Financial Performance of Indian New Private and Public sector banks

  • Mathi M Assistant Professor Cum Head Department of Commerce, Sri Vidya Mandir Arts and Science College
  • Kumaresan D Principal, Minerva College of Arts & Science college, Kattampatti
Keywords: CAMEL variables, New Private sector banks,, Public sector banks, Liberalisation and deregulation

Abstract

The broad objective of the banking sector reforms in India has been to increase efficiency and profitability of the banks. The banking sector in India has undergone several changes in the areas of prudential, regulatory, disclosure, and supervisory norms. It has been passing through the liberalization process and
deregulation of interest rates regime at the same time, while facing the competition from new generation private and foreign banks. Commercial banks, especially the dominant public sector banks, have been facing competition from the banks in the private sector. The present study is an attempt to examine
the financial performance of Indian banks based on the CAMEL variables and to find out whether the average performance of new private sector and public sector banks differ significantly across the two bank groups for the period of study, i.e. from 2010-11 to 2013-14. For the purpose of study, five leading
private sector banks – ICICI Bank, HDFC Bank, Axis Bank (formerly UTI), Kotak Mahindra Bank and Indusind Bank and five public sector banks – State Bank of India(SBI), Punjab National Bank (PNB), Bank of Baroda, Canara bank and Bank of India have been taken as sample. For evaluating the performance of Indian commercial banks, the world renowned CAMEL Model is adopted. CAMEL stands for Capital Adequacy, Asset Quality, Management Quality, Earnings Quality and Liquidity. The study concludes that new private sector and public sector banks do not differ significantly in terms of capital adequacy and liquidity, however in terms of asset quality, management quality and earning CAMEL variablesquality new private sector banks have an edge over public sector banks.

Published
2016-10-30