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Prepared By. Issan shah (107960592121) Bhavik shah(107960592040)

1949 as one ³ which transacts the business of banking which means the accepting . or otherwise. of deposits of money from public.Introduction to Banking Sector : Definition of Bank :The Banking Companies act. repayable on demand or otherwise and withdraw able by cheque. for the purpose of lending or investment . order. draft. Public Sector Bank 2.´  Banking system :1. Private Sector Bank .

Structure of Banking System in India :Reserve Bank of India Scheduled Bank Non-Scheduled Bank Co-Operative Bank Central CoOperative Bank State CoOperative Bank Commercial Bank Foreign Bank Indian Bank Private Sector Bank Public Sector Bank Other Nationalized Bank Regional Rural Bank SBI and Subsidiaries Banks .

ICICI Bank . SBI Bank 2. Bank of India  Private Sector Bank :1. HDFC Bank 2.The Banks selected for the Study : Public Sector :1.

‡ To analyse the profitability position of sample banks. ‡ To get familiarity of scheming comparative efficiency of different firms. . Credit Ratio etc.Research and Methodology Objectives  To make a comparative study of performance of Banks by using camel model  AN investor who would like to be rational and scientific in his investment activity has to evaluate a lot of information about past performance and the expected future performance of the companies. Methodology The traditional set of ratios like Gross Profit Ratio . cannot be applied to study the Financial Performance of Banks.Debtors Ratio . ‡ To gain knowledge of evaluating intrinsic value of a firm.  Some of the objectives of conducting the study are as follows: ‡ To take investment decision cautiously after studying risks involved in the same. Net Profit Ratio . the present study attempts to analyze the position of the sample companies. Stock Turnover Ratio . ‡ To acquire practical exposure of financial analysis of an enterprise. industries and the economy as a whole before taking the investment decision and hence.

M. padmanabhan (Former Chairman of Indian Overseas Bank).CAMEL MODEL y This model is recommended by Padmanabhan Committee (1995) :y Appointed by RBI in 1995 to suggest changes in the approach and style of inspection and follow up by the Central Bank.) . y For Indian banks the rating will be based on five parameters (C. y Recommendations are yet to be accepted by RBI.A.L. The major recommendations are: Ongoing supervision:Shift from current system of periodical inspection to ongoing or continuous supervision.E. under the chairmanship of S. CAMEL Rating Model:y Each Bank should be raised on a five score scale A to E indicating in descending order the soundness and strength of the bank.

operational or compliance weaknesses that give cause for supervisory concern.Rating Symbol A B C Rating symbol indicates Bank is sound in every respect Bank is fundamentally sound but with moderate weaknesses financial. D E . operational and managerial weaknesses that could impair future viability critical financial weaknesses and there is high possibililty of failure in the near future. serious or immoderate finance.

‡ Earnings: Bank s earnings over time and in comparison to others in the industry should show a positive trend. there could be a problem. ‡ Management : Must have administrative skills and ability to cope with existing regulations and a changing environment.‡ Capital Adequacy : Staying power ‡ Asset Quality : Bank s lending decisions determine the level of credit risk. . ‡ Liquidity : If depositors start withdrawing.

Invested in Govt. Securities / Total Investment . Debt-Equity Ratio Debt Equity Ratio= Total Borrowings and Deposits / Shareholder s Net Worth. Govt. [Total Advances = Advances + Receivables] [Total Assets =Total Assets Revaluation of Assets] 4.Capital Adequacy: 1. [Tier I = Equity Capital + Free Reserves] [ Tier II: Debt of 5-7 years] 2. Government Securities to Total Investment Ratio = Amt. Capital Adequacy Ratio=Capital (Tier I. Advances to Assets Ratio Total Advances to Total Assets Ratio=Total Advances / Total Assets.-securities to Total Investment Ratio It is arrived at by dividing the amount invested in Government Securities by Total Investments. Capital +Reserves +Surplus] 3. [Shareholder s Net Worth = Eq. II) / Risk Weighted Assets * 100. Capital Adequacy Ratio The higher the CAR means the stronger the bank.

Net NPAs to Total Assets (NNPAs/TA) Ratio 2. ‡ Profit Per Employee(PPE) Ratio It is arrived at by dividing the Net Profit of the bank by Total Number of Branches. of Employees. Business per Employee (BPE) Ratio = Total Business / Total No. ‡ Business Per Employee (BPE) Ratio It is arrived at by dividing the Total Business by the Total Number of Employees.Assets Quality 1. [Total Business = Total Advances + Total Deposits] 4. Profit per Employee (PPE) Ratio = Net Profit / Total No. of Branches 3. Return on Net worth Ratio = PAT / Share Holder¶s Net Worth * 100. ‡ Return on Net Worth Ratio It is arrived at by dividing the Profit after Tax by Share Holder¶s Net Worth. Net NPAs to Net Advances (NNPAs/NA) Ratio 3. Capital + Reserves and Surpluses] . Total Advances to Total Deposits(TA/TD) Ratio ‡ [Total Advances = Advances + Receivables] [Total Deposits = Demand + Saving + Term + Others] 2. Total Investments to Total Assets (TI/TA) Ratio Management Efficiency 1. [PAT = Profit after Tax] [Share Holder¶s Net Worth = Eq.

Working Funds 2. Operating Profit by Avg. Working Funds Ratio ‡ This is arrived at by dividing the Operating Profit by Avg. Interest Income / Working Funds Ratio = Interest Income / Working Funds. Non Interest Income / Working Funds(NII/WF) Ratio ‡ This ratio measures the Operation from other than lending operations as a percentage of working funds. Interest Income / Working Funds Ratio ‡ This ratio measures the income from lending operations as a percentage of the working funds in a year. Working Funds Ratio = Operating Profit / Avg. Net Profit / Average Assets (PAT/AA) Ratio 3. of Total Assets during the year. Non-Interest Income is the Interest earned by the banks excluding income on advances and deposits with RBI. Working Funds. It is arrived at by dividing the Interest Income by Working Funds. Operating Profit by Avg.Earnings Quality 1. [Interest Income = Income on Advances + Income on Deposit with RBI + Dividend Income] 4. . working Funds or the Daily Avg.

Approved Securities to Total Assets Ratio .Liquidity 1. Liquid Assets to Total Assets (LA/TA) Ratio 4. Liquid Assets to Total Deposits (LA/TD) Ratio 3. Liquid Assets / Demand Deposits (LA/DD) Ratio 2. Government Securities to Total Assets (G-Secs/TA) Ratio 5.