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Analysis of Banks in IndiaA CAMEL Approach


Harsh Vineet Kaur
Global Business Review 2010 11: 257
DOI: 10.1177/097215091001100209

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Analysis of Banks in IndiaA CAMEL Approach

Harsh Vineet Kaur

Indian banking system has transformed in recent years due to globalization in the world market, which has
resulted in fierce competition. In this article, an attempt has been made to rank the various commercial banks
operating in India. The banks in India have been categorized into Public sector, Private sector and Foreign
banks. For the purpose of profitability analysis 28 Public Sector, 26 Private Sector and 28 Foreign banks have
been taken into consideration For the purpose of ranking, CAMEL analysis technique has been used. Each
parameter of CAMELCapital Adequacy, Asset Quality, Management Quality, Earning Quality and Liquid-
ity has been evaluated taking two ratios, and a final composite index has been developed. Among the public
sector banks, the best bank ranking has been shared by Andhra Bank and State Bank of Patiala. Among the
private sector banks, Jammu And Kashmir Bank has bagged the first rank followed by HDFC Bank. In the
category of foreign sector banks, Antwerp Bank has been ranked the best followed by JP Morgan Chase Bank.

Keywords: Banking sector, Profitability analysis, CAMEL analysis

Financial system is the most important insti- banks and other financial institutions (Uppal
tutional and functional vehicle for economic and Kaur 2007). These institutions are faced
transformation of any country. Banking sector with increased competitive pressures and
is reckoned as a hub and barometer of the changing customer demands. These, in turn,
financial system. As a pillar of the economy, have engendered a rapid increase in product
this sector plays a predominant role in the innovations and changes in business strategies.
economic development of the country. The While these developments have enabled im-
banking sector can play a significant role as provement in the efficiency of financial insti-
growth facilitator. Globalization, deregulation tutions, they have also posed some serious
and advances in information technology (IT) risks. The regulatory and supervisory policies
in recent years have brought about signifi- are, accordingly, being reshaped and reori-
cant changes in the operating environment for ented to meet the challenge of containing

Harsh Vineet Kaur is Assistant Professor at Institute of Management Studies, IET-Bhaddal Campus, Punjab.
E-mail: banwait_belle@yahoo.com

GLOBAL BUSINESS REVIEW, 11:2 (2010): 257280


SAGE Publications Los Angeles/London/New Delhi/Singapore/Washington DC
DOI: 10.1177/097215091001100209

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258  Harsh Vineet Kaur

systemic risks. In this changing milieu, the seen rapid growth with strong contribution
main challenge for the supervisors has been from all the three sectors of banks, namely,
to maintain the stability of the financial sys- government banks, private banks and foreign
tem and, at the same time, provide sufficient banks (Ketkar et al. 2003).
flexibility to financial institutions so that they The next stage for the Indian banking has
can respond effectively to the growing com- been set up with the proposed relaxation in
petition while taking advantage of business the norms for Foreign Direct Investment
opportunities and technological develop- (FDI), where all foreign investors in banks
ments (Arora and Kaur 2006). may be given voting rights which could
India is the largest country in South Asia exceed the present cap of 10 per cent, at pres-
with a huge financial system characterized by ent it has gone up to 49 per cent with some
many and varied financial institutions and restrictions.
instruments. Indian banking sector was well The new policy shook the banking sector
developed even prior to its political inde- in India completely. Bankers, till this time,
pendence in 1947. By the 1960s, the Indian were used to the 464 method (Borrow at
banking industry had become an important 4 per cent; Lend at 6 per cent; Go home at 4)
tool to facilitate the development of the Indian of functioning. The new wave ushered in a
economy. At the same time, it has emerged modern outlook and tech-savvy methods of
as a large employer, and a debate has ensued working for traditional banks (Arora and
about the possibility to nationalize the bank- Kaur 2006). All this led to the retail boom in
ing industry. In July 1969, 14 major com- India. People not just demanded more from
mercial banks were nationalized followed by their banks, but also received more.
6 more in 1980. The stated reason for the Currently, banking in India is generally
nationalization was to give the government fairly mature in terms of supply, product
more control of credit delivery. With the se- range and reacheven though reach in rural
cond dose of nationalization, the Government India still remains a challenge for the private
of India (GOI) controlled around 91 per cent sector and foreign banks. In terms of quality
of the banking business in India (Reserve of assets and capital adequacy, Indian banks
Bank of India 1991). are considered to have clean, strong and
In the early 1990s the then Narasimha Rao transparent balance sheets relative to other
government embarked on a policy of liberal- banks in comparable economies in its region.
ization and gave licenses to a small number The Reserve Bank of India (RBI) is an autono-
of private banks, which came to be known as mous body, with minimal pressure from the
New Generation tech-savvy banks, which in- government. The stated policy of the bank on
cluded banks such as UTI Bank (now re- the Indian Rupee is to manage volatility but
named as Axis Bank) (the first of such new without any fixed exchange rate, and this has
generation banks to be set up), ICICI Bank mostly been true (Reserve Bank of India 1991).
and HDFC Bank. This move, along with the With the growth in the Indian economy
rapid growth in the economy of India, kick- expected to be strong for quite some time
started the banking sector in India, which has especially in its services sectorthe demand

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Analysis of Banks in IndiaA CAMEL Approach  259

for banking services, especially retail banking, methodology along with the database. The
mortgages and investment services are ex- subsequent section focuses on relative per-
pected to be strong. One may also expect formance of the bank groups in terms of
merger and acquisitions (M&As), takeovers selected parameters. The last part concludes
and asset sales. the article along with implications of the
In March 2006, the RBI allowed Warburg article and future areas of intensive research.
Pincus to increase its stake in Kotak Mahindra
Bank (a private sector bank) to 10 per cent.
Objectives
This is the first time an investor has been
allowed to hold more than 5 per cent in a pri-  To conduct a comparative appraisal of
vate sector bank since the RBI announced the performance of public, private and
norms in 2005 that any stake exceeding 5 per foreign sector banks in India.
cent in the private sector banks would need  To rank the banks on the basis of com-
to be vetted by them. posite index calculated for each bank in
Currently, India has 88 scheduled com- their respective category.
mercial banks (SCBs)28 public sector banks
(that is, with the Government of India holding
a stake), 29 private banks (these do not have Data Base
government stake; they may be publicly listed
and traded on stock exchanges) and 31 for- Data used in the article is secondary in nature.
eign banks. They have a combined network These have been collected from the statistical
of over 53,000 branches and 17,000 ATMs. Tables related to banks in India from the year
According to a report by ICRA Limited, a 200001 to 200607, available on the official
rating agency, the public sector banks hold website of RBI. Report on trend and progress
over 75 per cent of the total assets of the bank- of banks in India for various years has also
ing industry, with the private and foreign been used.
banks holding 18.2 per cent and 6.5 per cent,
respectively (Reserve Bank of India 2003). Research Methodology

Organization of the Article For analysis of the performance of banks in


India, the banks have been divided into the
In this article, an attempt has been made to following groups on ownership basis:
make a comparative analysis of the per-
formance of public, private and foreign sec-  Public sector banks comprising national-
tor banks in India from the year 200001 to ized banks, State Bank of India (SBI) and
200607 by using CAMEL analysis (Gilbert its associates28 banks.
et al. 2000). The article is divided into four  Private sector banks comprising old pri-
sections. After a brief introduction of the vate sector banks and new private sector
banking scenario in India, the next section banks26 banks.
provides the objectives and research  Foreign banks28 banks.

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260  Harsh Vineet Kaur

Indian banking industry is undergoing  Capital adequacy ratio (CAR), also


structural changes mainly due to mergers and called Capital to Risk (Weighted)
acquisitions. Industrial Development Bank of Assets Ratio (CRAR) is a ratio of a banks
India (IDBI) has been included in the list of capital to its risk. CAR is the ratio which
public sector banks although it was a new determines the capacity of the bank in
private sector bank before 200405. In the list terms of meeting the time liabilities and
of new private sector banks, Bank of Punjab other risks, such as credit risk, oper-
and Centurion Bank of Punjab are merged ational risk, and so on. A banks capital
under the name of Centurion Bank of Punjab is the cushion for potential losses,
from the year 200405, and Global Trust Bank which protects the banks depositors or
has merged into Oriental Bank of Commerce other lenders.
in 2004. Yes Bank has been excluded from the  DebtEquity (D/E) Ratio: It is arrived
list as it entered the industry in 2004-05. by dividing the total borrowing and
Similarly, Kotak Mahindra Bank has been deposits by the net-worth, which in-
excluded as Kotak Mahindra Finance Ltd was cludes equity capital, reserves and sur-
granted license to carry banking business in plus. It shows leverage of the bank.
2003. UTI bank has been renamed as AXIS Lesser the D/E ratio, stronger the bank.
bank in 2007. From the list of 33 foreign Banks, Banks with negative net worth have
Credit Lynnoias, UJF bank, Sinhan Bank, ING been assigned zero score.
N.V. Bank and Summitomo Mitsui Banking
Corporation have been excluded as their data Asset Quality
is not available (Reserve Bank of India 2003).
For analyzing performance, CAMEL an- Asset quality refers to the degree of financial
alysis technique has been used. CAMEL strength and risk in a banks assets, typically
stands for Capital Adequacy, Asset Quality, loans and investments. A comprehensive
Management Quality, Earning Quality and evaluation of asset quality is one of the most
Liquidity (Media for Freedom 2007). important components in assessing the cur-
rent condition and future viability of the bank.
Capital Adequacy The quality of the banks assets impacts, in
varying degrees, all components of a banks
Capital adequacy reflects the overall financial financial performance. High levels of classi-
condition of the banks and also the ability of fied assets can have a negative impact on
the management to meet the need for add- earnings through lower interest income,
itional capital. It reflects the leverage the bank higher provisions to the loan loss reserve and
enjoys as it has to take the advantage of increased administrative costs for managing
lucrative investment opportunities that may and collecting these assets. Asset quality
come up in future as well as to withstand un- problems can diminish the liquidity inherent
expected adversity (Ketkar et al. 2003). I have in the loan portfolio and have a negative im-
compared the capital adequacy based on the pact on the adequacy of bank capital. Poor
following two parameters: asset quality also reflects upon managements

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Analysis of Banks in IndiaA CAMEL Approach  261

competence. I have compared the asset qual- already had a very high base of profits pre-
ity based on the following two parameters: vious year.

 Net Non-Performing Asset (NPA) by Liquidity


total assets
 Net NPA by net advances The main objective behind this parameter is
to assess the ability of a bank to meet the de-
Management Quality mand from the deposit holders at a particu-
lar time. We have assigned higher rank for
It involves a subjective analysis for measuring banks with higher liquidity ratio. Liquidity
the efficiency of the management. To measure has been compared based on the two para-
the efficiency of the management in an object- meters, namely:
ive way, I have used only two parameters:
Return on net worth (RONW) and profit per  Liquid Asset/Total Deposit
employee of the bank:  Liquid Asset/Total Asset

 RONW: Net after Tax Profit divided by 1. Two parameters from each category
Net Worth; this is the final measure of are considered.
profitability to evaluate overall return. 2. Group average rank has been de-
This ratio measures return relative to rived by taking the average of each
investment in the company. Put another parameter.
way, RONW indicates how well a com- 3. Composite average has been derived
pany leverages the investment in it by taking the average of each group.
may appear higher for startups and sole 4. Overall ranking has been assigned
proprietorships due to owner compen- based on the composite average.
sation draws accounted as net profit.
 Profit per employee: This measures the
overall efficiency of the banks staff. Relative Performance of Banks
Higher the ratio, higher the efficiency of
Public Sector Banks
the staff or, for that matter, of the
management. Capital Adequacy
Earning Quality Capital adequacy reflects the overall financial
condition of the banks and also the ability of
In this section, I try to assess the quality of the management to meet the need for add-
income in terms of income generated by core itional capital. The average CAR and average
banking activity. Therefore, I have compared D/E ratio along with ranking of the various
the ratio of interest income to the total income. public sector banks in the above context has
In addition, I have also compared the percent- been shown in Table 1.
age change in net profit to rank the bank. This On the basis of CAR, Corporation Bank
again has gone against the old banks that enjoys first rank with CAR of 16.10 followed

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262  Harsh Vineet Kaur

Table 1
Capital Adequacy Ratios

Public Sector Banks Capital Adequacy Ratio Rank DebtEquity Ratio Rank Average
Allahabad Bank 11.88714286 17 18.80303854 18 17.5
Andhra Bank 12.96571429 7 17.51604834 14 10.5
Bank of Baroda 12.67714286 10 14.88943872 7 8.5
Bank of India 11.68428571 19 20.10319947 22 20.5
Bank of Maharashtra 11.67714286 20 22.27391027 26 23
Canara Bank 12.05428571 15 17.22331866 13 14
Central Bank of India 10.87428571 26 20.04417387 21 23.5
Corporation Bank 16.10428571 1 10.35933327 2 1.5
Dena Bank 9.274285714 28 17.7850113 16 22
Indian Bank 11.14 25 8.598133858 1 13
IDBI 14.68 2 15.39541697 8 5
Indian Overseas Bank 12.19428571 13 22.13268504 25 19
Oriental Bank of Commerce 12.01 16 14.02195053 5 10.5
Punjab & Sind Bank 11.25428571 24 24.91178672 27 25.5
Punjab National Bank 12.15428571 14 16.73855765 10 12
Syndicate Bank 11.50428571 23 27.2846991 28 25.5
UCO Bank 10.65 27 19.84466867 20 23.5
Union Bank of India 11.85142857 18 17.75067041 15 16.5
United Bank of India 13.99 3 12.36417643 3 3
Vijaya Bank 12.37 11 19.18737206 19 15
State Bank of India 12.83428571 8 16.78147692 11 9.5
State Bank of Bikaner & Jaipur 12.78428571 9 15.86827021 9 9
State Bank of Hyderabad 13.12 5 17.08369168 12 8.5
State Bank of Indore 12.25285714 12 18.52415241 17 14.5
State Bank of Mysore 11.57714286 21 21.78324728 24 22.5
State Bank of Patiala 13.18714286 4 13.88008512 4 4
State Bank of Saurashtra 13.08 6 14.75570772 6 6
State Bank of Travancore 11.55285714 22 21.76000307 23 22.5

Source: Statistical Tables relating to Banks in India19992000 to 200607.

by IBDI (14.68) and United Bank of India On the aggregate basis, Indian Bank occu-
(13.99). Dena Bank has the least CAR (9.27). pies the first rank followed by Corporation
On the basis of D/E ratio, Indian Bank occu- Bank at the second position and United Bank
pies the top most position with a ratio of 8.59 of India at the third position.
followed by Corporation Bank (10.35) and
Asset Quality
United Bank of India (12.36). Lower the D/E
ratio, the better is the companys financial Asset quality refers to the degree of financial
position. Banks like Bank of Maharashtra strength and risk in a banks assets, typically
(22.27), Punjab & Sind Bank (24.91) and loans and investments. A comprehensive eva-
Syndicate Bank (27.28) have very high D/E luation of asset quality is one of the most im-
ratio. portant components in assessing the current

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Analysis of Banks in IndiaA CAMEL Approach  263

condition and future viability of the bank. For terms of asset quality. The second and the
evaluation of asset qualityNPAs as percent- third positions are occupied by Corporation
age of assets and NPAs as percentage of total Bank and Oriental Bank of Commerce, both
advances have been evaluated. The aggregate in terms of NPA to total advances and aggre-
position has been depicted in Table 2. The best gate asset quality.
bank in terms of least NPAs to total assets is
Andhra bank (0.551) followed by Corporation Management Quality
Bank (0.688) and Oriental Bank of Commerce It involves a subjective analysis for measuring
(0.786). the efficiency of the management. To measure
On the basis of NPA to total advances, the efficiency of the management in an object-
Andhra Bank (1.258) is again ranked at num- ive way, I have used only two parameters:
ber one, therefore, being the best bank in RONW and profit per employee of the bank.
Table 2
Asset Quality Ratios

Public Sector Banks NPA/Total Assets Rank NPA/Total Advances Rank Average
Allahabad Bank 2.208571429 26 4.912857143 25 25.5
Andhra Bank 0.551428571 1 1.258571429 1 1
Bank of Baroda 1.624285714 20 3.588571429 16 18
Bank of India 2.181428571 24 3.944285714 22 23
Bank of Maharashtra 1.457142857 15 3.7 19 17
Canara Bank 1.315714286 11 2.734285714 11 11
Central Bank of India 2.182857143 25 5.325714286 26 25.5
Corporation Bank 0.688571429 2 1.424285714 2 2
Dena Bank 3.978571429 28 9.44 28 28
Indian Bank 1.54 19 4.242857143 23 21
IDBI 0.793333333 4 2.284 5 4.5
Indian Overseas Bank 1.498571429 16 3.411428571 15 15.5
Oriental Bank of Commerce 0.786666667 3 1.751666667 3 3
Punjab & Sind Bank 3.21 27 7.944285714 27 27
Punjab National Bank 1.188571429 8 2.567142857 8 8
Syndicate Bank 1.277142857 10 2.667142857 9 9.5
UCO Bank 1.787142857 22 3.878571429 21 21.5
Union Bank of India 1.855714286 23 3.722857143 20 21.5
United Bank of India 1.522857143 11 4.794285714 24 17.5
Vijaya Bank 1.055714286 7 2.541428571 6 6.5
State Bank of India 1.454285714 14 3.671428571 18 16
State Bank of Bikaner & Jaipur 1.345714286 12 3.268571429 14 13
State Bank of Hyderabad 0.991428571 5 2.555714286 7 6
State Bank of Indore 1.245 9 2.67 10 9.5
State Bank of Mysore 1.721428571 21 3.642857143 17 19
State Bank of Patiala 1.033333333 6 2.066666667 4 5
State Bank of Saurashtra 1.381666667 13 3.101666667 12 12.5
State Bank of Travancore 1.515714286 17 3.181428571 13 15
Source: Statistical Tables relating to Banks in India19992000 to 200607.

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264  Harsh Vineet Kaur

The aggregate position has been depicted in Earning Quality


Table 3. In terms of RONW, Andhra bank In this section, I try to assess the quality of
enjoys the highest return (0.241) followed by income in terms of income generated by core
Indian overseas bank (0.230) and State Bank banking activity. Therefore, I have compared
of Mysore (0.210). the ratio of interest income to the total income.
IDBI earns the maximum profit per em- In addition, I have also compared the per-
ployee (6.81) followed by Oriental Bank of centage change in net profit to rank the bank.
Commerce (4.08) and Corporation Bank The aggregate position has been depicted in
(3.92). On overall basis of management qual- Table 4.
ity, Andhra bank is the best bank followed Dena Bank has the highest average increase
by State bank of Indore. in net profit, followed by United Bank of India

Table 3
Management Quality

Public Sector Banks Return on Net Worth Rank Profit Per Employee Rank Average
Allahabad Bank 0.165729845 16 2.062857143 12 14
Andhra Bank 0.24153484 1 2.995714286 4 2.5
Bank of Baroda 0.133354827 20 1.844285714 14 17
Bank of India 0.167405809 15 1.602857143 19 17
Bank of Maharashtra 0.146917813 19 1.234285714 23 21
Canara Bank 0.188916516 10 2.32 8 9
Central Bank of India 0.107078394 25 0.83 27 26
Corporation Bank 0.158311616 18 3.922857143 3 10.5
Dena Bank 0.035409006 27 0.961428571 26 26.5
Indian Bank 0.070329959 26 1.786666667 16 21
IDBI 0.125461355 21 6.81 1 11
Indian Overseas Bank 0.230172344 2 2.157142857 10 6
Oriental Bank of Commerce 0.177427028 12 4.082857143 2 7
Punjab & Sind Bank 0.028020022 28 0.462857143 28 28
Punjab National Bank 0.177708816 11 1.808571429 15 13
Syndicate Bank 0.198050923 7 1.565714286 20 13.5
UCO Bank 0.122245769 22 0.995714286 25 23.5
Union Bank of India 0.169874387 14 2.202857143 9 11.5
United Bank of India 0.108938871 24 1.254285714 22 23
Vijaya Bank 0.193694706 8 2.122857143 11 9.5
State Bank of India 0.158588166 17 1.674285714 17 17
State Bank of Bikaner & Jaipur 0.189398691 9 1.658571429 18 13.5
State Bank of Hyderabad 0.207182491 5 2.431428571 7 6
State Bank of Indore 0.204909998 6 2.584285714 5 5.5
State Bank of Mysore 0.210386058 3 1.56 21 12
State Bank of Patiala 0.177210353 13 2.575714286 6 9.5
State Bank of Saurashtra 0.110802751 23 1.052857143 24 23.5
State Bank of Travancore 0.208660063 4 1.87 13 8.5
Source: Statistical Tables relating to Banks in India19992000 to 200607.

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Analysis of Banks in IndiaA CAMEL Approach  265

and Bank of Maharashtra. With regard to ratio Liquidity has been compared based on the
of interest income to total income, Central two parameters, namely, liquid asset/total
bank of India ranks first followed by Union deposits and liquid asset/total asset. The
Bank of India and Bank of Maharashtra. aggregate position has been depicted in
Table 5.
Liquidity State Bank of India tops in the context of
The main objective behind this parameter is liquidity, both in terms of liquid assets to total
to assess the ability of a bank to meet the assets and liquid assets to total advances.
demand from the deposit holders at a par- Bank of Baroda and State Bank of Mysore are
ticular time. We have assigned the higher rank ranked second and third, respectively, in both
for the banks with higher liquidity ratio. the contexts of liquidity.

Table 4
Earning Quality

Public Sector Banks Increase in Net Profit Rank Interest Income/Total Income Rank Average
Allahabad Bank 73.4291597 9 0.858413717 11 10
Andhra Bank 32.91762618 17 0.832415947 21 19
Bank of Baroda 30.29249265 18 0.848332308 16 17
Bank of India 47.97805768 12 0.82750394 23 17.5
Bank of Maharashtra 105.5912891 3 0.882861098 3 3
Canara Bank 39.76009734 14 0.835607547 20 17
Central Bank of India 77.36735266 8 0.888205948 1 4.5
Corporation Bank 14.13156661 27 0.829949003 21 24
Dena Bank 170.8366518 1 0.822315482 25 13
Indian Bank 90.9917452 5 0.838060666 18 11.5
IDBI 86.59596472 7 0.818697062 26 16.5
Indian Overseas Bank 46.43096661 13 0.879051929 4 8.5
Oriental Bank of Commerce 23.17462156 23 0.872772748 6 14.5
Punjab & Sind Bank 158.4140403 28 0.856767321 12 20
Punjab National Bank 23.15861057 24 0.864636125 9 16.5
Syndicate Bank 21.59676992 25 0.875390361 5 15
UCO Bank 88.58831876 6 0.866818268 7 6.5
Union Bank of India 37.81986393 15 0.885684805 2 8.5
United Bank of India 112.6076628 2 0.850684697 15 8.5
Vijaya Bank 55.24456109 10 0.865727049 8 9
State Bank of India 19.95166667 26 0.844108392 17 21.5
State Bank of Bikaner & Jaipur 29.59836853 20 0.824971291 24 22
State Bank of Hyderabad 27.45150852 21 0.836769664 19 20
State Bank of Indore 36.27294931 16 0.817233266 27 21.5
State Bank of Mysore 52.36263448 11 0.805163487 28 19.5
State Bank of Patiala 25.00447705 22 0.85535404 13 17.5
State Bank of Saurashtra 99.56769057 4 0.864246228 10 7
State Bank of Travancore 32.83905959 18 0.854493073 14 16
Source: Statistical Tables relating to Banks in India19992000 to 200607.

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266  Harsh Vineet Kaur

Table 5
Liquidity Ratios

Public Sector Banks Liquid Assets/Total Deposits Rank Liquid Assets/Total Assets Rank Average
Allahabad Bank 0.00722929 27 0.006521719 27 27
Andhra Bank 0.019170745 9 0.016403666 8 8.5
Bank of Baroda 0.053272676 2 0.045702191 2 2
Bank of India 0.016893922 10 0.014251981 9 9.5
Bank of Maharashtra 0.016207267 13 0.014178564 10 11.5
Canara Bank 0.012653622 19 0.011085527 19 19
Central Bank of India 0.015568299 14 0.013851607 12 13
Corporation Bank 0.016285887 11 0.013329124 13 12
Dena Bank 0.010814749 21 0.008970489 22 21.5
Indian Bank 0.008175982 25 0.006623329 26 25.5
IDBI 0.025182764 5 0.012348155 16 10.5
Indian Overseas Bank 0.013241781 18 0.011595192 18 18
Oriental Bank of Commerce 0.007961577 26 0.007041959 25 25.5
Punjab & Sind Bank 0.031628547 4 0.028519109 4 4
Punjab National Bank 0.008615653 23 0.007447858 24 23.5
Syndicate Bank 0.012120777 20 0.010796153 20 20
UCO Bank 0.016215964 12 0.014070961 11 11.5
Union Bank of India 0.010526623 22 0.009054048 21 21.5
United Bank of India 0.021308727 8 0.018674396 6 7
Vijaya Bank 0.014693872 17 0.013056921 14 15.5
State Bank of India 0.077191712 1 0.059904052 1 1
State Bank of Bikaner & Jaipur 0.023563677 7 0.018076622 7 7
State Bank of Hyderabad 0.009217647 23 0.007608086 23 23
State Bank of Indore 0.006595131 28 0.00532839 28 28
State Bank of Mysore 0.037284052 3 0.030559573 3 3
State Bank of Patiala 0.024605304 6 0.020179771 5 5.5
State Bank of Saurashtra 0.015389944 15 0.012638065 15 15
State Bank of Travancore 0.014967535 16 0.012164142 17 16.5

Source: Statistical Tables relating to Banks in India19992000 to 200607.

Composite Index Bank of Patiala. The third rank is occupied


Composite index for the final ranking of the by IBDI bank with a composite index of 9.5.
banks has been developed by taking the
Private Sector Banks
average of ranks under the above five cat-
egories. Final rank has been assigned by Capital Adequacy
giving the best rank to the bank with the least
composite index (Table 6). In terms of capital adequacy ratio, SBI Com-
On the aggregate basis, Andhra bank ranks mercial and International Bank has the
the top most with the least composite index highest ratio of 22.90 followed by Tamilnad
of 8.3. This position is jointly shared with State Mercantile Bank Ltd with a ratio of 18.58.

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Table 6
Composite Index

Public Sector Banks Capital Adequacy Asset Quality Management Earning Quality Liquidity Composite Index Rank
Allahabad Bank 17.5 25.5 14 10 27 18.8 26
Andhra Bank 10.5 1 2.5 19 8.5 8.3 1
Bank of Baroda 8.5 18 17 17 2 12.5 8
Bank of India 20.5 23 17 17.5 9.5 17.5 23
Bank of Maharashtra 23 17 21 3 11.5 15.1 16
Canara Bank 14 11 9 17 19 14 14
Central Bank of India 23.5 25.5 26 4.5 13 18.5 25
Corporation Bank 1.5 2 10.5 24 12 10 4
Dena Bank 22 28 26.5 13 21.5 22.2 28
Indian Bank 13 21 21 11.5 25.5 18.4 24
IDBI 5 4.5 11 16.5 10.5 9.5 3
Indian Overseas Bank 19 15.5 6 8.5 18 13.4 13
Oriental Bank of Commerce 10.5 3 7 14.5 25.5 12.1 7
Punjab & Sind Bank 25.5 27 28 20 4 20.9 27
Punjab National Bank 12 8 13 16.5 23.5 14.6 15
Syndicate Bank 25.5 9.5 13.5 15 20 16.7 21
UCO Bank 23.5 21.5 23.5 6.5 11.5 17.3 22
Union Bank of India 16.5 21.5 11.5 8.5 21.5 15.9 20
United Bank of India 3 17.5 23 8.5 7 11.8 6
Vijaya Bank 15 6.5 9.5 9 15.5 11.1 5
State Bank of India 9.5 16 17 21.5 1 13 12

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State Bank of Bikaner & Jaipur 9 13 13.5 22 7 12.9 11
State Bank of Hyderabad 8.5 6 6 20 23 12.7 9
State Bank of Indore 14.5 9.5 5.5 21.5 28 15.8 19
State Bank of Mysore 22.5 19 12 19.5 3 15.2 17
State Bank of Patiala 4 5 9.5 17.5 5.5 8.3 1
State Bank of Saurashtra 6 12.5 23.5 7 15 12.8 10
State Bank of Travancore 22.5 15 8.5 16 16.5 15.7 18

Source: Statistical Tables relating to Banks in India19992000 to 200607.


Analysis of Banks in IndiaA CAMEL Approach  267

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268  Harsh Vineet Kaur

Axis bank has a ratio of 11.01 and occupies and Karur Vysya Bank Ltd at joint second
the nineteenth rank. In the context of D/E position (Table 7).
Ratio, SBI Commercial and International Bank
have the lowest ratio of 5.28 followed by Karur Asset Quality
Vysya Bank Ltd with a ratio of 9.54. HDFC is As shown in Table 8, Nanital Bank has zero
ranked fourth in this context with a D/E ratio NPA, so it occupies the first rank in aggre-
of 11.21 followed by ICICI bank with a ratio gate in terms of asset quality. HDFC bank is
of 11.36. ranked second both in terms of ratio of NPA
SBI Commercial and International Bank to total assets (0.14) and NPA to total ad-
is the best bank in terms of capital adequacy vances (0.37). It, thus, occupies the second rank
followed by Tamilnad Mercantile Bank Ltd in aggregate as well. SBI Commercial and

Table 7
Capital Adequacy Ratios

Private Sector Banks Capital Adequacy Ratio Rank DebtEquity Ratio Rank Average

Bank of Rajasthan Ltd 11.3971429 16 21.599878 23 19.5


Bharat Overseas Bank Ltd 14.305 7 15.373965 14 10.5
Catholic Syrian Bank Ltd 9.95 23 25.257443 26 24.5
City Union Bank Ltd 13.1371429 9 13.501803 7 8
Dhanalakshmi Bank Ltd 10.6585714 21 18.063301 19 20
Federal Bank Ltd 11.7257143 13 18.942701 20 16.5
Ganesh Bank of Kurundwad Ltd 8.25833333 25 19.54455 21 23
ING Vysya Bank Ltd 10.6857143 20 14.627712 11 15.5
Jammu & Kashmir Bank Ltd 15.4528571 6 13.33081 6 6
Karnataka Bank Ltd 12.5385714 10 13.873528 8 9
Karur Vysya Bank Ltd 15.9928571 3 9.5401657 2 2.5
Lakshmi Vilas Bank Ltd 11.6328571 14 14.917843 13 13.5
Lord Krishna Bank Ltd 13.1942857 8 14.41605 10 9
Nainital Bank Ltd 15.9685714 4 13.956539 9 6.5
Ratnakar Bank Ltd 15.92 5 14.915955 12 8.5
Sangli Bank Ltd 10.445 22 17.681228 18 20
SBI Commercial and
International Bank Ltd 22.9071429 1 5.2840028 1 1
South Indian Bank Ltd 11.2042857 17 19.548534 22 19.5
Tamilnad Mercantile Bank Ltd 18.58 2 9.6235107 3 2.5
United Western Bank Ltd 7.58833333 26 21.721058 24 25
Axis Bank 11.01 19 23.448806 25 22
Centurion Bank of Punjab Ltd 9.30285714 24 15.779274 16 20
Development Credit Bank Ltd 11.1242857 18 15.37881 15 16.5
HDFC Bank 12.0642857 12 11.217883 4 8
ICICI Bank 11.6128571 15 11.360255 5 10
IndusInd Bank Ltd 12.4414286 11 16.248195 17 14
Source: Statistical Tables relating to Banks in India19992000 to 200607.

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Analysis of Banks in IndiaA CAMEL Approach  269

Table 8
Asset Quality Ratios

Private Sector Banks NPA/Total Assets Rank NPA/Total Advances Rank Average
Bank of Rajasthan Ltd 1.64571429 9 4.2857143 12 10.5
Bharat Overseas Bank Ltd 1.35666667 6 2.9183333 8 7
Catholic Syrian Bank Ltd 2.48428571 18 5.8571429 21 19.5
City Union Bank Ltd 2.61857143 19 5.3314286 17 18
Dhanalakshmi Bank Ltd 3.55 23 6.9642857 23 23
Federal Bank Ltd 2.27 16 4.3028571 13 14.5
Ganesh Bank of Kurundwad Ltd 4.86 25 11.202 25 25
ING Vysya Bank Ltd 2.07285714 14 2.9071429 7 10.5
Jammu & Kashmir Bank Ltd 0.71571429 4 1.5557143 3 3.5
Karnataka Bank Ltd 1.89571429 11 4.2571429 11 11
Karur Vysya Bank Ltd 1.52714286 7 2.8871429 6 6.5
Lakshmi Vilas Bank Ltd 2.91428571 21 5.2157143 16 18.5
Lord Krishna Bank Ltd 3.12285714 22 6.6942857 22 22
Nainital Bank Ltd 0 1 0 1 1
Ratnakar Bank Ltd 2.41714286 17 5.6071429 19 18
Sangli Bank Ltd 1.69428571 10 5.6728571 20 15
SBI Commercial and
International Bank Ltd 4.96142857 26 13.821429 26 26
South Indian Bank Ltd 2.20571429 15 4.4085714 14 14.5
Tamilnad Mercantile Bank Ltd 2.00285714 13 4.6257143 15 14
United Western Bank Ltd 4.365 24 8.3166667 24 24
Axis Bank 0.532 3 1.9685714 4 3.5
Centurion Bank of Punjab Ltd 1.61 8 3.21 9 8.5
Development Credit Bank Ltd 2.78571429 20 5.4071429 18 19
HDFC Bank 0.14714286 2 0.37 2 2
ICICI Bank 1.26571429 5 2.64 5 5
IndusInd Bank Ltd 1.98 12 3.7257143 10 11

Source: Statistical Tables relating to Banks in India19992000 to 200607.

International Bank Ltd which was best in terms as compared to old private sector banks. In
of capital adequacy has the highest NPA to terms of Net worth, Axis Bank is the best with
total assets of 4.96. It also has the highest NPA a return of 0.36. Karur Vysya Bank Ltd enjoys
to total advances of 13.82. So in terms of asset a return of 0.19 on its net worth. Overall, in
quality, it is not working properly. terms of Asset Quality, Axis Bank is rated the
best followed by Karur Vysya bank Ltd and
Management Quality HDFC bank at the second and third rank,
ICICI Bank earns the maximum profit per respectively.
employee of 9.82 (Table 9). Even HDFC Bank
earns a handsome amount of 8.59 and Axis Earning Quality
bank of 7.80. Comparatively, the new private Sangli Bank has the maximum average in-
sector banks earn more profit per employee crease in net profit of 185.70 (Table 10), but

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270  Harsh Vineet Kaur

Table 9
Management Quality

Private Sector Banks Return on Net Worth Rank Profit per Employee Rank Average
Bank of Rajasthan Ltd 0.1701828 8 1.2942857 15 11.5
Bharat Overseas Bank Ltd 0.14920237 13 2.065 12 12.5
Catholic Syrian Bank Ltd 0.18504167 5 0.9142857 18 11.5
City Union Bank Ltd 0.20704183 2 2.96 8 5
Dhanalakshmi Bank Ltd 0.06035434 20 0.5742857 21 20.5
Federal Bank Ltd 0.17681387 6 2.1342857 11 8.5
Ganesh Bank of Kurundwad Ltd -0.1713348 25 0.4083333 22 23.5
ING Vysya Bank Ltd 0.05657043 21 0.8271429 19 20
Jammu & Kashmir Bank Ltd 0.19252957 4 3.7971429 6 5
Karnataka Bank Ltd 0.16675513 9 2.9042857 9 9
Karur Vysya Bank Ltd 0.19507842 3 4.2342857 5 4
Lakshmi Vilas Bank Ltd 0.12373711 16 1.2928571 16 16
Lord Krishna Bank Ltd 0.06655197 19 1.1128571 17 18
Nainital Bank Ltd 0.15636356 12 1.6428571 14 13
Ratnakar Bank Ltd 0.0797548 18 0.6185714 20 19
Sangli Bank Ltd 0.3075569 26 2.6171429 25 25.5
SBI Commercial and
International Bank Ltd 0.0507204 22 2.88 26 24
South Indian Bank Ltd 0.15693081 11 1.6457143 13 12
Tamilnad Mercantile Bank Ltd 0.15993256 10 3.4442857 7 8.5
United Western Bank Ltd 0.0737912 23 0.808 23 23
Axis Bank 0.3632067 1 7.8085714 3 2
Centurion Bank of Punjab Ltd 0.0869052 17 2.52 10 13.5
Development Credit Bank Ltd 0.1320365 24 1.2514286 24 24
HDFC Bank 0.17609005 7 8.5942857 2 4.5
ICICI Bank 0.1310654 15 9.8257143 1 8
IndusInd Bank Ltd 0.14320211 14 7.5185714 4 9

Source: Statistical Tables relating to Banks in India19992000 to 200607.

its ratio of interest income to total income is (0.089). SBI Commercial and International
quite low (0.75) showing that the bank earns Bank is ranked second on both aspects with
its maximum income from sources other than liquid assets to total assets of 0.064 and liquid
interest. ING Vysya Bank Ltd is ranked se- assets to total deposits of 0.083. ICICI Bank
cond in terms of average increase in net profit occupies the third rank and HDFC Bank the
of 11.069. fourth position.

Liquidity Composite Index


In terms of liquidity, Ganesh Bank of On an aggregate basis, Jammu and Kashmir
Kurundwad Ltd (Table 11) is ranked the best Bank is ranked first with the least composite
both in terms of liquid assets to total assets index of 6 (Table 12). The second position be-
(0.083) and liquid assets to total deposits longs to HDFC Bank with a composite index

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Table 10
Earning Quality

Private Sector Banks Increase in Net Profit Rank Interest Income/Total Income Rank Average
Bank of Rajasthan Ltd 102.586893 3 0.8431749 11 7
Bharat Overseas Bank Ltd 7.3195934 20 0.8586836 5 12.5
Catholic Syrian Bank Ltd 60.7890183 8 0.8335764 13 10.5
City Union Bank Ltd 25.3381583 16 0.8526217 8 12
Dhanalakshmi Bank Ltd 30.63792 21 0.8357716 12 16.5
Federal Bank Ltd 39.7069097 11 0.8447158 10 10.5
Ganesh Bank of Kurundwad Ltd 52.771271 22 0.90314 2 12
ING Vysya Bank Ltd 110.693373 2 0.8208182 18 10
Jammu & Kashmir Bank Ltd 23.7629072 17 0.8926416 3 10
Karnataka Bank Ltd 28.8572552 14 0.8134911 19 16.5
Karur Vysya Bank Ltd 17.79541 18 0.8531316 7 12.5
Lakshmi Vilas Bank Ltd 83.8869864 6 0.8273403 16 11
Lord Krishna Bank Ltd 74.435779 23 0.8227045 17 20
Nainital Bank Ltd 25.4910505 15 0.9548884 1 8
Ratnakar Bank Ltd 31.2687786 13 0.8547617 6 9.5
Sangli Bank Ltd 185.704735 1 0.755369 26 13.5
SBI Commercial and
International Bank Ltd 177.36774 25 0.7874617 23 24
South Indian Bank Ltd 97.1691085 4 0.8449894 9 6.5
Tamilnad Mercantile Bank Ltd 13.5072447 19 0.8819405 4 11.5
United Western Bank Ltd 71.2076405 7 0.8325667 14 10.5
Axis Bank 40.8173323 10 0.7929931 22 16
Centurion Bank of Punjab Ltd 77.092635 24 0.7736494 25 24.5
Development Credit Bank Ltd 205.13703 26 0.8119059 20 23
HDFC Bank 32.6420172 12 0.8292672 15 13.5
ICICI Bank 89.105697 5 0.7761179 24 14.5
IndusInd Bank Ltd 46.0972227 9 0.8115977 21 15

Source: Statistical Tables relating to Banks in India19992000 to 200607.

of 6.4 and third to Nanital Bank with a com- Indonesia occupies the second position in the
posite index of 7.7. ICICI bank is ranked context of CAR (Table 13). It is followed by
fourth (composite index, 8.1) and Axis bank Arab Bangladesh Bank with a ratio of 106.82.
seventh (composite index, 9.9). Bank of Bank International Indonesia has the lowest
Rajasthan is eighth in ranking with a com- D/E ratio of 0.33, and that is why it is ranked
posite index of 11.3. the best in this category.

Foreign Banks Asset Quality


Antwerp Diamond Bank does not have any
Capital Adequacy
NPAs, so in terms of asset quality it is the
Krung Thai Bank Public Co. Ltd has the best bank. It is followed by Bank of Tokyo-
highest CAR of 129.62. Bank International Mitsubishi Ltd with a quite low NPA to total
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Table 11
Liquidity Ratios

Private Sector Banks Liquid Assets/Total Deposits Rank Liquid Assets/Total Assets Rank Average

Bank of Rajasthan Ltd 0.02906791 8 0.0253179 8 8


Bharat Overseas Bank Ltd 0.01258464 18 0.0109446 18 18
Catholic Syrian Bank Ltd 0.01038627 24 0.009433 22 23
City Union Bank Ltd 0.01535961 15 0.0135018 15 15
Dhanalakshmi Bank Ltd 0.01853035 12 0.0163619 11 11.5
Federal Bank Ltd 0.01202902 19 0.0106242 19 19
Ganesh Bank of Kurundwad Ltd 0.0896448 1 0.0833569 1 1
ING Vysya Bank Ltd 0.00980826 25 0.0077861 25 25
Jammu & Kashmir Bank Ltd 0.03432085 6 0.0302073 5 5.5
Karnataka Bank Ltd 0.01162133 20 0.0102916 20 20
Karur Vysya Bank Ltd 0.01120774 22 0.0094002 23 22.5
Lakshmi Vilas Bank Ltd 0.01382579 16 0.0119955 16 16
Lord Krishna Bank Ltd 0.03269854 7 0.0284725 6 6.5
Nainital Bank Ltd 0.02017009 10 0.0178856 10 10
Ratnakar Bank Ltd 0.02709645 9 0.0234979 9 9
Sangli Bank Ltd 0.01305473 17 0.0117918 17 17
SBI Commercial and
International Bank Ltd 0.0835534 2 0.0641491 2 2
South Indian Bank Ltd 0.01049769 23 0.0093881 24 23.5
Tamilnad Mercantile Bank Ltd 0.01788434 13 0.0154601 13 13
United Western Bank Ltd 0.01135263 21 0.0102154 21 21

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Axis Bank 0.03996579 5 0.0256786 7 6
Centurion Bank of Punjab Ltd 0.01929053 11 0.0161887 12 11.5
Development Credit Bank Ltd 0.01716348 14 0.0147666 14 14
HDFC Bank 0.06226395 4 0.0460667 4 4
ICICI Bank 0.06299229 3 0.0322824 3 3
IndusInd Bank Ltd 0.00798719 26 0.006658 26 26

Source: Statistical Tables relating to Banks in India19992000 to 200607.


Table 12
Composite Index

Private Sector Banks Capital Adequacy Asset Quality Management Earning Quality Liquidity Composite Index Rank

Bank of Rajasthan Ltd 19.5 10.5 11.5 7 8 11.3 8


Bharat Overseas Bank Ltd 10.5 7 12.5 12.5 18 12.1 10
Catholic Syrian Bank Ltd 24.5 19.5 11.5 10.5 23 17.8 22
City Union Bank Ltd 8 18 5 12 15 11.6 9
Dhanalakshmi Bank Ltd 20 23 20.5 16.5 11.5 18.3 24
Federal Bank Ltd 16.5 14.5 8.5 10.5 19 13.8 13
Ganesh Bank of Kurundwad Ltd 23 25 23.5 12 1 16.9 21
ING Vysya Bank Ltd 15.5 10.5 20 10 25 16.2 20
Jammu & Kashmir Bank Ltd 6 3.5 5 10 5.5 6 1
Karnataka Bank Ltd 9 11 9 16.5 20 13.1 12
Karur Vysya Bank Ltd 2.5 6.5 4 12.5 22.5 9.6 5
Lakshmi Vilas Bank Ltd 13.5 18.5 16 11 16 15 14
Lord Krishna Bank Ltd 9 22 18 20 6.5 15.1 16
Nainital Bank Ltd 6.5 1 13 8 10 7.7 3
Ratnakar Bank Ltd 8.5 18 19 9.5 9 12.8 11
Sangli Bank Ltd 20 15 25.5 13.5 17 18.2 23
SBI Commercial and
International Bank Ltd 1 26 24 24 2 15.4 18
South Indian Bank Ltd 19.5 14.5 12 6.5 23.5 15.2 17
Tamilnad Mercantile Bank Ltd 2.5 14 8.5 11.5 13 9.9 6

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United Western Bank Ltd 25 24 23 10.5 21 20.7 26
Axis Bank 22 3.5 2 16 6 9.9 7
Centurion Bank of Punjab Ltd 20 8.5 13.5 24.5 11.5 15.6 19
Development Credit Bank Ltd 16.5 19 24 23 14 19.3 25
HDFC Bank 8 2 4.5 13.5 4 6.4 2
ICICI Bank 10 5 8 14.5 3 8.1 4
IndusInd Bank Ltd 14 11 9 15 26 15 15

Source: Statistical Tables relating to Banks in India19992000 to 200607.


274  Harsh Vineet Kaur

Table 13
Capital Adequacy Ratios

Foreign Banks Capital Adequacy Ratio Rank DebtEquity Ratio Rank Average
ABN-AMRO Bank N.V. 11.85285714 25 9.8063976 25 25
Abu Dhabi Commercial Bank Ltd 17.69285714 17 22.597021 29 23
American Express Bank Ltd 10.87142857 27 10.075807 27 27
Antwerp Diamond Bank 54.41 6 2.6095354 11 8.5
Arab Bangladesh Bank Ltd 106.8285714 3 0.7558716 3 3
Bank International Indonesia 115.3071429 2 0.3348172 1 1.5
Bank of America NA 20.7 16 4.8143327 15 15.5
Bank of Bahrain and Kuwait B.S.C. 17.25428571 18 6.4410321 18 18
Bank of Ceylon 44.85142857 7 1.9296265 5 6
Bank of Nova Scotia 14.21285714 20 9.8736306 26 23
Bank of Tokyo-Mitsubishi Ltd 27.17714286 15 2.4658459 10 12.5
Barclays Bank PLC 32.97428571 11 1.7955462 4 7.5
BNP Paribas 11.97142857 24 8.5390331 22 23
Calyon Bank 16.66857143 19 3.9764187 14 16.5
Chinatrust Commercial Bank 37.91571429 9 2.3716738 8 8.5
Citibank N.A. 11.12285714 26 9.4683301 23 24.5
Deutsche Bank AG 14.08142857 21 6.9399599 20 20.5
Development Bank of Singapore Ltd 28.04857143 14 3.5897415 12 13
HSBC Ltd 13.09 23 8.3635165 21 22
JP Morgan Chase Bank 39.36285714 8 3.7116663 13 10.5
Krung Thai Bank Public Co. Ltd 129.6214286 1 0.5694347 2 1.5
Mashreqbank psc 59.89857143 5 6.4985008 19 12
Mizuho Corporate Bank Ltd 30.43285714 13 2.0877392 6 9.5
Oman International Bank S.A.O.G. 14.03714286 22 2.2198987 7 14.5
Societe Generale 32.30714286 12 4.9849302 16 14
Sonali Bank 82.88571429 4 5.0906371 17 10.5
Standard Chartered Bank 10.16285714 28 9.4879821 24 26
State Bank of Mauritius Ltd 35.69285714 10 2.4343774 9 9.5

Source: Statistical Tables relating to Banks in India19992000 to 200607.

assets ratio of 0.38, and NPA to total advances banks. The bank with the highest RONW has
ratio of 0.077. Low NPA ratio depicts how effi- been ranked the best. As per this criterion,
ciently the assets are being managed in the Standard Chartered Bank with the highest
bank. Banks like Bank of Ceylon, Bank of Nova RONW of 0.236 has been ranked the best. It
Scotia, Oman International Bank SAOG have is followed by Citibank NA with a return of
not been prudent in managing their assets 0.182 on its net worth. Banks like Abu Dhabi
(Table 14). Commercial Bank Ltd, Bank of Bahrain,
Kuwait B.S.C., China trust Commercial Bank
Management Quality have negative return on their net worth, and
RONW and profit per employee have been thus have been ranked quite low in this cat-
used to measure management quality of the egory (Table 15). Bank of Tokyo-Mitsubishi Ltd

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Analysis of Banks in IndiaA CAMEL Approach  275

Table 14
Asset Quality Ratios

Foreign Banks NPA/Total Assets Rank NPA/Total Advances Rank Average


ABN-AMRO Bank N.V. 0.467142857 13 0.8014286 6 9.5
Abu Dhabi Commercial Bank Ltd 1.384285714 20 11.677143 25 22.5
American Express Bank Ltd 1.724285714 22 4.3314286 21 21.5
Antwerp Diamond Bank 0 1 0 1 1
Arab Bangladesh Bank Ltd 0.175714286 8 1.0657143 10 9
Bank Internasional Indonesia 2.835714286 25 29.627143 27 26
Bank of America NA 0.135714286 7 0.2185714 3 5
Bank of Bahrain and Kuwait B.S.C. 3.892857143 26 8.4028571 24 25
Bank of Ceylon 9.602857143 28 22.601429 26 27
Bank of Nova Scotia 2.418571429 24 3.7928571 20 22
Bank of Tokyo-Mitsubishi Ltd 0.038571429 2 0.0771429 2 2
Barclays Bank PLC 0.044285714 4 5.1514286 23 13.5
BNP Paribas 0.63 16 1.2357143 12 14
Calyon Bank 0.062 5 1.2185714 11 8
Chinatrust Commercial Bank 1.495714286 21 2.5157143 18 19.5
Citibank N.A. 0.487142857 15 0.95 8 11.5
Deutsche Bank AG 0.085714286 6 0.2314286 4 5
Development Bank of Singapore Ltd 0.845714286 18 1.4814286 15 16.5
HSBC Ltd 0.378571429 11 0.9242857 7 9
JP Morgan Chase Bank 0.04 3 0.31 5 4
Krung Thai Bank Public Co. Ltd 1.108571429 19 5.0614286 22 20.5
Mashreqbank psc 0.417142857 12 1.9142857 16 14
Mizuho Corporate Bank Ltd 0.811428571 17 1.2828571 13 15
Oman International Bank S.A.O.G. 2.371428571 23 39.67 28 25.5
Societe Generale 0.361428571 10 1.3071429 14 12
Sonali Bank 0.247142857 9 2.2614286 17 13
Standard Chartered Bank 0.478571429 14 0.9828571 9 11.5
State Bank of Mauritius Ltd 3.98 27 3.69 19 23

Source: Statistical Tables relating to Banks in India19992000 to 200607.

earns the maximum profit per employee of increase of 2454.60 followed by Bank of
79.29, and is thus ranked the best in these Ceylon with an average increase of 339.38. In
terms. If is followed by Barclays Bank PLC terms of ratio of interest income to total in-
with a profit of 55.3 per employee. Krung Thai come, China trust Commercial Bank has the
Bank Public Co. Ltd is ranked third in this highest proportion of 0.906 followed by s with
category with a profit of 38.16 per employee. a ratio of 0.89 and Abu Dhabi Commercial
Bank with a ratio of 0.887 (Table 16).
Earning Quality
Krung Thai Bank Public Co. Ltd has the max- Liquidity
imum average increase in net profit of 2633.30. Liquid assets to total deposits ratio of Barclays
Bank of Tokyo-Mitsubishi Ltd has an average Bank (Table 17) PLC is the highest with a ratio

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Table 15
Management Quality

Foreign Banks Return on Net Worth Rank Profit Per Employee Rank Average
ABN-AMRO Bank N.V. 0.165322805 4 10.658571 17 10.5
Abu Dhabi Commercial Bank Ltd 0.01818676 26 3.1428571 27 26.5
American Express Bank Ltd 0.005305199 20 0.2328571 25 22.5
Antwerp Diamond Bank 0.047608758 14 33.67 4 9
Arab Bangladesh Bank Ltd 0.060455622 12 11.337143 16 14
Bank International Indonesia 0.0003565 22 7.9042857 20 21
Bank of America NA 0.105533184 8 29.268571 6 7
Bank of Bahrain and Kuwait B.S.C. 0.03236364 27 1.5214286 23 25
Bank of Ceylon 0.019353833 19 2.1928571 22 20.5
Bank of Nova Scotia 0.084506519 11 16.243333 14 12.5
Bank of Tokyo-Mitsubishi Ltd 0.143443632 6 79.294286 1 3.5
Barclays Bank PLC 0.096310288 9 55.3 2 5.5
BNP Paribas 0.00826147 24 1.2242857 24 24
Calyon Bank 0.046787305 15 23.047143 10 12.5
Chinatrust Commercial Bank 0.01317516 25 0.3057143 26 25.5
Citibank N.A. 0.182940351 2 23.772857 9 5.5
Deutsche Bank AG 0.156447547 5 29.69 5 5
Development Bank of Singapore Ltd 0.057572836 13 19.29 11 12
HSBC Ltd 0.129425993 7 9.1714286 18 12.5
JP Morgan Chase Bank 0.091281548 10 38.166667 3 6.5
Krung Thai Bank Public Co. Ltd 0.024175383 18 26.485714 8 13
Mashreqbank psc 0.03858289 17 28.82 7 12
Mizuho Corporate Bank Ltd 0.00810175 23 19.236667 12 17.5

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Oman International Bank S.A.O.G. 0.08815293 28 7.9728571 28 28
Societe Generale 0.002377657 21 8.8714286 19 20
Sonali Bank 0.172867832 3 2.6128571 21 12
Standard Chartered Bank 0.236408787 1 16.532857 13 7
State Bank of Mauritius Ltd 0.039022417 16 15.842857 15 15.5

Source: Statistical Tables relating to Banks in India19992000 to 200607.


Table 16
Earning Quality

Foreign Banks Increase in Net Profit Rank Interest Income/Total Income Rank Average
ABN-AMRO Bank N.V. 24.83722904 12 0.7360082 18 15
Abu Dhabi Commercial Bank Ltd 106.719781 24 0.8873873 3 13.5
American Express Bank Ltd 85.4000598 23 0.5387949 25 24
Antwerp Diamond Bank 104.2016006 5 0.87607 4 4.5
Arab Bangladesh Bank Ltd 1.07888018 18 0.5533737 23 20.5
Bank Internasional Indonesia 63.4733642 20 0.8287372 7 13.5
Bank of America NA 23.23125802 14 0.7433452 17 15.5
Bank of Bahrain and Kuwait B.S.C. 485.092131 27 0.8276556 8 17.5
Bank of Ceylon 339.3815866 3 0.7302891 20 11.5
Bank of Nova Scotia -68.3702727 21 0.8131788 11 16
Bank of Tokyo-Mitsubishi Ltd 2454.606757 2 0.6430995 22 12
Barclays Bank PLC 75.17779971 7 0.3653892 27 17
BNP Paribas 84.8364939 22 0.7970832 12 17
Calyon Bank 277.791611 26 0.7882531 14 20
Chinatrust Commercial Bank 133.8274 25 0.906861 1 13
Citibank N.A. 21.75364261 15 0.7327397 19 17
Deutsche Bank AG 32.30788021 11 0.5394344 24 17.5
Development Bank of Singapore Ltd 3.675841303 17 0.8906343 2 9.5
HSBC Ltd 39.0433783 10 0.7295323 21 15.5
JP Morgan Chase Bank 243.0884219 4 0.5228326 26 15
Krung Thai Bank Public Co. Ltd 2633.301945 1 0.8587568 6 3.5
Mashreqbank psc 2.60350196 19 0.7914858 13 16

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Mizuho Corporate Bank Ltd 102.3855933 6 0.8264599 9 7.5
Oman International Bank S.A.O.G. 54.68412742 8 0.8624772 5 6.5
Societe Generale 944.862667 28 0.768112 16 22
Sonali Bank 9.490301242 16 0.2797289 28 22
Standard Chartered Bank 50.23861401 9 0.7793201 15 12
State Bank of Mauritius Ltd 24.29316143 13 0.8162916 10 11.5

Source: Statistical Tables relating to Banks in India19992000 to 200607.


278  Harsh Vineet Kaur

Table 17
Liquidity Ratios

Foreign Banks Liquid Assets/Total Deposits Rank Liquid Assets/Total Assets Rank Average
ABN-AMRO Bank N.V. 0.029257139 20 0.0158064 22 21
Abu Dhabi Commercial Bank Ltd 0.017299873 26 0.0107784 24 25
American Express Bank Ltd 0.151078659 10 0.0724645 6 8
Antwerp Diamond Bank 0.728810188 2 0.0671661 8 5
Arab Bangladesh Bank Ltd 0.058490944 19 0.0198433 19 19
Bank Internasional Indonesia 0.199035894 9 0.0252683 18 13.5
Bank of America NA 0.005808906 28 0.0020217 28 28
Bank of Bahrain and Kuwait B.S.C. 0.078144433 17 0.0522066 10 13.5
Bank of Ceylon 0.066669713 18 0.0322221 16 17
Bank of Nova Scotia 0.019664997 24 0.0105309 25 24.5
Bank of Tokyo-Mitsubishi Ltd 0.028520259 21 0.0140107 23 22
Barclays Bank PLC 0.924219818 1 0.1349454 3 2
BNP Paribas 0.098663287 12 0.0504181 11 11.5
Calyon Bank 0.2897564 5 0.0781501 5 5
Chinatrust Commercial Bank 0.07851229 16 0.0362413 13 14.5
Citibank N.A. 0.01047876 27 0.0066653 26 26.5
Deutsche Bank AG 0.094287762 13 0.0417435 12 12.5
Development Bank of Singapore Ltd 0.019495164 25 0.0060708 27 26
HSBC Ltd 0.028357824 22 0.018177 20 21
JP Morgan Chase Bank 0.631379709 3 0.1749522 2 2.5
Krung Thai Bank Public Co. Ltd 0.204510188 7 0.0308844 17 12
Mashreqbank psc 0.20351524 8 0.0678743 7 7.5
Mizuho Corporate Bank Ltd 0.125461261 11 0.0328345 15 13
Oman International Bank S.A.O.G. 0.403339548 4 0.242751 1 2.5
Societe Generale 0.27305078 6 0.0917104 4 5
Sonali Bank 0.08320126 14 0.0554429 9 11.5
Standard Chartered Bank 0.02776373 23 0.0162845 21 22
State Bank of Mauritius Ltd 0.081230433 15 0.0336703 14 14.5

Source: Statistical Tables relating to Banks in India19992000 to 200607.

of 0.924. Antwerp Diamond Bank has a ratio Composite Index


of 0.72 followed by JPMorgan Chase Bank
with a ratio of 0.63. Oman International Bank On the aggregate basis, Antwerp Bank is
SAOG has the highest liquid assets to total ranked the best with the lowest composite
assets ratio of 0.24 followed by JPMorgan index of 5.6. The second position is occupied
Chase Bank with a ratio of 0.174 and Barclays by JPMorgan Chase Bank with a composite
Bank PLC with a ratio of 0.13. The best bank index of 7.7 and the third rank belongs to
in terms of liquidity is Barclays Bank PLC fol- Barclays Bank PLC with a composite index
lowed by Oman International Bank S.A.O.G. of 9.1 (Table 18).
and JPMorgan Chase Bank.

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Table 18
Composite Index

Foreign Banks Capital Adequacy Asset Quality Management Earning Quality Liquidity Composite Index Rank
ABN-AMRO Bank N.V. 25 9.5 10.5 15 21 16.2 20
Abu Dhabi Commercial Bank Ltd 23 22.5 26.5 13.5 25 22.1 28
American Express Bank Ltd 27 21.5 22.5 24 8 20.6 27
Antwerp Diamond Bank 8.5 1 9 4.5 5 5.6 1
Arab Bangladesh Bank Ltd 3 9 14 20.5 19 13.1 10
Bank Internasional Indonesia 1.5 26 21 13.5 13.5 15.1 15
Bank of America NA 15.5 5 7 15.5 28 14.2 12
Bank of Bahrain and Kuwait B.S.C. 18 25 25 17.5 13.5 19.8 26
Bank of Ceylon 6 27 20.5 11.5 17 16.4 22
Bank of Nova Scotia 23 22 12.5 16 24.5 19.6 25
Bank of Tokyo-Mitsubishi Ltd 12.5 2 3.5 12 22 10.4 5
Barclays Bank PLC 7.5 13.5 5.5 17 2 9.1 3
BNP Paribas 23 14 24 17 11.5 17.9 24
Calyon Bank 16.5 8 12.5 20 5 12.4 8
Chinatrust Commercial Bank 8.5 19.5 25.5 13 14.5 16.2 21
Citibank N.A. 24.5 11.5 5.5 17 26.5 17 23
Deutsche Bank AG 20.5 5 5 17.5 12.5 12.1 6
Development Bank of Singapore Ltd 13 16.5 12 9.5 26 15.4 16
HSBC Ltd 22 9 12.5 15.5 21 16 19
JP Morgan Chase Bank 10.5 4 6.5 15 2.5 7.7 2
Krung Thai Bank Public Co. Ltd 1.5 20.5 13 3.5 12 10.1 4

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Mashreqbank psc 12 14 12 16 7.5 12.3 7
Mizuho Corporate Bank Ltd 9.5 15 17.5 7.5 13 12.5 9
Oman International Bank S.A.O.G. 14.5 25.5 28 6.5 2.5 15.4 17
Societe Generale 14 12 20 22 5 14.6 13
Sonali Bank 10.5 13 12 22 11.5 13.8 11
Standard Chartered Bank 26 11.5 7 12 22 15.7 18
State Bank of Mauritius Ltd 9.5 23 15.5 11.5 14.5 14.8 14

Source: Statistical Tables relating to Banks in India19992000 to 200607.


Analysis of Banks in IndiaA CAMEL Approach  279

Global Business Review, 11:2 (2010): 257280


280  Harsh Vineet Kaur

Conclusion alliances, and so on. Banks are diverting their


focus on retail banking so as to obtain access
The advantage of the CAMEL model is that to low cost funds and to expand into relatively
it highlights the key aspects of a bank that an untapped potential areas. Banking sector is
analyst should be interested incapital, asset to witness the emergence of financial super-
quality, earnings and liquidity. For off-site markets in the form of universal banks (Uppal
analysis purposes, it also offers the flexibility and Kaur 2007). They are providing a suite of
of selecting the most appropriate ratios that services from retail to corporate banking and
a regulatory authority, feel are most applic- industrial lending to investment banking,
able to its own financial environment. The besides providing personnel financial services
model simply offers a framework within which is the highest growth segment. The
which to select the appropriate ratios and financial sector reforms have brought the
specify the standards against which to eva- Indian financial system closer to global stand-
luate the performance of an individual bank ards. The process of strengthening the bank-
as well as the performance of an industry ing system has to be viewed as a continuous
(Cargill 1989). one. With India increasingly getting inte-
Changing financial scenario has opened up grated with the global financial world, the
opportunities for banks to expand their global Indian banking sector has still a long way to
presence through self expansion, strategic go to catch up with their counterparts.

REFERENCES

Arora Sangeeta and Shubhpreet Kaur. 2006. Finan- Media for Freedom. 2007. Banks on CAMEL in
cial Performance of Indian Banking Sector in Nepal, Issue-14, December 2007.
Post-Reform Era, GYAN Management, I(I), July Reserve Bank of India. 1991. Report of the Committee
December. on the Financial System. Mumbai.
Cargill, T.F. 1989. CAMEL Ratings and the CD Market, .2003. Report on Currency and Finance. Mumbai.
Journal of Financial Services Research, Volume 3. Statistical Tables Relating to Banks in India, 19992000
Gilbert, R. Alton, Andrew P. Meyer and Mark D. to 200607, Reserve Bank of India.
Vaughan. 2000. The Role Of A CAMEL Downgrade Uppal R.K and Rimpi Kaur. 2007. Indian Banking
Model in Bank Surveillance, Federal Reserve Bank
Industry: Comparative Performance Evaluation in
of St. Louis. Downloaded from: Working Paper
Liberalized and Globalized Era, GYAN Management,
2000-021A http://research.stlouisfed.org/wp/2000/
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2000-021.pdf

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