Performance Measurement System in Indian Banking Sector in Camel Framework a Comparative Study of Private and Foreign Banks in India

Vol 16 , Issue 1 , January - June 2015 | Pages: 75-85 | Research Paper

https://doi.org/10.51768/dbr.v16i1.161201507

Published Online: January 03, 2015

Author Details ( * ) denotes Corresponding author

1. * S.K. Khatik, Professor and Head, Department of Commerce, Barkatullah Univeristy, Bhopal, Madhya Pradesh, India (shankhla2003@yahoo.com)

2. Amit Kr. Nag, Assistant Professor, Department of Commerce, The Bhopal School of Social Sciences. (BSSS), Shyamapalli, Awadhpuri, Khajurikalan, Piplani, Bhopal, Madhya Pradesh, India (amit_nag78@yahoo.co.in)

The Banking sector is a crucial linkage between the household sectors and firms and forms the backbone of an economy. It forms the basis for all the productive activities taking place in an economy and the performance of the economy is judged by the performance of its banking sector. The banking sector constitutes a major part of the financial service sector and its soundness is necessary for healthy, dynamic, growing, and vibrant economy. A sound and healthy banking sector ensures an efficient, profitable, stable, flexible, and productive economy.

Design/Methodology/Approach: The present research work has been undertaken to measure the performance of the banking sector in India by analyzing the performance of Private and Foreign banks with the help of CAMEL MODEL Approach. The Camel Model approach incorporates important parameters like Capital Adequacy, Assets Quality, Management Efficiency, Earnings Quality, and Liquidity.

Research Limitations/Implications/Practical Implications/ Originality/Value Findings: The data was collected from the annual reports of five private banks and five foreign banks in India covering the period of five years starting from 2007-08 to 2011-2012 and the data analysis was conducted by using Analysis of Variance (ANOVA)- Two way classification model and is analytical in nature. The study reveals that among the private banks performance of ICICI Bank was the best and among the foreign banks performance of Antwerp Diamond Bank was best.

Keywords

Capital Adequacy, Assets Quality, Management Efficiency, Earning Quality, and Liquidity

Agarwal, P.K., & Sinha,.S.K. (2010). Financial performance of Microfinance Institutions of India - A cross sectional study. Delhi Business Review, 11(2), 37-46.
Athanasoglou, P.P., Brissimis, S.N., & Delis, M.D. (2008). Bank-specific, industry-specific and macroeconomic determinants of bank profitability. Journal of International Financial Markets, Institutions and Money, 18(2), 121-136.
Bhat, S. (2008). Financial management – Principles and Practice (2nd ed.). New Delhi: Excel Books.
Bhayani, S. (2006). Performance of the New Indian Private Sector Banks: A comparative study. Journal of Management Research, 5(11) 53-70.
Bodla, B.S., & Verma, R. (2006). Evaluating performance of banks through CAMEL model: A case study of SBI and ICICI. The ICFAI Journal of Bank Management, 5(3), 49-63.
Bodla, B.S., & Verma, R. (2006). Determinants of profitability of banks in India: A multivariate analysis, Delhi Business Review, 7(2), 79-88.
Brigham, E.F. (1978). Fundamentals of financial management. Illnois: The Dryden Press.
Chaudhry, S., & Singh, S. (2012). Impact of reforms on the asset auality in Indian banking, Zenith International Journal of Multidisciplinary Research, 2(1), January 2012, ISSN: 2231-5780.
Ghosh, S. (2010). Credit growth, bank soundness and financial fragility, evidence from Indian banking sector, South Asia Economic Journal, 11(March), 69-98.
Gupta, A.S. (2011). The current state of financial and regulatory frameworks in Asian economies: The case of India, ADBI Working Paper Series 303.
Gupta, R. (2008). A camel model analysis of private banks in India, Journal of Gyan Management, 2(1), 3-8.
Goyal, K.A. (2010). Risk management in Indian banks: Some emerging issues, International Journal of Economics and Research, 1(1), 102-109.
Howard, B.B., & Uptan, M. (1953). Introduction to business finance. London: McGraw Hill Book Co., Inc., 188.
Khatik, S.K., & Nag, A. (2014). Analyzing soundness of nationalized banks in India: A camel approach. APSTRACT (Agroinform Publishing House) Applied Studies in Agribusiness and Commerce. 8(1), 73-78.
Khan, M.Y., & Jain, P.K. (1982). Basic financial management. New Delhi: Tata McGraw Hill Publishing Co. Ltd..
Mittal, R.K., & Dhingra, S. (2007). Assessing the impact of computerization on productivity and profitability of Indian banks, Delhi Business Review, 8(1), 63-73.
Northcott, C.A. (2004). Competition in banking: A review of the literature. Working Paper No. 04-24. Bank of Canada. Retrieved April 26, 2007, from Bank of Canada: http://www.bankofcanada.ca/en/res/wp/2004/wp04-24.pdf.
Pandey, I.M. (2002). Financial management: New Delhi: Vikas Publishing House Pvt. Ltd., 912.
Prasad, K.V.N., & Ravinder, G. (2012). A camel model analysis of nationalized banks in India. Journal of Venture Capital & Financial Services, 6(1), 5.
Prasuna, D.G. (2003). Performance snapshot 2003-04. Chartered Financial Analyst, 10(11), 6-13.
Said, M. (2003). Liquidity, solvency and efficiency: An empirical analysis of the Japanese banks distress. Journal of Oxford, 5(3), 354-358.