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as a tool of performance evaluation for banking institutions
Lovely Ganeriwal (18) Unnati Modi (31)
SOM- LALIT INSTITUTE OF MANAGEMENT STUDIES (SLIMS) AHMEDABAD – 380 009
This is to certify that Miss Unnati Modi and Lovely Ganeriwal have completed their project report titled “To study the strength of using CAMELS framework as a tool of performance evaluation for banking institutions” under my supervision. To the best of my knowledge and belief this is their original work and this, wholly or partially, has not been submitted for any degree of this or any other University.
Prof. Nirali Parikh
Signature - ______________
We hereby declare that this project work entitled “To study the strength of using CAMELS framework as a tool of performance evaluation for banking institutions” is our work, carried out under the guidance of Professor Nirali Parikh and Mr Shivshankar (Corporation Bank). Our report neither fully nor partially has ever been submitted for award of any other degree to either this university or any other university.
LOVELY GANERIWAL UNNATI MODI
We know that final the project is for the development and enhancement of the knowledge in particular field. It can never be possible to make a mark in today’s competitive era only with theoretical knowledge when industries are developing at global level, practical knowledge of administration and management of business is very important. Hence, practical study is of great importance to PGDM student Banking is a highly information intensive activity that relies heavily on information technology (IT) to acquire, process, and deliver the information to all relevant customers. Banks used the Internet technology as a strategic weapon to revolutionize the way they operate, deliver, and compete against each other. Although a complete turnaround in banking sector performance is not expected till the completion of reforms, signs of improvement are visible in some indicators under the CAMEL framework. Under this bank is required to enhance capital adequacy, strengthen asset quality, improve management, increase earnings and reduce sensitivity to various financial risks. 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 bank’s performance and how this particular model encompasses a wide range of parameters making it a widely used and accepted model in today’s scenario. We have undergone our Grand Project at CORPORATION BANK, AHMEDABAD. We feel great pleasure to present this report work after our training at CORPORATION BANK that produced to be golden opportunity for us by enriching our knowledge by comparing our theoretical knowledge with the managerial skill and application. Simple language has been used throughout the report. Report is illustrated with figure, charts and diagrams as and when required.
Words are the dress of thoughts, appreciating and acknowledging those who are responsible for successful completion of the project. Our sincerity gratitude goes to Prof. Nirali Parikh who helped us to work on this project and provided us all the help, guidance and encouragement to complete this project. The encouragement and guidance given by Mr Shivshankar (Corporation Bank) have made this a personally rewarding experience. We thank him for his support and inspiration, without which, understanding the intricacies of the project would have been exponentially difficult. We are sincerely grateful Som-Lalit Institute Of Business Management who provided us the opportunity and inspiration needed to prepare this training report in congenial manner.
WITH SINCERE THANKS, LOVELY GANERIWAL UNNATI MODI
In today’s scenario, the banking sector is one of the fastest growing sector and a lot of funds are invested in Banks. Also today’s banking system is becoming more complex. So, we thought of evaluating the performance of the banks. There are so many models of evaluating the performance of the banks, but we have chosen the CAMELS Model to evaluate the performance of the banks. We have read a lot of books and found it the best model because it measures the performance of the banks from each parameter i.e. Capital, Assets, Management, Earnings and Liquidity. After deciding the model, we have decided to take two public bank and two private bank for comparison. We have collected annual reports of all the banks. And we have calculated ratios for all the banks and interpreted them. After that we have given weightage to each parameter of the CAMELS Model. According to their importance and our understandings, we have allocated weightage to the each ratios of the each parameter. From the weighted results of each ratio, we got percentage on the bases of the performance of the bank. On the basis of total derived, we have given ranking to the banks. Ranking as per our analysis, 1. Kotak Mahindra Bank 2. Bank of Baroda 3. Corporation Bank 4. Karur Vysya Bank
TABLE OF CONTENT
Chapter Certificate Declaration Preface Acknowledgement Executive Summary 1 1.1 1.2 1.3 1.4 1.5 1.6 INTRODUCTION Bank Origin and Use of Banks Banking Reforms Basel II Accord Camel Rating System Need for Camel Rating 2 CAMEL FRAMEWORK 2.1 2.2 2.3 2.4 2.5 Capital Adequacy Asset Management Management Soundness Earnings & Profitability Liquidity 3 Introduction of Banks 3.1 Private sector Banks 3.1.1 Karur Vysya Bank 3.1.2 Kotak Mahindra Bank Public Sector Banks 3.2.1 Bank Of Baroda 3.2.2 Corporation Bank Particulars Page no I ii iii iv V
4 RESEARCH METHODOLOGY 4.1 4.1.1 4.1.2 4.2 4.2.1 4.2.2 4.2.3 4.3 Objective of the study Statement of problem Research type Research Method Data Source Contribution of the Study Beneficiaries Limitation of the study
5 RATIOS ANALYSIS 5.1 5.2 5.3 5.4 Corporation Bank Ratios Karur Vysya Bank Ratios Bank Of Baroda Ratios Kotak Mahindra Bank Ratios 6 FINDING AND ANALYSIS 6.1 6.2 6.3 6.4 6.5 6.6 Reasons for weightage Capital adequency Assets Quality Management Earnings Liquidity 7 Camel Rating 7.1 7.2 Table showing rating Chart Showing comparison Recommendation Conclusion Bibliography Annexure
LIST OF TABLES
CAMEL Framework Page 8
1 1.1 1.2 1.3 1.4 1.5 2 2.1 2.2 2.3 2.4 2.5 3 3.1 3.2 3.3 3.4 3.5 4 4.1 4.2 4.3 4.4 4.5
Corporation Bank Capital Ratios Assets Ratios Management Ratios Earnings Ratios Liquidity Ratios Karur Vysya Bank Capital Ratios Assets Ratios Management Ratios Earnings Ratios Liquidity Ratios Bank of Baroda Capital Ratios Assets Ratios Management Ratios Earnings Ratios Liquidity Ratios Kotak Mahindra Bank Capital Ratios Assets Ratios Management Ratios Earnings Ratios Liquidity Ratios
5 6 7 8 9 10
Comparison of Capital adequacy ratios Comparison of Asset quality ratios Comparison of Management ratios Comparison of Earnings ratios Comparison of Liquidity ratios Camel Rating
1.1 The Bank
The word bank means an organization where people and business can invest or borrow money; change it to foreign currency etc. According to Halsbury “A Banker is an individual, Partnership or Corporation whose sole pre-dominant business is banking, that is the receipt of money on current or deposit account, and the payment of cheque drawn and the collection of cheque paid in by a customer.’’
1.2 The Origin and Use of Banks
The Word ‘Bank’ is derived from the Italian word ‘Banko’ signifying a bench, which was erected in the market-place, where it was customary to exchange money. The Lombard Jews were the first to practice this exchange business, the first bench having been established in Italy A.D. 808. Some authorities assert that the Lombard merchants CAMEL Framework Page 10
commenced the business of money-dealing, employing bills of exchange as remittances, about the beginning of the thirteenth century. About the middle of the twelfth century it became evident, as the advantage of coined money was gradually acknowledged, that there must be some controlling power, some corporation which would undertake to keep the coins that were to bear the royal stamp up to a certain standard of value; as, independently of the ‘sweating’ which invention may place to the credit of the ingenuity of the Lombard merchants- all coins will, by wear or abrasion, become thinner, and consequently less valuable; and it is of the last importance, not only for the credit of a country, but for the easier regulation of commercial transactions, that the metallic currency be kept as nearly as possible up to the legal standard. Much unnecessary trouble and annoyance has been caused formerly by negligence in this respect. The gradual merging of the business of a goldsmith into a bank appears to have been the way in which banking, as we now understand the term, was introduced into England; and it was not until long after the establishment of banks in other countries-for state purposes, the regulation of the coinage, etc. that any large or similar institution was introduced into England. It is only within the last twenty years that printed cheques have been in use in that establishment. First commercial bank was Bank of Venice which was established in 1157 in Italy.
1.3 THE BANKING REFORMS
In 1991, the Indian economy went through a process of economic liberalization, which was followed up by the initiation of fundamental reforms in the banking sector in 1992. The banking reform package was based on the recommendations proposed by the Narasimham Committee Report (1991) that advocated a move to a more market oriented banking system, which would operate in an environment of prudential regulation and transparent accounting. One of the primary motives behind this drive was to introduce an element of market discipline into the regulatory process that would reinforce the
supervisory effort of the Reserve Bank of India (RBI). Market discipline, especially in the financial liberalization phase, reinforces regulatory and supervisory efforts and provides a strong incentive to banks to conduct their business in a prudent and efficient manner and to maintain adequate capital as a cushion against risk exposures. Recognizing that the success of economic reforms was contingent on the success of financial sector reform as well, the government initiated a fundamental banking sector reform package in 1992. Banking sector, the world over, is known for the adoption of multidimensional strategies from time to time with varying degrees of success. Banks are very important for the smooth functioning of financial markets as they serve as repositories of vital financial information and can potentially alleviate the problems created by information asymmetries. From a central bank’s perspective, such high-quality disclosures help the early detection of problems faced by banks in the market and reduce the severity of market disruptions. Consequently, the RBI as part and parcel of the financial sector deregulation, attempted to enhance the transparency of the annual reports of Indian banks by, among other things, introducing stricter income recognition and asset classification rules, enhancing the capital adequacy norms, and by requiring a number of additional disclosures sought by investors to make better cash flow and risk assessments. During the pre-economic reforms period, commercial banks & development financial institutions were functioning distinctly, the former specializing in short & medium term financing, while the latter on long term lending & project financing. Commercial banks were accessing short term low cost funds thru savings investments like current accounts, savings bank accounts & short duration fixed deposits, besides collection float. Development Financial Institutions (DFIs) on the other hand, were essentially depending on budget allocations for long term lending at a concessionary rate of interest. The scenario has changed radically during the post reforms period, with the resolve of the government not to fund the DFIs through budget allocations. DFIs like IDBI, IFCI & ICICI had posted dismal financial results. Infect, their very viability has become a
question mark. Now, they have taken the route of reverse merger with IDBI bank & ICICI bank thus converting them into the universal banking system.
1.4 BASEL II ACCORD
Bank capital framework sponsored by the world's central banks designed to promote uniformity, make regulatory capital more risk sensitive, and promote enhanced risk management among large, internationally active banking organizations. The International Capital Accord, as it is called, will be fully effective by January 2008 for banks active in international markets. Other banks can choose to "opt in," or they can continue to follow the minimum capital guidelines in the original Basel Accord, finalized in 1988. The revised accord (Basel II) completely overhauls the 1988 Basel Accord and is based on three mutually supporting concepts, or "pillars," of capital adequacy. The first of these pillars is an explicitly defined regulatory capital requirement, a minimum capital-to-asset ratio equal to at least 8% of risk-weighted assets. Second, bank supervisory agencies, such as the Comptroller of the Currency, have authority to adjust capital levels for individual banks above the 8% minimum when necessary. The third supporting pillar calls upon market discipline to supplement reviews by banking agencies. Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision. The purpose of Basel II, which was initially published in June 2004, is to create an international standard that banking regulators can use when creating regulations about how much capital banks need to put aside to guard against the types of financial and operational risks banks face. Advocates of Basel II believe that such an international standard can help protect the international financial system from the types of problems that might arise should a major bank or a series of banks collapse. In practice, Basel II attempts to accomplish this by setting up rigorous risk and capital management requirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices. Generally speaking, these rules mean that the greater
risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability.
1. Ensuring that capital allocation is more risk sensitive; 2. Separating operational risk from credit risk, and quantifying both; 3. Attempting to align economic and regulatory capital more closely to reduce the scope for regulatory arbitrage. Basel II has largely left unchanged the question of how to actually define bank capital, which diverges from accounting equity in important respects. The Basel I definition, as modified up to the present, remains in place.
The Accord in operation
Basel II uses a "three pillars" concept – (1) minimum capital requirements (addressing risk), (2) supervisory review and (3) market discipline – to promote greater stability in the financial system.
The Three Pillars of Basel II
The Basel I accord dealt with only parts of each of these pillars. For example: with respect to the first Basel II pillar, only one risk, credit risk, was dealt with in a simple manner while market risk was an afterthought; operational risk was not dealt with at all.
The First Pillar
The first pillar deals with maintenance of regulatory capital calculated for three major components of risk that a bank faces: credit risk, operational risk and market risk. Other risks are not considered fully quantifiable at this stage. The credit risk component can be calculated in three different ways of varying degree of sophistication, namely standardized approach, Foundation IRB and Advanced IRB. IRB stands for "Internal Rating-Based Approach". For operational risk, there are three different approaches - basic indicator approach or BIA, standardized approach or TSA, and advanced measurement approach or AMA. For market risk the preferred approach is VAR (value at risk). As the Basel 2 recommendations are phased in by the banking industry it will move from standardized requirements to more refined and specific requirements that have been developed for each risk category by each individual bank. The upside for banks that do develop their own bespoke risk measurement systems is that they will be rewarded with potentially lower risk capital requirements. In future there will be closer links between the concepts of economic profit and regulatory capital.
Credit Risk can be calculated by using one of three approaches 1. Standardized Approach 2. Foundation IRB (Internal Ratings Based) Approach 3. Advanced IRB Approach The standardized approach sets out specific risk weights for certain types of credit risk. The standard risk weight categories are used under Basel 1 and are 0% for short term government bonds, 20% for exposures to OECD Banks, 50% for residential mortgages and 100% weighting on commercial loans. A new 150% rating comes in for borrowers with poor credit ratings. The minimum capital requirement( the percentage of risk weighted assets to be held as capital) remains at 8%. For those Banks that decide to adopt the standardized ratings approach they will be forced to rely on the ratings generated by external agencies. Certain Banks are developing the IRB approach as a result.
The Second Pillar
The second pillar deals with the regulatory response to the first pillar, giving regulators much improved 'tools' over those available to them under Basel I. It also provides a framework for dealing with all the other risks a bank may face, such as systemic risk, pension risk, concentration risk, strategic risk, reputation risk, liquidity risk and legal risk, which the accord combines under the title of residual risk. It gives banks a power to review their risk management system.
The Third Pillar
The third pillar greatly increases the disclosures that the bank must make. This is designed to allow the market to have a better picture of the overall risk position of the bank and to allow the counterparties of the bank to price and deal appropriately. The new Basel Accord has its foundation on three mutually reinforcing pillars that allow banks and bank supervisors to evaluate properly the various risks that banks face and realign regulatory capital more closely with underlying risks. The first pillar is compatible with
the credit risk, market risk and operational risk. The regulatory capital will be focused on these three risks. The second pillar gives the bank responsibility to exercise the best ways to manage the risk specific to that bank. Concurrently, it also casts responsibility on the supervisors to review and validate banks’ risk measurement models. The third pillar on market discipline is used to leverage the influence that other market players can bring. This is aimed at improving the transparency in banks and improves reporting.
1.5 CAMEL RATING SYSTEM
The CAMEL rating system is based upon an evaluation of five critical elements of a credit union's operations: Capital Adequacy, Asset Quality, Management, Earnings and Asset/Liability Management. This rating system is designed to take into account and reflect all significant financial and operational factors examiners assess in their evaluation of a credit union's performance. Credit unions are rated using a combination of financial ratios and examiner judgment. Since the composite CAMEL rating is an indicator of the viability of a credit union, it is important that examiners rate credit unions based on their performance in absolute terms rather than against peer averages or predetermined benchmarks. The examiner must use professional judgment and consider both qualitative and quantitative factors when analyzing a credit union's performance. Since numbers are often lagging indicators of a credit union's condition, the examiner must also conduct a qualitative analysis of current and projected operations when assigning CAMEL ratings. Although the CAMEL composite rating should normally bear a close relationship to the component ratings, the examiner should not derive the composite rating solely by computing an arithmetic average of the component ratings. Following are general definitions the examiner should use for assigning the credit union's CAMEL composite rating:
1.6 NEED OF CAMEL RATING SYSTEM IN BANKS
In 1979, the bank regulatory agencies created the Uniform Financial Institutions Rating System (UFIRS). Under the original UFIRS a bank was assigned ratings based on performance in five areas: the adequacy of Capital, the quality of Assets, the capability of Management, the quality and level of Earnings and the adequacy of Liquidity. Bank supervisors assigned a 1 through 5 rating for each of these components and a composite rating for the bank. This 1 through 5 composite rating was known primarily by the acronym CAMEL. A bank that received a CAMEL of 1 was considered sound in every respect and generally had component ratings of 1 or 2 while a bank with a CAMEL of 5 exhibited unsafe and unsound practices or conditions, critically deficient performance and was of the greatest supervisory concern. While the CAMEL rating normally bore close relation to the five component ratings, it was not the result of averaging those five grades. Rather, supervisors consider each institution's specific situation when weighing component ratings and, more generally, review all relevant factors when assigning ratings. CAMEL ratings reflect the excellent banking conditions and performance over the last several years. There is a need for bank employees to have sufficient knowledge of the rating system, in order to guide the banking growth rate in the positive direction. Lack of knowledge among employees regarding banking performance indicators affects banks negatively as these are the basis for any banking action.
Capital base of financial institutions facilitates depositors in forming their risk perception about the institutions. Also, it is the key parameter for financial managers to maintain adequate levels of capitalization. Moreover, besides absorbing unanticipated shocks, it signals that the institution will continue to honor its obligations. The most widely used indicator of capital adequacy is capital to risk-weighted assets ratio (CRWA). According to Bank Supervision Regulation Committee (The Basle Committee) of Bank for International Settlements, a minimum 8 percent CRWA is required. Capital adequacy ultimately determines how well financial institutions can cope with shocks to their balance sheets. Thus, it is useful to track capital-adequacy ratios that take into account the most important financial risks—foreign exchange, credit, and interest rate risks—by assigning risk weightings to the institution’s assets. Capital cushions fluctuations in earnings so that credit unions can continue to operate in periods of loss or negligible earnings. It also provides a measure of reassurance to the members that the organization will continue to provide financial services. It serves to support growth as a free source of funds and provides protection against insolvency. While meeting statutory capital requirements is a key factor in determining capital adequacy, the credit union’s operations and risk position may warrant additional capital beyond the statutory requirements. Maintaining an adequate level of capital is a critical element. Determining the adequacy of a credit union's capital begins with a qualitative evaluation of critical variables that directly bear on the institution's overall financial condition. The examiner should also consider the interrelationships with the other areas: • • • Capital level and trend analysis; Compliance with earnings transfers requirements and risk-based net worth requirements; Composition of capital;
• • • • •
Interest and dividend policies and practices; Adequacy of the Allowance for Loan and Lease Losses account; Quality, type, liquidity and diversification of assets, with particular reference to classified assets; Loan and investment concentrations; Growth plans; Ability of management to control and monitor risk, including credit and interest rate risk; Earnings: Good historical and current earnings performance enables a credit union to fund its growth, remain competitive, and maintain a strong capital position;
Liquidity and funds management; Economic Environment.
Capital Risk Adequacy Ratio: CRAR is a ratio of Capital Fund to Risk Weighted Assets. Reserve Bank of India prescribes Banks to maintain a minimum Capital to risk-weighted Assets Ratio (CRAR) of 9 % with regard to credit risk, market risk and operational risk on an ongoing basis, as against 8 % prescribed in Basel documents. Total capital includes tier-I capital and Tier-II capital. Tier-I capital includes paid up equity capital, free reserves, intangible assets etc. Tier-II capital includes long term unsecured loans, loss reserves, hybrid debt capital instruments etc. The higher the CRAR, the stronger is considered a bank, as it ensures high safety against bankruptcy. CRAR = Capital/ Total Risk Weighted Credit Exposure
Debt Equity Ratio: This ratio indicates the degree of leverage of a bank. It indicates how much of the bank business is financed through debt and how much through equity. This is calculated as the proportion of total asset liability to net worth. ‘Outside liability’ includes total borrowing, deposits and other liabilities. ‘Net worth’ includes equity capital and reserve and surplus. Higher the ratio indicates less protection for the creditors and depositors in the banking system. Debt Equity Ratio = Borrowings/ (Share Capital + reserves) Total Advance to Total Asset Ratio: This is the ratio of the total advanced to total asset. This ratio indicates banks aggressiveness in lending which ultimately results in better profitability. Higher ratio of advances of bank deposits (assets) is preferred to a lower one. Total advances also include receivables. The value of total assets is excluding the revolution of all the assets. Total Advance to Total Asset Ratio = Total Advances/ Total Asset Government Securities to Total Investments: The percentage of investment in government securities to total investment is a very important indicator, which shows the risk taking ability of the bank. It indicates a bank’s strategy as being high profit high risk or low profit low risk. It also gives a view as to the availability of alternative investment opportunities. Government securities are generally considered as the most safe debt instrument, which, as a result, carries the lowest return. Since government securities are risk free, the higher the government security to investment ratio, the lower the risk involved in a bank’s investments. Government Securities to Total Investments = Government Securities/ Total Investment
2.2 ASSET QUALITY
Asset quality determines the robustness of financial institutions against loss of value in the assets. The deteriorating value of assets, being prime source of banking problems, directly pour into other areas, as losses are eventually written-off against capital, which ultimately jeopardizes the earning capacity of the institution. With this backdrop, the asset quality is gauged in relation to the level and severity of non-performing assets, adequacy of provisions, recoveries, distribution of assets etc. Popular indicators include nonperforming loans to advances, loan default to total advances, and recoveries to loan default ratios. The solvency of financial institutions typically is at risk when their assets become impaired, so it is important to monitor indicators of the quality of their assets in terms of overexposure to specific risks, trends in nonperforming loans, and the health and profitability of bank borrowers— especially the corporate sector. Share of bank assets in the aggregate financial sector assets: In most emerging markets, banking sector assets comprise well over 80 per cent of total financial sector assets, whereas these figures are much lower in the developed economies. Furthermore, deposits as a share of total bank liabilities have declined since 1990 in many developed countries, while in developing countries public deposits continue to be dominant in banks. In India, the share of banking assets in total financial sector assets is around 75 per cent, as of end-March 2008. There is, no doubt, merit in recognizing the importance of diversification in the institutional and instrument-specific aspects of financial intermediation in the interests of wider choice, competition and stability. However, the dominant role of banks in financial intermediation in emerging economies and particularly in India will continue in the medium-term; and the banks will continue to be “special” for a long time. In this regard, it is useful to emphasise the dominance of banks in the developing countries in promoting non-bank financial intermediaries and services including in development of debt-markets. Even where role of banks is apparently diminishing in emerging markets, substantively, they continue to play a leading role in non-banking financing activities, including the
development of financial markets. One of the indicators for asset quality is the ratio of non-performing loans to total loans (GNPA). The gross non-performing loans to gross advances ratio is more indicative of the quality of credit decisions made by bankers. Higher GNPA is indicative of poor credit decision-making.
NPA: Non-Performing Assets
Advances are classified into performing and non-performing advances (NPAs) as per RBI guidelines. NPAs are further classified into sub-standard, doubtful and loss assets based on the criteria stipulated by RBI. An asset, including a leased asset, becomes nonperforming\ when it ceases to generate income for the Bank. An NPA is a loan or an advance where: 1. Interest and/or installment of principal remains overdue for a period of more than 90 days in respect of a term loan. 2. The account remains "out-of-order'' in respect of an Overdraft or Cash Credit (OD/CC). 3. The bill remains overdue for a period of more than 90 days in case of bills purchased and discounted. 4. A loan granted for short duration crops will be treated as an NPA if the installments of principal or interest thereon remain overdue for two crop seasons. 5. A loan granted for long duration crops will be treated as an NPA if the instalments of principal or interest thereon remain overdue for one crop season The Bank classifies an account as an NPA only if the interest imposed during any quarter is not fully repaid within 90 days from the end of the relevant quarter. This is a key to the stability of the banking sector. There should be no hesitation in stating that Indian banks have done a remarkable job in containment of non-performing loans (NPL) considering the overhang issues and overall difficult environment. For 2008, the net NPL ratio for the Indian scheduled commercial banks at 2.9 per cent is ample testimony to the impressive efforts being made by our banking system. In fact, recovery management is also linked to
the banks’ interest margins. The cost and recovery management supported by enabling legal framework hold the key to future health and competitiveness of the Indian banks. No doubt, improving recovery-management in India is an area requiring expeditious and effective actions in legal, institutional and judicial processes. Asset quality is rated in relation to: • • • • • • • • The quality of loan underwriting, policies, procedures and practices; The level, distribution and severity of classified assets; The level and composition of nonaccrual and restructured assets; The ability of management to properly administer its assets, including the timely identification and collection of problem assets; The existence of significant growth trends indicating erosion or improvement in asset quality; The existence of high loan concentrations that present undue risk to the credit union; The appropriateness of investment policies and practices; The investment risk factors when compared to capital and earnings structure; and the effect of fair (market) value of investments vs. book value of investments
Total Loans/Total Shares Total Loans/Total Assets Fair (Market) Value / Book value
Gross NPA ratio: This ratio is used to check whether the bank's gross NPAs are increasing quarter on quarter or year on year. If it is, indicating that the bank is adding a fresh stock of bad loans. It would mean the bank is either not exercising enough caution when offering loans or is too lax in terms of following up with borrowers on timely repayments. Net NPA ratio: Net NPAs reflect the performance of banks. A high level of NPAs suggests high probability of a large number of credit defaults that affect the profitability and net-worth of banks and also wear down the value of the asset. Loans and advances usually represent the largest asset of most of the banks. It monitors the quality of the bank loan portfolio. The higher the ratio, the higher the credits risk.
Management of financial institution is generally evaluated in terms of capital adequacy, asset quality, earnings and profitability, liquidity and risk sensitivity ratings. In addition, performance evaluation includes compliance with set norms, ability to plan and react to changing circumstances, technical competence, leadership and administrative ability. In effect, management rating is just an amalgam of performance in the above-mentioned areas. Sound management is one of the most important factors behind financial institutions’ performance. Indicators of quality of management, however, are primarily applicable to individual institutions, and cannot be easily aggregated across the sector. Furthermore, given the qualitative nature of management, it is difficult to judge its soundness just by looking at financial accounts of the bank. Management is the most forward-looking indicator of condition and a key determinant of whether a credit union is able to correctly diagnose and respond to financial stress. The management component provides examiners with objective, and not purely subjective, indicators. An assessment of management is not solely dependent on the current financial condition of the credit union and will not be an average of the other component ratings.
Total Advance to Total Deposit Ratio: This ratio measures the efficiency and ability of the banks management in converting theVdeposits available with the banks (excluding other funds like equity capital, etc.) into high earning advances. Total deposits include demand deposits, saving deposits, term deposit and deposit of other bank. Total advances also include the receivables. Total Advance/ Total Deposit
Business per Employee: Revenue per employee is a measure of how efficiently a particular bank is utilizing its employees. Ideally, a bank wants the highest business per employee possible, as it denotes higher productivity. In general, rising revenue per employee is a positive sign that suggests the bank is finding ways to squeeze more sales/revenues out of each of its employee. Total Income/ No. of Employees Profit per Employee: This ratio shows the surplus earned per employee. It is arrived at by dividing profit after tax earned by the bank by the total number of employee. The higher the ratio shows good efficiency of the management. Profit after Tax/ No. of Employees
Earnings and profitability, the prime source of increase in capital base, is examined with regards to interest rate policies and adequacy of provisioning. In addition, it also helps to support present and future operations of the institutions. The single best indicator used to gauge earning is the Return on Assets (ROA), which is net income after taxes to total asset ratio. Strong earnings and profitability profile of banks reflects the ability to support present and future operations. More specifically, this determines the capacity to absorb losses, finance its expansion, pay dividends to its shareholders, and build up an adequate level of capital. Being front line of defense against erosion of capital base from losses, the need for high earnings and profitability can hardly be overemphasized. Although different indicators are used to serve the purpose, the best and most widely used indicator is Return on Assets (ROA). However, for in-depth analysis, another indicator Net Interest Margins (NIM) is also used. Chronically unprofitable financial institutions risk insolvency. Compared with most other indicators, trends in profitability can be more difficult to interpret—for instance, unusually high profitability can reflect excessive risk taking. Return on Assets (ROA): An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment". The continued viability of a credit union depends on its ability to earn an appropriate return on its assets. It enables a credit union to fund expansion, remain competitive, and replenish and/or increase capital. In evaluating and rating earnings, it is not enough to review past and present performance. Future performance is of equal or greater value, including performance under various economic conditions. Examiners should evaluate "core" earnings: that is the long-run earnings ability of a credit union discounting
temporary fluctuations in income and one-time items. A review for the reasonableness of the credit union's budget and underlying assumptions is appropriate for this purpose. Key factors to consider when assessing the credit union's earnings are: • • • • •
Level, growth trends, and stability of earnings, particularly return on average assets; Quality and composition of earnings; Adequacy of valuation allowances and their effect on earnings; Future earnings prospects under a variety of economic conditions; Net interest margin; Net non-operating income and losses and their effect on earnings; Quality and composition of assets; Net worth level; Sufficiency of earnings for necessary capital formation
• • •
Operating Profit by Average Working Fund: This ratio indicates how much a bank can earn from its operations net of the operating expenses for every rupee spent on working funds. Average working funds are the total resources (total assets or total liabilities) employed by a bank. It is daily average of total assets/ liabilities during a year. The higher the ratio, the better it is. This ratio determines the operating profits generated out of working fund employed. The better utilization of the funds will result in higher operating profits. Thus, this ratio will indicate how a bank has employed its working funds in generating profits. Operating Profit/ Average Working Fund
Net Profit to Average Asset: Net profit to average asset indicates the efficiency of the banks in utilizing their assets in generating profits. A higher ratio indicates the better income generating capacity of the assets and better efficiency of management. It is arrived at by dividing the net profit by average assets, which is the average of total assets in the current year and previous year. Thus, this ratio measures the return on assets employed. Higher ratio indicates better earning potential in the future. Net Profit/ Average Asset Interest Income to Total Income: Interest income is a basic source of revenue for banks. The interest income total income indicates the ability of the bank in generating income from its lending. In other words, this ratio measures the income from lending operations as a percentage of the total income generated by the bank in a year. Interest income includes income on advances, interest on deposits with the RBI, and dividend income. Interest Income/ Total Income Other Income to Total Income: Fee based income account for a major portion of the bank’s other income. The bank generates higher fee income through innovative products and adapting the technology for sustained service levels. The higher ratio indicates increasing proportion of feebased income. The ratio is also influenced by gains on government securities, which fluctuates depending on interest rate movement in the economy. Other Income/ Total Income
An adequate liquidity position refers to a situation, where institution can obtain sufficient funds, either by increasing liabilities or by converting its assets quickly at a reasonable cost. It is, therefore, generally assessed in terms of overall assets and liability management, as mismatching gives rise to liquidity risk. Efficient fund management refers to a situation where a spread between rate sensitive assets (RSA) and rate sensitive liabilities (RSL) is maintained. The most commonly used tool to evaluate interest rate exposure is the Gap between RSA and RSL, while liquidity is gauged by liquid to total asset ratio. Initially solvent financial institutions may be driven toward closure by poor management of short-term liquidity. Indicators should cover funding sources and capture large maturity mismatches The “L” of CAMEL represents the concept of Asset/Liability Management - the identification, monitoring and control of: • • • Interest rate risk sensitivity and exposure Liquidity risk and control Technical competence in asset/liability management techniques
Cash maintained by the banks and balances with central bank, to total asset ratio (LQD) is an indicator of bank's liquidity. In general, banks with a larger volume of liquid assets are perceived safe, since these assets would allow banks to meet unexpected withdrawals.
Liquidity Asset to Total Asset: Liquidity for a bank means the ability to meet its financial obligations as they come due. Bank lending finances investments in relatively illiquid assets, but it fund its loans with mostly short term liabilities. Thus one of the main challenges to a bank is ensuring its own liquidity under all reasonable conditions. Liquid assets include cash in hand, balance with the RBI, balance with other banks (both in India and abroad), and money at call and short notice. Total asset include the revaluations of all the assets. The proportion of liquid asset to total asset indicates the overall liquidity position of the bank. Liquidity Asset/ Total Asset Government Securities to Total Asset: Government Securities are the most liquid and safe investments. This ratio measures the government securities as a proportion of total assets. Banks invest in government securities primarily to meet their SLR requirements, which are around 25% of net demand and time liabilities. This ratio measures the risk involved in the assets hand by a bank Government Securities/ Total Asset Approved Securities to Total Asset: Approved securities include securities other than government securities. This ratio measures the Approved Securities as a proportion of Total Assets. Banks invest in approved securities primarily after meeting their SLR requirements, which are around 25% of net demand and time liabilities. This ratio measures the risk involved in the assets hand by a bank.
Approved Securities/ Total Asset Liquidity Asset to Demand Deposit: This ratio measures the ability of a bank to meet the demand from deposits in a particular year. Demand deposits offer high liquidity to the depositor and hence banks have to invest these assets in a highly liquid form. Liquidity Asset/ demand Deposit Liquidity Asset to Total Deposit: This ratio measures the liquidity available to the deposits of a bank. Total deposits include demand deposits, savings deposits, term deposits and deposits of other financial institutions. Liquid assets include cash in hand, balance with the RBI, balance with other banks (both in India and abroad), and money at call and short notice. Liquidity Asset/ Total Deposit
3.1: PRIVATE BANKS
3.1.1: KARUR VYSYA BANK LIMITED
Karur Vysya Bank Limited, universally known as KVB has made a mark in commercial banking arena right from 1916 when it was set up by two great visionaries and famous sons of Karur, Late M A Venkatarama Chettiar and Late Athi Krishna Chettiar. The main aim for setting up this bank was to instill the habit of savings and also for providing financial support to traders and small agriculturists in and around Karur (the textile town in Tamil Nadu). The journey for the bank started off with a meager capital of Rs.1 lakh. But over the years, KVB has met all the market dynamics and challenges and created a strong base for itself. Presence of Karur Vysya Bank The Bank, in its initial days, bore a regional flavor in its transactions but slowly made a mark and expanded. At present, it has around 285 branches spanning 13 States and 2 Union Territories. The Bank has been prudential and has followed all the statutory regulations to make a mark in its area of operations. They have been maintaining a strong Capital Adequacy Ratio of more than 15% as against the compulsory rule of 9% set by the RBI. This is sure to take care of the asset growth of the bank. Financial highlights of the KVB
Total business of KVB stood at Rs.25664.29 cr., with total deposits of Rs. 15101.39 cr. and total advances of Rs. 10562.90 cr. as at 31.03.2009. It was the first
Tamil Nadu based private sector bank to have crossed the Rs. 25000 cr. total business mark.
The net owned funds of KVB stood at Rs. 1350.16 cr with healthy capitalization levels, with high share of Tier I capital at 96.53%. This indicates that they have
strength on owned funds. The Tier II capital forms only a paltry part (3.47%), having provision for standard assets only.
It has one of the lowest net NPA ratios in India @ 0.25% Till date the bank has been only earning profits with no interruption in the declaration of dividend. The bank has declared 100% dividend since 2003-04. For 2005-06, 2007-08 and 2008-09, the company declared a dividend of 120%
Branch and ATM network of Karur Vysya Bank The bank has a branch network of 312 and an ATM network of 322. The bank plans to improve the branch network to over 350 by the end of 2009 -10. Contact details of Karur Vyasa Bank Limited Chennai Divisional Office KVB Towers I Floor 568, Anna Salai Teynampet, Chennai - 600 018 (T.N.) STD: 044 - 24314418 Website: www.kvb.co.in 044 - 24314418 , 24314421, 24347250
3.1.2: KOTAK MAHINDRA BANK
Kotak Mahindra Bank is one of India's leading financial private banking institutions. It offers banking solutions that covers almost every sphere of life. Some of its financial services include commercial banking, stock broking, mutual funds, life insurance and investment banking. Established under the brand of Kotak Mahindra Finance Ltd in 1984, it was given the license to carry on with banking business by the Reserve Bank of India in February 2003. It is the first company in the Indian banking history to convert to be converted from a private financial institution to a bank. CAMEL Framework Page 35
Kotak Mahindra Bank: Branches and Business Within a small span of 6 years, the bank has spread it wings in several sphere of finances. Presently, spread in 82 cities in India, the bank caters to the needs of its 5.9 million customers spread throughout the length and breadth of country and even abroad. By the end of FY 2007-2008, the Kotak Mahindra Bank had about 178 branches spread all over the country and it plans to add some more branches by the end of FY 2010. The entire Kotak Mahindra group has a net worth of over Rs. 6,327 crore and at the end of FYP 2007-2008,it was reported that the consolidated profit of Kotak Mahindra Bank individually was Rs 991.2 crore which was 84% higher than the consolidated profit of Rs 538.2 crore in FY07. Kotak Mahindra Bank has 75 ATMs at 41 locations in the country which are 24x7 accessible. Before the free transactions facility of RBI was made mandatory to all the ATM operating banks in India from April 1, 2009, Kotak Mahindra Bank had underwent under a treaty with the HDFC Bank to provide free network free of cost to most of its customers through its 1335 ATMs spread in the country to ensure comfort to its customers. Kotak Mahindra Bank: Facilities and Customer Care The facilities of Kotak Mahindra Bank are wide spread. It's banking sector acts as a central platform for customer relationships across the entire Kotak Mahindra group's various businesses. The bank marks its presence in the commercial vehicles, retail finance, corporate banking and treasury and housing finance segments. It offers you several facilities like personal banking, commercial banking, insurance and investment banking. Apart from traditional facilities like deposits accounts, savings account, current account, term deposits, personal loans, home loans the bank has spread its wing in the investment services by providing its customer facilities like Demat, mutual fund and insurance. The bank has also opted for net banking, mobile banking and phone banking for convenience of its customers.
Contact details of Kotak Mahindra Bank Limited Registered Office Kotak Mahindra Bank Limited 36-38A, Nariman Bhavan, 227 Nariman Point, Mumbai - 400 021 E-mail: firstname.lastname@example.org
3.2. PUBLIC BANKS
3.2.1: BANK OF BARODA
Bank of Baroda (BoB) is the third largest Public Sector bank in India, after State Bank of India and Punjab National Bank. BoB has total assets in excess of Rs. 2.27 lakh crores, or Rs. 2,274 billion, a network of over 3000 branches and offices, and about 1100+ ATMs. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, credit cards and asset management. It all started with a visionary Maharaja's uncanny foresight into the future of trade and enterprising in his country. On 20th July 1908, under the Companies Act of 1887, and with a paid up capital of Rs 10 Lacs started the legend that has now translated into a strong, trustworthy financial body, THE BANK OF BARODA. It has been a wisely orchestrated growth, involving corporate wisdom, social pride and the vision of helping others grow, and growing itself in turn. The founder, Maharaja Sayajirao Gaekwad, with his insight into the future, saw "a bank of this nature will prove a beneficial agency for lending, transmission, and deposit of money and will be a powerful factor in the development of art, industries and commerce of the State and adjoining territories." MISSION
“To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence.”
By December 1996, Bank of Baroda penetrated the equity market by successfully implementing the Follow on Public Offer' of around 71 million equity shares in January 2006. In the present scenario, Bank of Baroda's public shareholding is as high as 46.19 percent with a total equity capital of 365.53 crore. This is held by Retail Investors, Banks and Financial Institutions, Employees, FIIs and OCBs, Mutual Funds, Insurance Companies and Others.
3.2.2: CORPORATION BANK
The Corporation Bank in India started its journey in the name of the Canara Banking Corporation (Udupi) Ltd in 1906 with a sum of Rs. 5000 only in a small town of Udupi near the city of Mangalore in Karnataka. Corp Bank received RBI license in 1952 and saw a merger with the Bank of Citizens in 1961. In the month of April 1980, it was given a status of nationalized bank. From the time of its establishment till today, the bank has never looked back. Currently it is one of the well-recognized Public Sector Banks in India. Today, Corporation Bank India is identified with dynamic services of its young and dedicated staffs, who know no bounds. It runs more than 600 ATMs extending across 21 States and 2 Union Territories. It shares ATM network with Andhra Bank, ING Vysya Bank Ltd. and IndusInd Bank Ltd. Branches of Corporation Bank India The branches of the Corporation Bank India are located at all the key destinations like Bangalore, Belgaum, Bhopal, Chandigarh, Chennai, Coimbatore, Delhi, Goa, Mumbai, Gujarat, Hassan, Hubli, Hyderabad, Kerala, Kolkata, Lucknow, Pune, Udupi and Vijayawada.
Awards and Recognition of Corporation Bank India In its journey to cater successfully to the needs of valuable customers, Corporation Bank has bagged many awards and accolades. Some of them are as follows:
National Award for Assistance to Exporters Gem & Jewellery Export Promotion Council Award (it won this award 5 times in a row from 1981 to 1985) Shiromani Award for Banking Best Bank Award for Excellence in Banking Technology Best Bank Award for Innovative Usage and Application on INFINET (Indian Financial Network) Best Bank Award for Delivery Channels Runner-up Awards in the categories of "Best Online and Multi-channel Banking Team" and "Outstanding achiever of the year-corporate".
• • •
Corporation Bank has been recognized as one of the Best Public Sector Banks in India by Business Today on 26 February 2006. Prior to this, Forbes Global announced it one of the Best 200/100 companies in Asia/Pacific and Europe. Outlook Money called it Best Public Sector Bank in India and The Asian Banker said it to be the strongest bank in India and second strongest in Asia. Contact details of Corporation Bank India: Corporation Bank, Mangaladevi Temple Road, Pandeshwar, Mangalore - 575 001 Karnataka, India
4.1 OBJECTIVE OF THE STUDY
“To study the strength of using CAMELS framework as a tool of performance evaluation for banking institutions”
To understand the financial performance of the banks. To describe the CAMELS model of ranking, banking institutions, so as to analyze the comparative of various banks. To analyze the banks performance through CAMEL model and give suggestion for improvement if necessary
4.1.1 STATEMENT OF PROBLEM
In the recent years the financial system especially the banks have undergone numerous changes in the form of reforms, regulations & norms. The attempt here is to see how various ratios have been used and interpreted to reveal a bank’s performance and how this particular model encompasses a wide range of parameters making it a widely used and accepted model in today’s scenario.
4.1.2 RESEARCH TYPE - DESCRIPTIVE RESEARCH
Here, we are under going to have descriptive research i.e. analysis of banks financial statements which will make us understand the position of one bank in comparison of another and their financial position.
4.2 RESEARCH METHODOLOGY
1) AREA OF SURVEY: The survey will be done for four banks. The study environment will be the Banking industry. 2) PLAN OF ANALYSIS: Here, we will be using financial statements of the banks in order to calculate different ratios required for camel rating system as it considers all areas of banking operations and considered to be the best available method for evaluation bank performance and bank’s health.
4.2.1 DATA SOURCE
1) PRIMARY DATA Primary data was collected from the bank’s balance sheet and bank‘s income statement and interview of the bank employees. 2) SECONDARY DATA Secondary data on the subject was collected from bank’s prospectus, annual reports and other websites.
4.2.2 CONTRIBUTION OF THE STUDY
Major issues pertaining to the preparation of a project from Start to End of Project to be covered, Basel II norms will be taken into consideration while calculating each ratio and this report will be provided to the bank for their future use.
CAMELS rating system help the banks to enhance required capital adequacy, strengthen asset quality, improve management, increase earnings and reduce sensitivity to various financial risks. Keeping this in mind, they will able to make improvements and deteriorates the problems effectively. It will be helpful for the reader to know the specific details of the model which in turn lead to identify the strengths and weaknesses of the banks. By having a standardized CAMELS model for all banks, it becomes easy to compare different banks. As this model uses all significant ratios of banks, it will be useful for the reader to know how effectively bank manages each ratio and whether it meets its pre-determined criteria for each ratio as per RBI rules and regulations.
4.3 LIMITATION OF THE STUDY
The study was limited to four banks only. Time and resource constrains. The method discussed pertains only to banks though it can be used for performance evaluation of other financial institutions. The study was completely done on the basis of ratios calculated from the balance sheets. It was not possible to get a personal interview with the top management employees of all banks under study
5.1 CALCULATIONS OF DIFFERENT RATIOS FOR
CAPITAL RATIOS (Values in Lakhs) 1. Capital Adequency Ratio Ratio (%) 2. Debt Equity Ratio Debt= Deposits + borrowings + unsecured debts debt = Equity = Capital + Reserves and surplus equity = Ratio = Debt/ equity Ratio (%) 3. Advances to Assets Advances Total assets Ratio = Advances/ Total Assets Ratio (%) 4. Securities To Total Investments Securities = Government securities+ approved securities Securities Investments Ratio = Securities/Total Investments Ratio (%) 4851216 8690581 55.82 13.66%
7855631 489651 16.04
1764165 2493777 70.74
TABLE 1.2 ASSETS (Values in Lakhs) 1. Gross NPA To Net Advances gross NPA Ratio = Gross NPA/ Net Advances Ratio (%) 2. Net NPA to Net Advances Net NPA Ratio = Net NPA / Net Advances Ratio (%) 3.Total Loans To Total shares Total loans No. of shares Ratio = Total Loans/ Total Shares Ratio (Rs.) 4.Total Loans To Total Assets Total assets Ratio = Total Loans/Total Assets Ratio (%) 5.Fair Market Value To Book Value market value Book Value Ratio (%) 8690581 56.30 4892712 614.4 7963.398 13830 0.29 55922 1.15
176.58 341.36 51.73
MANAGEMENT (Values in Lakhs) 1.Market Value To Equity Capital Face value Ratio (%) Market value/Equity capital 2.Total Advances To Total Deposits Total deposits Ratio = Total advances/Total deposits Ratio (%) 7398391 65.57 10 17.66
3.Business Per Employee Business= Advances+ deposits Business= no of employees= Ratio = Business/No.of Employees Ratio (Rs.) 4.Profit Per Employee Profit = Net Profit Profit Ratio = Profit/No.of Employees Ratio (Rs.)
12249607 12465 982.72
TABLE 1.4 EARNINGS (Values In Lakhs)
1.Operating profit To Average Working Funds Average Working funds = operating prfit Ratio = Operating profit/Average Working Funds Ratio (%) 2.Interest Spread Interest earned Interest spend Interest Spread = Interest Earned - Interest expenditure Spread 3.Net profit To Average Assets Average Assets = Opening Assets+Closing Assets/2 avg.assets Ratio = Net Profit/Average Assets Ratio (%) 4.Interest Income To Total Income Total income Ratio= Interest Income/Total Income Ratio (%) 5.Non-Interest Income To Total Income Non-interest income Ratio = Non-interest Income/ Total Income Ratio (%) 6.Operating Expense To Average Assets operating expenses Ratio = Operating expense/Average Assets Ratio (%) TABLE 1.5 LIQUIDITY (Values in Lakh) 100158 1.30 110721 15.43 717457 84.57 606735.2 437637.5 72.13 6950000 179661 2.58505
1.Liquid Assets To Total Assets Liquid Assets = Cash with RBI+ Cash for short notice Liquid assets Ratio = Liquid assets/Total assets Ratio (%) 2.Government Securities To Total Assets Govt. securities Ratio = Government securities/Total assets Ratio (%) 3.Approved Securities To Total Assets Approved securities Ratio = Approved securities/Total assets Ratio (%) 4.Liquid Assets To Demand Deposits demand deposits Ratio = Liquid assets/Demand deposits Ratio (%) 5.Liquid Assets To Total Deposits Ratio = Liquid assets/Total deposits Ratio (%) 1317419 80.00262 1706165 19.63 1755238 20.20
5.2 CALCULATIONS OF DIFFERENT RATIOS FOR
CAMEL Framework Page 50
KARUR VYSYA BANK (Values in lakhs)
CAPITAL 1. Capital Adequency Ratio Ratio (%) 2. Debt Equity Ratio Debt= Deposits + borrowings + unsecured debts debt Equity = Capital + Reserves and surplus equity Ratio = Debt/ equity Ratio (%) 14.92%
1512443 135016.6 11.2019
3. Advances To Assets Advances Total assets Ratio = Advances/ Total Assets Ratio (%) 4. Securities To Total Investments Securities = Government securities+ approved securities securities Invetments Ratio = Securities/Total Investments Ratio (%) 1040988 1706074 61.01657
382907.1 471598 81.19354
TABLE 2.2 ASSETS (Values in lakhs) 1. Gross NPA To Net Advances gross NPA Ratio= Gross NPA/ Net Advances Ratio (%) 2. Net NPA To Net Advances Net NPA= Ratio = Net NPA / Net Advances Ratio (%) 3.Total Loans To Total Shares Total loans No. of shares Ratio = Total Loans/ Total Shares Ratio (%) 4.Total Loans To Total Assets Total assets Ratio = Total Loans/Total Assets Ratio (%) 5.Fair market value To Book Value market value book value Ratio (%) Fair market value/Book value 1706074 56.27754 960136.7 539.99 1778.064 2582 0.248034 20586 1.977544
199.38 250.3 79.65641
TABLE 2.3 MANAGEMENT (Rupees in Lakhs) 1.Market Value To Equity Capital face value Ratio = Market value/Equity capital 2.Total Advances To Total Deposits total deposits Ratio = Total advances/Total deposits Ratio (%) 1510139 68.93326 10 19.938
3.Business Per Employee Business= Advances+ deposits Business= no of employees= Ratio = Business/No.of Employees Ratio (%) 4.Profit Per Employee Profit = Net Profit Profit Ratio = Profit/No.of Employees Ratio (%)
2551127 3941 647.3299
TABLE 2.4 CAMEL Framework Page 54
EARNINGS (Values in Lakhs)
1.Operating profit To Average Working Funds Average Working funds = operating prfit Ratio = Operating profit/Average Working Funds Ratio (%) 2.Interest Spread Interest earned Interest spend Interest Spread = Interest Earned - Interest expenditure Spread 3.Net profit To Average Assets Average Assets = Opening Assets+Closing Assets/2 avg.assets Ratio = Net Profit/Average Assets Ratio (%) 4.Interest Income To Total Income Total Income Ratio= Interest Income/Total Income Ratio (%) 5.Non-Interest Income To Total Income Non-interest income Ratio = Non-interest Income/ Total Income Ratio (%) 6.Operating Expense To Average Assets Operating Expenses Ratio = Operating expense/Average Assets Ratio (%) TABLE 2.5 25759.64 1.628102 26520.92 15.49754 171129.9 84.50246 144608.9 103568.1 41040.86 1576270 41802 2.651957
LIQUIDITY (Values in Lakhs) 1.Liquid Assets To Total Assets Liquid Assets = Cash with RBI+ Cash for short notice Liquid Assets Ratio = Liquid assets/Total assets Ratio (%) 2.Government Securities To Total Assets Govt. securities Ratio = Government securities/Total assets Ratio (%) 3.Approved Securities To Total Assets Approved Securities Ratio = Approved securities/Total assets Ratio (%) 4.Liquid Assets To Demand Deposits Demand Deposits Ratio = Liquid assets/Demand deposits Ratio (%) 5.Liquid Assets To Total Deposits Ratio = Liquid assets/Total deposits Ratio (%) 149677 91.80877 1359.05 0.079659 381548.1 22.3641
5.3 CALCULATIONS OF DIFFERENT RATIOS FOR
BANK OF BARODA
CAPITAL (Values in Lakhs) 1. Capital Adequency Ratio Ratio (%) 2. Debt Equity Ratio Debt= Deposits + borrowings + unsecured debts Debt Equity = Capital + Reserves and surplus Equity Ratio = Debt/ equity Ratio (%) 3. Advances To Assets Advances Total assets Ratio = Advances/ Total Assets Ratio (%) 4. Securities To Total Investments Securities = Government securities+ approved securities Securities Invetments Ratio = Securities/Total Investments Ratio (%) 14398590 22740673 63.31646 14.05%
20516486 1283554 15.98412
4084894 5244588 77.88781
TABLE 3.2 ASSETS (Values in Lakhs) 1. Gross NPA to Net Advances Gross NPA Ratio= Gross NPA/ Net Advances Ratio (%) 2. Net NPA to Net Advances Net NPA Ratio = Net NPA / Net Advances Ratio (%) 3.Total Loans To Total Shares Total Loans No. Of Shares Ratio = Total Loans/ Total Shares Ratio (%) 4.Total Loans To Total Assets Total Assets Ratio = Total Loans/Total Assets Ratio (%) 5.Fair Market Value To Book Value Market Value Book Value Ratio(%) = Fair market value/Book value 22740673 57.18279 13003751 227406.7 57.18 45115 0.313329 184292 1.279931
227.05 352.37 64.43511
MANAGEMENT (Values in Lakhs) 1.Market Value To Equity Capital Face Value Ratio(%) = Market value/Equity capital 2.Total advances To Total Deposits Total Deposits Ratio = Total advances/Total deposits Ratio (%) 19239695 74.83793 10 22.705
3.Business Per Employee Business = Advances+ deposits Business No Of Employees Ratio = Business/No.of Employees Ratio (Rs.) 4.Profit Per Employee Profit = Net Profit Profit Ratio = Profit/No.of Employees Ratio (Rs.)
33638285 36838 913.1409
EARNINGS (Values in Lakhs)
1.Operating profit To Average Working Funds Average Working funds Operating Profit Ratio = Operating profit/Average Working Funds Ratio (%) 2.Interest Spread Interest earned Interest spend Interest Spread = Interest Earned - Interest expenditure Spread 3.Net profit To Average Assets Average Assets = Opening Assets+Closing Assets/2 Avg.Assets Ratio = Net Profit/Average Assets Ratio (%) 4.Interest Income To Total Income Total Income Ratio= Interest Income/Total Income Ratio (%) 5.Non-Interest Income To Total Income Non-interest Income Ratio = Non-interest Income/ Total Income Ratio (%) 6.Operating Expense To Average Assets Operating Expenses Ratio = Operating expense/Average Assets Ratio (%) TABLE 3.5 LIQUIDITY (Values in Lakhs) 1.Liquid Assets To Total Assets CAMEL Framework Page 61 275765.8 15.44973 1784924 84.55027 1509158 996816.8 512341 19366972 334295 1.726109
Liquid Assets = Cash with RBI+ Cash for short notice Liquid Assets Ratio = Liquid assets/Total assets Ratio (%) 2.Government Securities To Total Assets Govt. Securities Ratio = Government securities/Total assets Ratio (%) 3.Approved Securities To Total Assets Approved Securities Ratio = Approved securities/Total assets Ratio (%) 4.Liquid Assets To Demand deposits Demand Deposits Ratio = Liquid assets/Demand deposits Ratio (%) 5.Liquid Assets To Total deposits Ratio = Liquid assets/Total deposits Ratio (%)
5.4 CALCULATIONS OF DIFFERENT RATIOS FOR
KOTAK MAHINDRA BANK
CAPITAL (Values in Lakhs) 1. Capital Adequency Ratio Ratio (%) 2. Debt Equity Ratio Debt= Deposits + borrowings +unsecured debts Debt Equity = Capital + Reserves and surplus Equity Ratio = Debt/ equity Ratio (%) 3. Advances To Assets Advances Total Assets Ratio = Advances/ Total Assets Ratio (%) 4. Securities To Total Investments Securities = Government securities+ approved securities Securities Invetments Ratio = Securities/Total Investments Ratio (%) 1662534 2871187 57.90405 19.86%
2237894 390552.7 5.730071
814993.3 911018.1 89.45962
TABLE 4.2 ASSETS (Values in Lakhs) 1. Gross NPA to Net Advances Gross NPA Ratio= Gross NPA/ Net Advances Ratio (%) 2. Net NPA to Net Advances Net NPA Ratio = Net NPA / Net Advances Ratio (%) 3.Total Loans To Total Shares Total loans No. of shares Ratio = Total Loans/ Total Shares Ratio (%) 4.Total Loans To Total Assets Total assets Ratio = Total Loans/Total Assets Ratio (%) 5.Fair Market Value To Book Value Market Value Book Value Ratio(%) = Fair market value/Book value 2871187 56.39279 1619143 3456.69 468.4084 39684 2.386959 73071 4.395159
277.98 112.98 246.0435
TABLE 4.3 MANAGEMENT (Values in Lakhs) 1.Market Value To Equity Capital face value Ratio(%) = Market value/Equity capital 2.Total advances To Total Deposits Total Deposits Ratio = Total advances/Total deposits Ratio (%) 1564493 106.2666 10 27.798
3.Business Per Employee Business= Advances + deposits Business No Of Employees Ratio = Business/No.of Employees Ratio (Rs.) 4.Profit Per Employee Profit = Net Profit Profit Ratio = Profit/No.of Employees Ratio (Rs.)
3227027 8400 384.1699
EARNINGS (Values in Lakhs) 1.Operating profit To Average Working Funds Average Working funds Operating Profit Ratio = Operating profit/Average Working Funds Ratio (%) 2.Interest Spread Interest earned Interest spend Interest Spread = Interest Earned - Interest expenditure Spread 3.Net profit To Average Assets Average Assets = Opening Assets + Closing Assets/2 Avg.Assets Ratio = Net Profit/Average Assets Ratio (%) 4.Interest Income To Total Income Total Income Ratio= Interest Income/Total Income Ratio (%) 5.Non-Interest Income To Total Income Non-interest Income Ratio = Non-interest Income/ Total Income Ratio (%) 6.Operating Expense To Average Assets operating expenses Ratio = Operating expense/Average Assets Ratio (%) TABLE 4.5 LIQUIDITY (Values in Lakhs) CAMEL Framework Page 67 119642.3 4.196191 35786.26 10.45465 342300 89.54554 306514.4 154659.8 151854.7 2814695 68000 2.415893
1.Liquid Assets To Total Assets Liquid Assets = Cash with RBI + Cash for short notice Liquid Assets Ratio = Liquid assets/Total assets Ratio (%) 2.Government Securities To Total Assets Govt. Securities Ratio = Government securities/Total assets Ratio (%) 3.Approved Securities To Total Assets Approved Securities Ratio = Approved securities/Total assets Ratio (%) 4.Liquid Assets To Demand deposits Demand Deposits Ratio = Liquid assets/Demand deposits Ratio (%) 5.Liquid Assets To Total deposits Ratio = Liquid assets/Total deposits Ratio (%) 341816.1 33.37086 0 0 814993.3 28.38524
6.1 REASONS FOR WEIGHTAGE
In Capital ratios, we have given 0.5 to capital adequacy ratio as it is the most important ratio which has significant impact on capital of the bank. Second most important ratio which affects the capital ratio is debt – equity ratio and rest of them are of low impact.
In assets Ratio, we have highest importance to Net GPA which shows clear picture how well company is performing with its assets. Secondly Gross NPA is given is not given so much importance compared to Net NPAs. Other ratios like fair value to market value, totals loans to total assets are given equal importance.
In management ratios, there is no specific ratio which has specific importance. All ratios have equal impact so here we have equal weightage to all the ratios.
In Earnings ratios, there is no specific ratio which has specific importance. All ratios have equal impact so here we have equal weightage to all the ratios.
In Liquidity ratios, there is no specific ratio which has specific importance. All ratios have equal impact so here we have equal weightage to all the ratios.
6.2 CAPITAL RATIOS
TABLE 5 CAPITAL RATIOS Capital Adequacy Ratio 13.66 14.92 14.05 19.86 0.5 6.83 7.46 7.03 9.93 Debt Equity Ratio 16.04 11.20 15.98 5.73 0.3 4.81 3.36 4.80 1.72 Securities Advances To Total to Assets Investments 55.82 61.02 63.32 57.90 0.1 5.58 6.10 6.33 5.79 70.74 81.19 77.89 89.46 0.1 7.07 8.12 7.79 8.95 TOTAL 14.67 18.32 16.35 22.95
PARTICULARS CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK WEIGHTAGE CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK
1. As per capital adequacy ratio, the minimum ratio is 9% i.e. every bank has to maintain with RBI. Here Kotak Mahindra Bank out stands from other banks. 2. In case of Debt- Equity ratio, Kotak Mahindra bank has the lowest debt – equity ratio compared to other banks. 3. Advances to Assets ratio shows how efficient capital is managed, so here we have Bank of Baroda on the top position. 4. Securities to Total Investment show the quick fund of the bank which can be encashed at any point of time. Here, again kotak Mahindra bank is having highest ratio against other bank. 5. So, overall Kotak Mahindra Bank is in first position followed by Karur Vysya bank, Bank Of Baroda and Corporation Bank. 6. If we compare only Public banks, Bank Of Baroda is on top position followed by Corporation Bank.
6.3 ASSETS RATIOS
TABLE 6 ASSETS RATIOS Gross NPA To Net Advances 1.15 1.98 1.28 4.40 0.1 0.12 0.20 0.13 0.44 Total Loans To Total Assets 56.30 56.28 57.18 56.39 0.2 11.26 11.26 11.44 11.28 Fair Market Value To Book Value 51.73 79.66 64.44 246.04 0.2 10.35 15.93 12.89 49.21 TOTAL 21.35 26.87 24.04 58.85
Net NPA to Net Advances
CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK WEIGHTAGE CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK
0.29 0.25 0.31 2.39 0.5 0.14 0.12 0.16 1.19
1. The net non-performing assets to loans (advances) ratio is used as a measure of the overall quality of the bank’s loan book. Higher ratio reflects rising bad quality of loans. But here NPA percentage of Karur Vysya Bank is just 0.25% which shows bank is performing well and it is able to recover its debt. The Bank has maintained high standard in asset quality through appropriate risk management measures and recovery measures as evidenced by lower NPA levels. Here as compared to its peers it has lowest ratio which is better. 2. The loans to assets ratio measures the total loans outstanding as a percentage of total assets. The higher this ratio indicates a bank is loaned up and its liquidity is low. The higher the ratio, the more risky a bank may be to higher defaults. Here the ratio for all the banks is almost same.
3. Market value ratios are strong indicators of what investors think of the firm’s past performance and future prospects. It basically shows Goodwill or Reputation of the bank in the market. Here Kotak Mahindra Bank is highly reputed in the minds of investors. 4. So overall in Assets Ratio, Kotak Mahindra Bank is on top position as compared to its peers. 5. If we compare only public banks, again Bank Of Baroda is ahead than Corporation Bank.
6.4 MANAGEMENT RATIOS
TABLE 7 MANAGEMENT RATIOS Marke Total t Value Advances PARTICULARS To To Total Equity Deposits Capital CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK 17.66 19.94 22.71 27.80 65.57 68.93 74.84 106.27 MANAGEMENT RATIOS Business Profit Per Per Employee Employee ( IN (IN LACS) LACS) 982.72 647.33 913.14 384.17 7.16 5.98 6.05 3.29 TOTAL (IN LACS) %age 247.47 163.33 229.80 96.86 737.46 33.56 22.15 31.16 13.13
0.25 WEIGHTAGE CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK 4.41 4.98 5.68 6.95 0.25 16.39 17.23 18.71 26.57 TOTAL 20.81 22.22 24.39 33.52 0.25 245.68 161.83 228.29 96.04 0.25 1.79 1.50 1.51 0.82
PARTICULARS CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK
TOTAL 1 20.81 22.22 24.39 33.52
TOTAL 2 33.56 22.15 31.16 13.13
Final Total 54.37 44.37 55.55 46.65
1. Business per employee/ profit per employee These ratios indicate the productivity level of the bank’s employees. Since state run banks are operating with large employee base, the productivity ratio for these banks lags behind when compared with new generation private sector banks. Here Corporation bank has ratio of 982, Karur Vysya Bank has ratio of 647, BOB has 913 and Kotak Mahindra Bank has 384. 2. Market Value to equity Capital This Ratio indicates the price of the shares in the market compared to the actually face value of the shares. It shows the premium on each shares people are ready to pay because of the reputation and value of the company. Here, Kotak Mahindra Bank is having almost 27 times the market value whereas Corporation Bank is having only 17 times which is lowest of all four banks. 3. Total Advances to Total Deposits It indicates Money Lend by the Bank compared to Money borrowed by the bank. Higher the ratio indicates the Efficiency of the Bank. Kotak Mahindra Bank is having 106% whereas Bank of Baroda is having 74%, Karur Vysya Bank is having 68% and Corporation Bank is having 65%.
4. Over all if we compare Management Ratio, Bank of Baroda is on the top position where as Corporation Bank is in second position. There is very Minor difference between the two banks. They are well performing in Profit per employee and Business per employee. 5. If we compare only Private Banks, Kotak Mahindra Bank is performing comparatively better than Karur Vysya Bank.
6.5 EARNINGS RATIOS
TABLE 8 EARNING RATIOS Operating profit To Net profit To Interest Average Average Spread Working Assets Funds 2.59 2.65 1.73 2.42 0.25 0.65 0.66 0.43 0.60 72.13 71.62 66.05 50.46 0.25 18.03 17.90 16.51 12.61 1.16 1.49 1.09 0.97 0.25 0.29 0.37 0.27 0.24
Interest Income To Total Income 84.57 84.50 84.55 89.55 0.25 21.14 21.13 21.14 22.39 TOTAL 40.11 40.07 38.36 35.85
CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK WEIGHTAGE CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK
1. Operating profit to Average Working Funds shows the return on working funds. Higher the ratio indicates the profitability of the bank. Here Karur Vysya Bank is having 2.65%, where as its peers are having lower than it has. So Karur Vysya Bank is more profit making Bank. 2. Higher the Interest spread will be better for the bank as it shows the better offering of bank in the market. Here Corporation Bank has the highest Interest Spread as compared to its peers. 3. Net Profit To Average Assets shows return on assets of the banks. Higher the return, better for the bank. Here Karur Vysya bank is having highest return on the assets.
4. The main income of any bank is interest. This ratio shows the percentage of income generated in bank through Interest. Here Kotak Mahindra Bank is having 89.55% of income through interest followed by Corporation Bank, Bank Of Baroda and karur Vysya Bank. 5. Here overall Corporation Bank is performing well in earnings ratio and it is leading as compared to its competitors. 6. If we compare only private banks then Karur Vysya Bank is well performing than Kotak Mahindra Bank.
6.6 LIQUIDITY RATIOS
TABLE 9 LIQUIDITY RATIOS Liquid Assets To Total Assets 12.13 8.05 10.59 3.97 0.2 Government Securities To Total Assets Liquid Approved Assets Securities To To Total Demand Assets Deposits 19.63 0.08 0.43 0.00 0.2 80.00 91.81 166.68 33.37 0.2 Liquid Assets To Total Deposits 14.25 9.10 12.52 7.29 0.2 2.85 1.82 2.50 1.46 TOTAL 29.24 26.28 41.64 14.60
CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK WEIGHTAGE CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK
20.20 22.36 17.96 28.39 0.2
2.43 1.61 2.12 0.79
4.04 4.47 3.59 5.68
3.93 0.02 0.09 0.00
16.00 18.36 33.34 6.67
1. Liquid Assets To Total Assets ratio shows the percentage of liquid assets out of the total assets. Higher the ratio indicates better liquidity of the bank. Here Corporation Bank is having better liquidity as compared to other banks. 2. Government securities are considered to be the quick assets of the bank which can be encashed easily. Here, kotak Mahindra bank is having 28.39% of the assets as government securities and is the highest among others. 3. Same as government securities, approved securities also can be encashed easily. Here Corporation bank is having highest approved securities i.e. 19.63% compared to others. Kotak Mahindra Bnak is not having any approved securities. 4. Liquid Assets To Total Deposits ratio indicates the Percentage of liquid assets bank against deposits. Here Bank Of Baroda is having the highest ratio i.e. 166.68% as compared to its competitors. So it shows that it is having an ample amount of liquidity to pay the deposits.
5. Overall, Bank of Baroda is performing well i.e. 41% followed by its peers i.e. Kotak Mahindra Bank- 14%, Karur Vysya Bank- 26% and Corporation Bank -29%. 6. In case of Private Banks, Karur Vysya Bank is having more Liquidity as compared to Kotak Mahindra Bank
7.1 TABLE SHOWING CAMEL RATING COMPARSION
PARTICULARS CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK WEIGHTAGE CORPORATION BANK KARUR VYSYA BANK BANK OF BARODA KOTAK MAHINDRA BANK
CAPIT AL ASSE TS MANAGEM ENT EARNIN GS LIQUID ITY
14.6 7 18.3 2 16.3 5 22.9 5 0.2
21.3 5 26.8 7 24.0 4 58.8 5 0.2
54.37 44.37 55.55 46.65
40.11 40.07 38.36 35.85
29.24 26.28 41.64 14.6 TOT AL 31.9 5 31.1 8 35.1 9 35.7 8 RAN K 3 4 2 1
2.93 3.66 3.27 4.59
4.27 5.37 4.81 11.7 7
10.87 8.87 11.11 9.33
8.02 8.01 7.67 7.17
5.85 5.26 8.33 2.92
7.2 CHART SHOWING CAMEL RATING FOR DIFFERENT BANKS
Rank 1 – Here kotak Mahindra Bank indicates strong performance and risk management practices that consistently provide for safe and sound operations. The historical trend and projections for key performance measures are consistently positive. It is not performing well in Liquidity ratio but it performs strong in other ratios which covered up its weak performing area. Rank 2 – Here Bank of Baroda reflects satisfactory performance and risk management practices that consistently provide for safe and sound operations. It maintains very well in management and liquidity ratio which has become its strength. In order to lead, it should focus more on Capital and Assets. Rank 3 – Corporation Bank represents performance that is flawed to some degree and is of supervisory concern. Performance is marginal. Risk management practices may be less
than satisfactory. In order to improve their position, it should maintain the capital and Assets ratio so that it will be able to compete with their competitors. Rank 4 –Karur Vysya Bank refers to poor performance that is of serious supervisory concern. Risk management practices are generally unacceptable and the Bank should try to improve its operations. It is performing Good in Earnings but Management and Liquidity of the bank is not up to the mark and should give more importance to these factors in order to be at the par with other banks.
Corporation Bank is excellent in Earnings ratio but lacks in other ratio like Capital, Assets, and Liquidity etc. If we compare Corporation Bank with Bank Of Baroda i.e. both Public bank, Bank of Baroda’s Liquidity ratio is quite good. So, Corporation Bank should improve its liquidity ratio. The Major difference is due to Liquid assets to Demand Deposits ratio. Corporation bank’s fair market value to book value ratio is the lowest of the entire banks. This shows Corporation Bank should create more awareness among the people through Targeting youngsters as well as providing new schemes in order to attract more customers. The banks should adapt themselves quickly to the changing norms.
The system is getting internationally standardized with the coming of BASELL II accords so the Indian banks should strengthen internal processes so as to cope with the standards. The banks should try to maintain a 0% NPA by always lending and investing or creating quality assets which earn returns by way of interest and profits. Corporation bank is performing well in Management, earnings and Liquidity but lacking in Capital and Assets Management. The Bank should focus more on managing Asset as it is at the last position compared to other banks. Even in Capital Management, Kotak Mahindra Bank is having almost 22% capital adequency ratio whereas corporation bank is having 13.66% which is lowest of all banks mentioned in the report.
The current Banking Crisis, which is quite unprecedented, underlines the importance of regulatory issues and the effects of incompetence in this area. CAMEL, as a rating system for judging the soundness of Banks is a quite useful tool, that can help in mitigating the conditions and risks that lead to Bank failures. The report makes an attempt to examine and compare the performance of four different banks of India i.e. Corporation Bank, Kotak Mahindra Bank, Karur Vysya Bank and Bank Of Baroda. The analysis is based on the CAMEL Model. The study has brought many interesting results, some of which are mentioned as below:
All the three banks have succeeded in maintaining CRAR at a higher level than the prescribed level, 9%. But KOTAK MAHINDRA BANK has maintained highest i.e.19.86%. It is very good sign for the bank to survive and to expand in future. In Management Quality, we have found that Business per Employee Ratio and Profit per Employee Ratio is more in CORPORATION BANK AND BANK OF BARODA. This shows the growth of the bank as well as efficiency of the employee, which is very good in both the banks and they will help to the bank to grow in future. After evaluating all the ratios, calculations and ratings we have given 1st Rank to KOTAK MAHINDRA BANK, 2nd Rank to BANK OF BARODA, 3rd Rank to CORPORATION BANK and 4th to KARUR VYSYA BANK.
www.bankofbaroda.com www.kotak.com/bank/personal-banking www.corpbank.com www.kvb.co.in www.allbankingsolutions.com www.wikinvest.com www.rbi.org.in www.basel2implementation.com http://ezinearticles.com/?Banks-and-Camels&id=2565867
Annual Reports 1. Corporation Bank 2008-09 2. Bank of Baroda 2008-09 3. Karur Vysya Bank 2008-09 4. Kotak Mahindra Bank 2008-09
KOTAK MAHINDRA BANK LIMITED
BALANCE SHEET AS AT 31st MARCH, 2009 (Rupees in 000) PARTICULARS CAPITAL AND LIABILITIES Capital Reserves and Surplus Employees' Stock Options (Grants) Outstanding Deposits Borrowings Other Liabilities and Provisions Total ASSETS Cash and Balances with Reserve Bank of India Balances with Banks and Money at Call and Short Notice Investments Advances Fixed Assets Other Assets Total Contingent Liabilities Bills for Collection 6 7 8 9 10 11 99,53,533 14,53,164 9,11,01,805 16,62,53,371 21,33,560 1,62,23,306 28,71,18,739 57,95,42,087 31,75,756 1,68,34,945 43,91,790 9,14,19,885 15,55,22,232 21,02,487 1,28,52,276 28,31,23,615 1,21,62,75,762 29,08,837 Schedule 1 2 As at 31st MARCH, 2009 34,56,689 3,46,79,490 9,19,086 3 4 5 15,64,49,336 5,90,40,706 3,25,73,432 28,71,18,739 As at 31st MARCH, 2008 34,46,728 3,19,08,220 5,82,140 16,42,36,456 5,11,92,532 3,17,57,539 28,31,23,615
BALANCE SHEEET OF BANK OF BARODA
Balance Sheet as on 31st March, 2009 (Rs.In 000's) Schedules As on 31.3.2009 As on 31.3.2008
Capital & Liabilities Capital Reserves & Surplus Deposits Borrowings Other Liabilities & Provisions Total Assets Cash and balances with Reserve Bank of India Balances with Banks and Money at Call and Short Notice Investments Advances Fixed Assets Other Assets Total Contingent Liabilities Bills for Collection Significant Accounting Policies Notes on Accounts
1 2 3 4 5
365,52,77 124700135 1923969517 5636,08,59 16538,14,66 227406,72,54
365,52,77 10678,39,91 152034,12,72 3927,04,80 12594,41,42 179599,51,62
6 7 8 9 10 11
10596,34,35 13490,77,35 52445,87,58 143985,89,61 2309,71,93 4578,11,72 227406,72,54 73386,09,83 13963,99,04
9369,72,34 12929,56,33 43870,06,78 106701,32,41 2427,00,81 4301,82,95 179599,51,62 82362,32,83 8315,01,73
12 17 18
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