21.8 23
0.012
2 Andhra Bank
31.45 4 1.28 10 7 14 0.883 16 0.12 25 13.8 3
0.017
3 Axis Bank Ltd.
21.83 19 1.60 4 1 6 0.770 42 0.23 1 14.4 6
0.012
4 Bank of Baroda
18.63 27 1.21 14 7 14 0.867 28 0.13 13 19.2 13
0.010
5 Bank of India
19.60 24 0.99 25 6 23 0.867 28 0.13 13 22.6 26
0.006
6 Bank of Maharashtra
27.34 7 0.63 37 3 38 0.900 7 0.10 34 24.6 32
0.012
7 Canara Bank
16.16 28 1.26 11 6 16 0.883 16 0.12 25 19.2 13
0.006
8 Central Bank of India
36.51 1 0.60 39 0 39 0.900 7 0.10 36 24.4 30
0.015
9 City Union Bank Ltd.
12.57 37 1.56 5 5 9 0.877 21 0.12 20 18.4 12
0.012
10 Corporation Bank
15.84 29 1.23 12 3 18 0.860 31 0.14 12 20.4 19
0.009
11 Dena Bank
20.70 22 1.01 23 3 28 0.887 13 0.11 28 22.8 27
-
Development Credit
12 0.010
Bank Ltd.
9.17 40 -0.75 42 5 42 0.827 37 0.17 6 33.4 42
Dhanalakshmi Bank 0.005
13
Ltd. 14.22 34 0.60 40 7 40 0.850 32 0.15 10 31.2 41
0.014
14 Federal Bank Ltd.
7.86 41 1.32 9 0 11 0.877 21 0.12 20 20.4 19
0.017
15 HDFC Bank Ltd.
22.20 16 1.46 7 4 5 0.820 38 0.18 4 14 5
0.020
16 ICICI Bank Ltd.
36.38 2 1.15 17 0 2 0.790 41 0.21 2 12.8 2
0.007
17 IDBI Bank Ltd.
24.35 10 0.63 38 6 33 0.887 13 0.11 28 24.4 30
0.017
18 Indian Bank
22.00 18 1.61 3 0 7 0.877 21 0.12 20 13.8 3
0.009
19 Indian Overseas Bank
28.90 6 0.80 31 0 31 0.890 11 0.11 31 22 24
0.012
20 Indusind Bank Ltd.
26.20 9 1.06 20 2 19 0.833 35 0.17 8 18.2 10
0.009
21 ING Vysya Bank Ltd.
13.47 36 0.80 32 2 29 0.793 40 0.21 3 28 40
Jammu & Kashmir 0.013
22
Bank Ltd. 23.88 12 1.17 16 3 13 0.903 5 0.10 37 16.6 7
0.009
23 Karnataka Bank Ltd.
33.83 3 0.88 28 2 29 0.867 28 0.13 13 20.2 18
0.016
24 Karur Vysya Bank Ltd.
30.27 5 1.65 2 6 8 0.873 24 0.13 19 11.6 1
Kotak Mahindra Bank 0.023
25
Ltd. 6.80 42 1.51 6 0 1 0.870 25 0.13 16 18 9
Lakshmi Vilas Bank 0.006
26
Ltd. 26.27 8 0.65 36 4 37 0.883 16 0.12 24 24.2 28
Oriental Bank of 0.009
27
Commerce 15.10 33 0.94 26 8 27 0.907 2 0.09 39 25.4 36
0.010
28 Punjab & Sind Bank
22.38 15 1.07 18 6 23 0.907 2 0.09 39 19.4 15
 0.014
29 Punjab National Bank
15.65 32 1.39 8 9 10 0.870 25 0.13 16 18.2 10
0.011
30 South Indian Bank Ltd.
15.76 30 1.07 18 3 21 0.837 34 0.16 9 22.4 25
State Bank of Bikaner & 0.018
31
Jaipur 19.04 25 0.94 27 5 3 0.820 38 0.18 4 19.4 15
State Bank of 0.010
32
Hyderabad 15.76 31 1.05 22 5 25 0.880 20 0.12 23 24.2 28
0.012
33 State Bank of India
24.10 11 0.88 29 3 17 0.850 32 0.15 10 19.8 17
0.011
34 State Bank of Mysore
10.92 38 1.00 24 1 22 0.887 13 0.11 28 25 33
0.009
35 State Bank of Patiala
20.11 23 0.83 30 0 31 0.900 7 0.10 34 25 33
State Bank of 0.013
36
Travancore 13.52 35 1.23 13 5 12 0.890 11 0.11 32 20.6 22
0.007
37 Syndicate Bank
22.01 17 0.73 33 5 34 0.917 1 0.08 42 25.4 36
0.006
38 UCO Bank
21.56 20 0.71 34 7 36 0.907 2 0.09 39 26.2 38
0.011
39 Union Bank of India
18.74 26 1.19 15 6 20 0.883 16 0.12 25 20.4 19
0.004
40 United Bank of India
23.00 14 0.48 41 9 41 0.903 5 0.10 37 27.6 39
0.006
41 Vijaya Bank
23.19 13 0.69 35 7 35 0.893 10 0.11 33 25.2 35
0.017
42 YES Bank Ltd.
10.25 39 1.66 1 5 4 0.830 36 0.17 7 17.4 8
Source: Compiled by Researcher

Table 4 presents the earning quality of selected 42 banks in terms of DPS,

ROA, Net profit to average asset, interest income to total income and
other income to total income. Central Bank of India ranked top in terms of
dividend per share which declared mean dividend of Rs. 36.51 per share
during the period of study. This rank is followed by ICICI Bank and
Karnataka Bank which declared dividend of Rs. 36.38 and Rs. 33.83
respectively. In terms of ROA Yes Bank again yielded maximum return, i.e.,
1.66, which was followed by Karur Vysya bank (1.65) and Indian Bank
(1.61).
Kotak Mahindra Bank (.0230) ranked top in case of net profit to average
asset ratio followed by ICICI Bank (.02) and State Bank of Bikaner & Jaipur
(.0185). on the other hand, Development Credit Bank ranked last in this
case. Syndicate bank secured first position in case of interest income to
total income and attained 0.917. it shows that 91.70 % of income is
generated by interest income in this bank. Oriental Bank of Commerce
and Punjab & Sindh Bank shared second position jointly and have 0.907
Interest income to total income ratio. In terms of other income to total
income, Bank of Baroda attained first position as 23% of their incomes are
generated from other incomes and not from interest income.
On the basis of group average of rankings of sub parameters, Karur Vysya
Bank secured the first position with group average of 11.6. ICICI bank
stood at number second and Indian Bank at number three on group
average basis of earnings quality measures.
E) LIQUIDITY RATIOS:
Risk of liquidity is curse to the image of bank. Bank has to take a proper
care to hedge the liquidity risk; at the same time ensuring good
percentage of funds are invested in high return generating securities, so
that it is in a position to generate profit with provision liquidity to the
depositors. The following ratios are used to measure the liquidity under
the CAMEL Model. They are:
Table 5: Individual and Group Ratings based on Liquidity Ratios
Liquidity to Liquidity to
Group Rank
Sr. No. Name of Bank Total Assets Deposits
Average Rank Average Rank Average Rank
1 Allahabad Bank -0.172 28 -0.198 26 27 27
2 Andhra Bank -0.241 35 -0.281 34 34.5 34
3 Axis Bank Ltd. -0.162 24 -0.206 28 26 26
4 Bank of Baroda -0.207 32 -0.242 32 32 32
5 Bank of India -0.122 21 -0.145 20 20.5 21
6 Bank of Maharashtra -0.197 31 -0.223 29 30 30
7 Canara Bank -0.099 17 -0.114 15 16 16
8 Central Bank of India -0.117 20 -0.133 18 19 20
9 City Union Bank Ltd. -0.078 11 -0.088 10 10.5 11
10 Corporation Bank -0.005 5 -0.006 5 5 5
11 Dena Bank -0.182 29 -0.203 27 28 28
12 Development Credit Bank Ltd. -0.228 33 -0.295 36 34.5 34
13 Dhanalakshmi Bank Ltd. -0.280 39 -0.319 38 38.5 38
14 Federal Bank Ltd. -0.188 30 -0.226 30 30 30
15 HDFC Bank Ltd. 0.114 1 0.149 1 1 1
16 ICICI Bank Ltd. -0.091 16 -0.159 21 18.5 19
17 IDBI Bank Ltd. -0.279 38 -0.402 40 39 39
18 Indian Bank -0.082 14 -0.094 12 13 12
19 Indian Overseas Bank -0.089 15 -0.107 14 14.5 14
20 Indusind Bank Ltd. -0.066 8 -0.090 11 9.5 9
21 ING Vysya Bank Ltd. -0.136 22 -0.176 23 22.5 22
22 Jammu & Kashmir Bank Ltd. -0.011 6 -0.013 6 6 6
23 Karnataka Bank Ltd. -0.110 18 -0.126 16 17 17
24 Karur Vysya Bank Ltd. -0.114 19 -0.129 17 18 18
25 Kotak Mahindra Bank Ltd. -0.079 12 -0.134 19 15.5 15
26 Lakshmi Vilas Bank Ltd. -0.142 23 -0.166 22 22.5 22
27 Oriental Bank of Commerce -0.308 40 -0.354 39 39.5 40
28 Punjab & Sind Bank -0.257 37 -0.298 37 37 37
29 Punjab National Bank -0.081 13 -0.096 13 13 12
30 South Indian Bank Ltd. 0.015 3 0.019 3 3 3
31 State Bank of Bikaner & Jaipur -0.170 27 -0.233 31 29 29
32 State Bank of Hyderabad -0.162 25 -0.192 25 25 24
33 State Bank of India -0.607 42 -0.737 42 42 42
34 State Bank of Mysore -0.070 9 -0.084 8 8.5 8
35 State Bank of Patiala -0.247 36 -0.292 35 35.5 36
36 State Bank of Travancore 0.086 2 0.102 2 2 2
37 Syndicate Bank -0.166 26 -0.190 24 25 24
38 UCO Bank -0.231 34 -0.259 33 33.5 33
39 Union Bank of India -0.050 7 -0.058 7 7 7
40 United Bank of India -0.076 10 -0.087 9 9.5 9
41 Vijaya Bank -0.417 41 -0.471 41 41 41
42 YES Bank Ltd. 0.000 4 0.000 4 4 4
Source: Compiled by Researcher
Table 5 explores that HDFC Bank (0.114) was at the first position in terms
of Liquidity to Total Assets ratio followed by State Bank of Travancore
(0.086) and South Indian Bank (0.015). On the other hand, State Bank of
India scored least with a ratio of -0.607. In case of Liquidity to Deposits,
again HDFC Bank ranked first, and second and third positions are secured
by State Bank of Travancore and South Indian Bank. On the basis of group
averages also, HDFC Bank stood at number one in terms of liquidity
positions.
Overall Composite Rankings:
Table 6: Overall Performance: Composite Ratings
Sr. No. Name of Bank C A M E L Average Rank
1 Allahabad Bank 22.67 21.25 24.75 21.8 27 23.49 25
2 Andhra Bank 13.00 4 14.25 13.8 34.5 15.91 8
3 Axis Bank Ltd. 18.00 19.25 7.25 14.4 26 16.98 11
4 Bank of Baroda 11.00 9.5 8.75 19.2 32 16.09 9
5 Bank of India 24.67 14 15.25 22.6 20.5 19.40 17
6 Bank of Maharashtra 35.33 27.25 35.25 24.6 30 30.49 40
7 Canara Bank 14.67 24.25 12.25 19.2 16 17.27 13
8 Central Bank of India 28.33 23.5 35.75 24.4 19 26.20 34
9 City Union Bank Ltd. 27.67 20 26.25 18.4 10.5 20.56 21
10 Corporation Bank 26.33 12.5 11.75 20.4 5 15.20 7
11 Dena Bank 19.00 25.75 26.75 22.8 28 24.46 30
12 Development Credit Bank Ltd. 19.67 39.25 36.25 33.4 34.5 32.61 42
13 Dhanalakshmi Bank Ltd. 23.67 18.5 38.75 31.2 38.5 30.12 39
14 Federal Bank Ltd. 19.33 14.75 17.25 20.4 30 20.35 20
15 HDFC Bank Ltd. 15.33 18.5 20.25 14 1 13.82 2
16 ICICI Bank Ltd. 15.33 38.25 4.25 12.8 18.5 17.83 14
17 IDBI Bank Ltd. 28.00 25.25 3.5 24.4 39 24.03 29
18 Indian Bank 17.00 8.25 18.5 13.8 13 14.11 3
19 Indian Overseas Bank 14.67 29.75 24.25 22 14.5 21.03 22
20 Indusind Bank Ltd. 17.33 23.25 14 18.2 9.5 16.46 10
21 ING Vysya Bank Ltd. 26.67 29.75 30.25 28 22.5 27.43 36
22 Jammu & Kashmir Bank Ltd. 20.00 26.75 24 16.6 6 18.67 15
23 Karnataka Bank Ltd. 28.33 30.75 33.75 20.2 17 26.01 33
24 Karur Vysya Bank Ltd. 8.67 15 17.75 11.6 18 14.20 4
25 Kotak Mahindra Bank Ltd. 12.67 37.5 17 18 15.5 20.13 19
26 Lakshmi Vilas Bank Ltd. 18.33 24 35.25 24.2 22.5 24.86 32
27 Oriental Bank of Commerce 27.33 17.25 14.75 25.4 39.5 24.85 31
28 Punjab & Sind Bank 14.67 13.5 22.25 19.4 37 21.36 24
29 Punjab National Bank 18.33 7.75 13.75 18.2 13 14.21 5
30 South Indian Bank Ltd. 26.67 26.25 28 22.4 3 21.26 23
31 State Bank of Bikaner & Jaipur 29.00 16.75 24.25 19.4 29 23.68 26
32 State Bank of Hyderabad 21.67 12.75 17 24.2 25 20.12 18
33 State Bank of India 22.00 32.75 24 19.8 42 28.11 37
34 State Bank of Mysore 17.67 18.75 23.5 25 8.5 18.68 16
35 State Bank of Patiala 22.00 17.25 19.25 25 35.5 23.80 27
36 State Bank of Travancore 15.67 18 15.5 20.6 2 14.35 6
37 Syndicate Bank 24.33 20 25.25 25.4 25 24.00 28
38 UCO Bank 30.67 27.5 29.75 26.2 33.5 29.52 38
39 Union Bank of India 25.00 14 18.75 20.4 7 17.03 12
40 United Bank of India 28.00 34 37.25 27.6 9.5 27.27 35
41 Vijaya Bank 31.67 26.5 30.25 25.2 41 30.92 41
42 YES Bank Ltd. 13.67 19.25 2.25 17.4 4 11.31 1
Source: Compiled by Researcher
It is evident from the above table that Yes Bank stood at number one
position on the basis of composite average (11.31), followed by HDFC
Bank (13.82), Indian Bank (14.11) and Karur Vysya Bank (14.20).
Development Credit Bank was at the bottom, out of the selected forty two
banks.
Conclusion
The researcher tried to rank selected forty two Indian commercial banks in
terms of their CAMEL variable values. Practically, bounding the results into
ranking is a difficult task as the ratios can in interpreted in many ways.
This method of analysis provides a simplistic, reader friendly version of
presenting complex data regarding performance of a set of selected
banks. The ranking system makes judging and analysing the financial data
of banks much simpler for a layman. Thus through this particular data set,
it can be established that private sector banks are at the top of the list
with their performances in terms of soundness being the best. This implies
that the Government needs to focus more on the Public Sector Banks in
order to increase the net profit to average assets ratio, profit per
employee etc. Although these will be good for the soundness of the bank,
it may defeat the purpose of Public Sector Banks lending at comparative
lower rates.
Looking at the trend, we can say that private banks are growing at a
faster pace than public sector banks and will head towards convergence
faster than the PSBs.

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