12 Chapter 5

CHAPTER V
AN ANALYSIS OF TRENDS IN FINANCIAL PERFORMANCE OF

PUBLIC SECTOR BANKS IN INDIA
5.0 INTRODUCTION
The Indian banking system has been experiencing a Meta morphosis since
independence. Nationalization of commercial banks has given an impetus to the growth
and expansion of commercial banks in the country. The finance sector reforms has posed
threat to the Indian public sector banks which has heralded an era of competitive sprit.
However, the dynamism introduced, despite the growth in competition, has provided
enough places for all these three players. Each of these players has identified niches for
themselves in the vast Indian banking system. The players are also learning from each
other and are adjusting to the changing environment. This is not only important for their
survival, but also for improving their performance on sustainable basis. In this context,
RBI has been playing a crucial and a balancing role in the monetary management of the
economy.
While RBI initiated changes based on the economic condition, there were other
developments which had a major impact on the banking sector. In order to provide a
level-playing field to the Public Sector Banks and bring them on par with the private and
foreign banks, the Government of India announced a package providing operational and
managerial autonomy to Public Sector Banks. Under this package, these banks are
allowed to take strategic decisions on mergers and acquisitions. They are also now free to
tap the markets to raise their capital to meet the stringent capital adequacy norms. Banks
can also decide on the recruitment, remuneration and compensation of their employees.
163
This will give the Public Sector Banks flexibility to take decisions quickly, which is
essential to face competition. Tackling NPAs is also a major challenge to Indian banks.
The union government introduced an amendment to the legislation to help banks manage
NPAs better. The Union Cabinet cleared amendments to the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI)
Act in November 2004, which further strengthens the various provisions of the Act and
paves the way for a speedy recovery of NPAs.
In nutshell, as indicated above, the measures taken by RBI and Government of
India are expected to provide an impetus to the growth of the Indian public sector banks,
in terms of financial viability, improvement in profit position of the public sector banks
through efficiency, autonomy in decision making and innovation introduced in the
banking system. A logical question that arises in this context is that with autonomy given,
to what extent the public sector banks are able to improve their performance and to what
extent the efficiency of the banking institutions has improved. In the present chapter it is
attempted to discuss the answers to these questions by examining the financial
performance of the public sector banks. For this purpose, as discussed in chapter I, the
relevant sophisticated econometric tools are applied. Also, based on the literature, certain
financial indicators that are germane to the analysis of the financial performance are used.
5.1 CAPITAL ADEQUACY
There has been a sea change in the capital position of most banks since the days
when there was pressure on the government to recapitalize some of the banks. Besides
improved performance and good market conditions, many banks have gone to the equity
164
markets to raise capital it is important for a bank to maintain depositors' confidence and
preventing the bank from going bankrupt. Capital is seen as a cushion to protect
depositors and promote the stability and efficiency of financial system around the world.
Capital Adequacy reflects the overall financial condition of the banks and also the ability
of the management to meet the need for an additional capital. It also indicates whether the
bank has enough capital to absorb unexpected losses. Capital Adequacy Ratios act as
indicators of bank leverage.
5.1.1 CAPITAL ADEQUACY RATIO
The banks are required to maintain the Capital Adequacy Ratio (CAR) as
specified by RBI from time to time. As per the latest RBI norms, the banks in India
should have CAR of 9 per cent.
Higher the CAR, the stronger is considered to be a bank, as it ensures high safety
against bankruptcy.
An examination of the data on the capital adequacy ratio provided in Table 5.1
indicates that during the study period, the growth of capital adequacy ratio has improved
in almost all the banks indicating the increasing efficiency of the PSBs. A bank wise
analysis indicates that during the study period, Indian Bank (28.88 per cent) has recorded
the highest ratio. This is being followed by the other banks like, United Bank of India
(5.94 per cent), Indian Overseas Bank (4.68 per cent), Punjab National Bank (3.78 per
cent), Canara Bank (3.29 per cent), UCO Bank (3.09 per cent), Vijaya Bank (2.14 per
cent), Union Bank of India (1.88 per cent), State Bank of Hyderabad (1.78 per cent),
Bank of India (1.73 per cent) and Bank of Maharashtra (1.63 per cent)
165
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TABLE 5.1: CAPITAL ADEQUACY RATIO
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However, the negative growth in capital adequacy ratio has been recorded by the
following banks: State Bank of India (-0.82 per cent), Oriental Bank of Commerce (-2.54
per cent), State Bank of Saurashtra -3.38 per cent) and Allahabad Bank (-18.44 per cent).
In terms of compound growth rate worked out indicates that the growth is highest
with 45.22 per cent recorded by Indian Bank (45.22 per cent). The order of the other
banks is: United Bank of India (6.45 per cent), Indian Overseas Bank (4.81 per cent),
Punjab National Bank (3.93 per cent), Canara Bank (3.39 per cent), UCO Bank (3.13 per
cent), Vijaya Bank (2.23 per cent), Union Bank of India (1.91 per cent), State Bank of
Hyderabad (1.89 per cent), Bank of India (1.85 per cent) and Bank of Maharashtra (1.68
per cent).
Thus from the analysis it can be concluded that in terms of percentage of capital
adequacy ratio, and growth rates, Indian bank could performance better.
5.1.2 ANOVA RESULTS OF CAPITAL ADEQUACY RATIO
The earlier table indicated the trends in the capital adequacy of the public sector
banks. Given the similar operating environment, a moot question that arises is whether
the banks could perform equally or there is a difference. This means, whether there is a
significant difference among the banks in terms of the trends in the growth of capital
adequacy ratio. This is being tested with the help of Analysis of variance.
TABLE: 5.2
TABLE SHOWING ANOVA RESULTS OF CAPITAL ADEQUACY RATIO
Sources of Sum of Degrees of
Mean Square F Value
Variance Squares Freedom
Between 1523.75 26 58.60577 1.34 12.55*
Within 10606.48 243 43.64807
Total 12130.23 269
Source: RBI Report, Trends and Progress of Banking, Various Issues.
167
The null hypothesis framed for this purpose is “there is no significant difference
among the banks in terms of capital adequacy ratio during the study period.” This is
being tested with help of ANOVA. The calculated value is 12.55. The table value for 26
and 243 degrees of freedom and at 5 per cent level of significance is 2.01. A comparison
of the calculated value with that of the table value indicates that the calculated value is
greater than the table value and hence the null hypothesis that “there is no significant
difference among the banks in terms of capital adequacy ratio during the study period”
has been rejected.
This gives the conclusion that there is a significant difference among the banks in
terms if capital adequacy ratio during the study period.
5.1.3 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. Higher ratio
indicates less protection for the creditors and depositors in the banking system. Hence, a
declining trend in the debt equity ratio is desirable.
As it could be seen in Table 5.3, among the sample banks in the year 1998, Indian
Bank (5.59 per cent) recorded the lowest debt equity ratio. The next highest debt equity
ratio is being registered by UCO Bank (5.99 per cent). The highest ratio could be seen
in the case of Indian Overseas Bank (29.34 per cent).
During the year, 2007 the order of the banks have changed slightly to have:
Oriental Bank of Commerce (11.80 per cent), Corporation Bank (12.13 per cent),
Andhra Bank (13.52 per cent), Allahabad Bank (13.71 per cent), Punjab National Bank
168
TABLE 5.3: DEBT EQUITY RATIO
Name of the bank 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 AVG CV LGR CGR
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Allahabad Bank 18.12 18.35 19.86 21.98 22.68 21.43 19.82 17.83 13.65 13.71 16.71 -2.92
Andhra Bank 12.21 21.55 24.98 24.43 21.17 19.76 16.37 15.88 12.20 13.52 18.21 26.52 -4.15 -3.92
Bank of Baroda 14.87 15.56 15.98 16.37 16.33 15.27 14.39 15.01 12.84 14.89 I 15.15 6.89 -1.23 -1.26
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Bank of India 17.67 19.70 19.76 19.91 22.16 19.34 18.83 19.51 20.69 19.98 7.06 1.24 1.26
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Bank of Maharashtra 25.33 27.99 22.93 18.74 19.55 18.05 20.53 21.71 25.35 -0.44
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Central Bank of India 11.87 14.06 16.49 23.72 21.17 18.40 19.05 19.90 28.68 18.34
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Dena Bank 18.85 17.76 16.98 19.14 15.99 16.74 17.68 19.88 18.09 19.16 0.54 0.53
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Indian Bank 5.59 6.04 6.71 7.56 5.83 5.35 5.55 17.10 17.33 14.39 9.15 54.88 13.49' 12.58'
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Oriental Bank of Commerce 12.15 13.73 15.82 16.08 17.95 14.49 13.58 9.99 14.04 16.58 -2.12
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Punjab & Sind Bank LL 0
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Syndicate Bank i 22.70 20.76 16.98 19.05 22.31 21.53 j 19.65 22.75 20.56 21.96 1.24 2.35
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UCO Bank 6.29 7.i5 8.35 9.86 21.79 24.54 23.45 26.30 15.99 56.72
Union Bank of India 14.67 16.76 18.01 19.04 18.91 17.33 16.27 17.73 17.88 17.48 7.48 0.93 1.02
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United Bank of India 6.48 7.41 8.58 10.03 10.75 11.63 16.45 15.84 11.20 31.89 i
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Vijaya Bank 11.60 13.97 26.11 21.33 18.91 18.03 14.82 16.82 17.19 20.43 17.92 1.96
State Bank of India 14.49 17.12 16.97 18.84 18.38 17.75 16.41 16.19 15.04 15.70 16.69 8.42 -0.56 -0.52
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State Bar k of Bikaner and Jaipur 19.29 18.72 17.53 17.03 15.54 15.00 14.15 15.30 16.65 18.62 -1.47 -1.45
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State Bank of Hyderabad 21.68 20.57 19.63 17.52 15.94 16.76 16.96 18.54 12.77 -3.75'
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State Bank of Indore 21.04 22.54 22.21 19.62 16.30 13.66 16.54 17.59 18.88 18.87 15.07 -3.08 -3.04
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State Bank of Mysore 22.32 24.37 24.45 21.69 19.40 18.94 18.77 20.90 22.27 12.60 -2.94 ’
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State Bank of Patiala 13.69 13.69 12.45 12.35 12.96 13.27 13.23 16.01 16.87 13.76 10.83 2.14 2.00
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State Bank of Saurashtra 10.79 12.14 12.07 13.14 13.63 15.19 14.68 17.11 15.26 16.46 14.05 14.53 4.49'
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State Bank of Travancore 21.57 23.07 23.60 22.55 21.88 21.85 21.47 21.93 20.99 21.24 22.02 3.74 -0.79'
Indicates significant at 5 percent level Source: RBI Report, Trends and Progress of Banking, Various Issues.
(13.94 per cent), Indian Bank (14.39 per cent), Canara Bank (14.51 per cent), Punjab &
Sind Bank (14.68 per cent), Bank of Baroda (14.89 per cent) and State Bank of India
(15.70 per cent), while the highest ratio of 28.68 per cent could be seen in the case of
Central Bank of India (28.68 per cent).
The average level of debt equity ratio worked out for the entire study period for
all the banks shows that Indian Bank (9.15 per cent) recorded the least debt equity ratio.
This is being followed by the few other banks including, Corporation Bank (10.96 Per
cent), United Bank of India (11.20 Per cent), State Bank of Patiala (13.76 Per cent),
Oriental Bank of Commerce (14.04 Per cent) and State Bank of Saurashtra (14.05 Per
cent). The highest ratio has been registered by Indian Overseas Bank (24.96 Per cent),
A lowest coefficient of variation indicates the less volatility of the growth of the
variable which has high predictive power. Accordingly, the coefficient of variation
worked out indicates that UCO Bank (56.72 Per cent) has recorded the highest
coefficient of variation. This is being followed by the other banks like: Indian Bank
(54.88 Per cent), Punjab & Sind Bank (34.66 Per cent), United Bank of India (31.89 Per
cent), Central Bank of India (30.38 Per cent), Andhra Bank (26.52 Per cent), Bank of
Maharashtra (25.35 Per cent), Indian Overseas Bank (24.42 Per cent), Vijaya Bank
(23.01 Per cent), Syndicate Bank (21.96 Per cent) and Punjab National Bank (18.56 Per
cent). The least coefficient of variation could be seen in the case of State Bank of
Travancore (3.74 Per cent)
In terms of linear growth rate worked out, Indian Overseas Bank (-7.41 Per cent)
shows the highest decline indicating the fast decline in the debt equity ratio during the
study period. This is being followed by the other banks like: Punjab National Bank (-5.68
170
Per cent), Andhra Bank (-4.15 Per cent) State Bank of Hyderabad (-3.75 Per cent), State
Bank of Indore (-3.08 Per cent), State Bank of Mysore (-2.94 Per cent), Allahabad Bank
(-2.92 Per cent), Corporation Bank (-2.20 Per cent), Canara Bank (-1.98 Per cent),
Oriental Bank of Commerce (-1.96 Per cent) and State Bank of Bikaner and Jaipur (-1.47
Per cent) while the positive growth rate has been recorded by: Punjab & Sind Bank (0.48
Per cent), Dena Bank (0.54 Per cent), Union Bank of India (0.93 Per cent), Vijaya Bank
(1.19 Per cent), Syndicate Bank (1.24 Per cent), Bank of India (1.24 Per cent), State Bank
of Patiala (2.14 Percent), State Bank of Saurashtra (4.49 Per cent), Central Bank of India
(8.33 Per cent), United Bank of India (10.2 1 Per cent), Indian Bank (13.49 Per cent),
UCO Bank (16.93 Per cent).
Thus from the analysis it can be concluded that in terms of debt equity ratio, India
banks is in the most favorable position, while in terms of growth rates UCO bank has
taken the lead.
5.1.4 ANOVA RESULTS OF DEBT EQUITY RATIO

The earlier table indicated the trends in the debt equity ratio of the public sector
banks. In a uniform operating environment it is expected that the debt equity ratio of the
public sector banks to be similar. This means, it is expected that there is no significant
difference among the banks in terms of the growth in debt equity ratio. This is being
tested with the help of Analysis of variance.
TABLE: 5.4
TABLE SHOWING ANOVA RESULTS OF DEBT EQUITY RATIO
Mean Square F Value
Between 3733.791 26 143.6073 6.41’
Within 5440.9 243 22.39053
Total 9174.691 269
’ Indicates signi leant at 5 percent level
Source: RBI Report, Trends and Progress of Banking, Various Issues
171
among the banks in terms of debt equity ratio during the study period.’' This is being
tested with help of ANOVA. The calculated value is 6.41. The table value for 26 and 243
degrees of freedom and at 5 per cent level of significance is 2.01. A comparison of the
calculated value with that of the table value indicates that the calculated value is greater
than the table value and hence the null hypothesis that “there is no significant difference
among the banks in terms of debt equity ratio during the study period” has been rejected.
This gives the conclusion that there is a significant difference among the banks in
terms of debt equity ratio during the study period.
5.1.5 ADVANCES TO ASSETS
The ratio of the Total Advances to Total Assets indicates the bank’s
aggressiveness in lending which ultimately results in better profitability. A higher ratio is
preferred to lower one. Hence, it becomes essential to understand the trends in the
movement of this crucial indicator.
As it could be seen in Table 5.5, in the year 1998, the highest ratio of 47.52 per
cent of total advances to total asset has been achieved by Bank of India while the least
was recorded by United Bank of India (23.43 Per cent),
During the year 2007 the order of the banks have changed slightly with State
Bank of Travancore (65.14 Per cent) taking the highest ratio, while this was found to be
the least in the case Indian Bank (51.75 Per cent).
172
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o nT r- nr NO r- NO K IN NO CM K NO m d d in od IN d »n od d NO
Source: RBI Report, Trends and Progress

0 0 00
IN nT nr nr in rn m nr nT rn nr nT nr nT nr nr in m nT m nr rn nr nr nr nr nT
IN to NO nr m IN NO GN nr o On m NO NO «n , r- ON NO in tn 00 NO . 00 •n 00
© r- NO IN NO — rn in 00 r- m NO NO m NO ON CM rn NO in ON «n nr nr —
© nf NO NO in 00 On o in _ nf CM NO d NO d »n d d NO d NO wd NO d CM od
CM nr nf nf •n m nr nr m nT nr nr nr nT nr tT m nr rn m m nr nT n nr nr
CM o IN c- 00 m OO NO »n m nf OO 00 m nr c- 0 ON NO O' O' nr 00 NO NO NO r- O'

o rn IN nf 00 nf 00 rr in On o i"- oo •n — 00 00 — O' m NO 0 NO nr O 00 0
lav* nf NO d nf oo in o NO O^ NO IN rn d NO d od d od nf 00 od CM d d rn wd
IN nr nf nf in rn Tf nr nr m m nT nT nr nr nr nT nr IN rn rn m m nT nr in nr nr
m — o IN m On in 00 o , , m NO nr nr 0 CM ON r~~ NO 00 nr 0 0
© nT nT m Tt o 00 00 On — nr IN ON NO — nr ON ON — O' IN NO NO w-> r- ON —
o cd NO rn rn »n o< rn o^ in rn o 00 nf NO NO nf NO d »n d od wd d nf
IN nT m nr in m m nr m rn nr nr m nr nT fO nT CM nr m m m nr nr nr nr nT
O O r-~ IN o CN 00 o nr NO o o n 0 nr ON r- ON in , O NO NO 00 r- NO
o 00 IN NO o nf IN — nr CM oo ON o 0 r-~ ON m r- m NO »n m CM CM — O' nr CM
— wd _7^ wd nf rn oo NO CM nT od d nf IN — rn NO d •n d wd CM NO CM —
IN nf m nf Tt rn rn nr nr m nT m nr nT nr m nr IN rn m m m nr nT nT nr nT
O' ON W> 00 nf On m in On »n NO m IN IN m 00 , m tn »n m nT m NO 00 NO
On o — m — m in CM ON O On m o NO — tn^ ON CM m O' 0 »n nT r- nr m NO O'
o Os o in m o NO m nT 00 IN d NO IN rn r-- c- 0 CM m nr CM od
nr m nf nf rn rn nT nr m nr nr m nT nr CM m CM rn rn m nr nT nr nr nr m
00 r- o IN (N m On r- r- CM nr nr 00 nr nr ON O m NO CM nr _ O' 00 0
ON c- r- IN m c- o On m ON m nr r- CM m •—< ON nr — m ON NO nr 00 in 00
ON d in rn d rn ON nf 00 r- o CM in d in d d rn nf CM rn NO nf CM NO rn
m rn nf nT m m m m nr m nT nr m nr m m m CM m nr nf nT nr nr nr nr nT
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173
The order of the banks in terms of the average ratio of advances to total assets
goes as: Bank of India (53.22 Per cent) followed by State Bank of Patiala (49.35 Per cent)
while United Bank of India (32.55 Per cent) recorded the least.
The coefficient of variation is determinants of volatility in the ratio indicate that
State Bank of Patiala (10.09 per cent) has recorded the least volatility. This is being
followed by the other banks like: Bank of India (10.34 per cent), State Bank of Saurashtra
(12.06 per cent), Punjab National Bank (12.15 per cent), Bank of Baroda (12.23 per cent)
and Punjab & Sind Bank (12.54 per cent), with United Bank of India (31.76 per cent)
taking the highest coefficient of variation.
United Bank of India (9.76 per cent) has recorded the highest growth rate of 8.78
per cent in terms of growth in the advances to assets. The second highest growth has been
register by Vijaya Bank (5.94 per cent). Though all the other banks have shown a positive
growth in the variable on advances to assets, State Bank of Saurashtra (2.39 per cent) has
recorded the least growth.
Thus, from the analysis it can be concluded that Bank of India recorded the
highest share of total advances to total advances, while in terms of growth rate United
Bank of India recorded the highest.
5.1.6 ANOVA RESULTS OF ADVANCES TO ASSETS
The earlier table indicated the trends in the advances to assets position of the
public sector banks. Given the similar operating environment, a moot question that arises
is whether the banks could perform equally well in terms of the ratio of advances to
174
assets or there is a difference. This means, whether there is a significant difference
among the banks in terms of the trends in the advances to assets ratio. This is being
tested with the help of Analysis of variance.
TABLE: 5.6
TABLE SHOWING ANOVA RESULTS OF ADVANCES TO ASSETS
Mean Square F Value^,
Between 4349.81 26 167.3004 1.74
Within 23297.7 243 95.87531 S
Total 27647.51 269

~ Indicates significant at 5 percent evel
Source: RBI Report, Trends and Progress ofBanking, Various Issues.
The null hypothesis framed for this purpose is "there is no significant difference
among the banks in terms of advances to total assets position during the study period.5'
This is being tested with help of ANOVA. The calculated value is 1.74. The table value
for 26 and 243 degrees of freedom and at 5 per cent level of significance is 2.01. A
comparison of the calculated value with that of the table value indicates that the
calculated value is less than the table value and hence the null hypothesis that "there is no
significant difference among the banks in terms of capital adequacy ratio during the study
period” has been accepted.
This gives the conclusion that there is a no significant difference among the banks
in terms of advances to assets ratio during the study period.
5.1.7 GOVERNMENT SECURITIES TO TOTAL INVESTMENTS
As per the Reserve Bank of India regulations under Cash Reserve Ratio (CRR), it
is mandatory on the part of the commercial banks to invest a portion of their liquid assets
in government and other reliable securities. Having known that investment in government
175
securities is risk free though it provides lower rates of return, a higher share of investment
in it indicates a smooth and certainty in the flow of income. However, depending on the
economic conditions and future economic plan, CRR is highly volatile in nature and
hence it is expected to bring about volatility in the amount and share in investment in
securities. An understanding of the trends in the movement of the ratio of government
securities to total investment becomes pertinent.
In the case of the ratio on the investment in government securities to total
investment, during the year 1998, the highest share in investment in securities is being
made by State Bank of Travancore (82.13 per cent). The next highest share, Indian
Bank (81.83 per cent) the least share in investment is being made by Oriental Bank of
Commerce (49.77 per cent).
In the year 2007, the order has changed to have State Bank of Travancore (96.75
per cent) taking the first position, while Bank of India (72.73 per cent) has shown the
least ratio
The average level of the ratio of government investment to total investment stood
highest for Allahabad Bank with 89.44 per cent and it was the least in the case of State
Bank of Travancore (61.25 per cent).
Thus the average share of investment in government securities to total investment
indicates that the share ranges from a minimum of 61.25 per cent to a maximum of
89.44 per cent which implies that a lion’s share of investment is being made in
government bonds. This provides the conclusion that the banks, as investors are risk
averters than risk takers.
176
4 .0 6 ’
3 .7 2 ’
5 .7 3 ’
4 .6 0 ’
2 .9 8 '
3.32*
2 .0 3 '
1 .9 2
2.74*
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0 .6 7
0 .4 9
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CM
sq
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00 CM q re
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ITS o SO Cs O' O we o
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d
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© On re o Cs 00 ef Cn rc Cs r- C- 00 00 OO r- c- oo C Tf CM
> vO* OO Os rd vd rd we sd CM tT rd OO »d 00 Cs CM id X Os vd oo d d d d we
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re re SO CM CM VO ef SO CM - Cs CM re CM re oo Tf we re re we 00 OO r-
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> we © OO O' ef* o CM vd d rf CM CM c- vd d vd id d O CM rd ©
< r- oo VO VO 00 c- r- C" r- 00 00 VO c- C** OO C- r- C' c- c- 00 oo oo 00 00 oo as
TABLE 5.7: GOVERNMENT SECURITIES TO TOTAL INVESTMENTS
CM CM ef re N CM vO so r- rc r- ic> 5s VO CM o 00 re o o 00 c- re O' VO ef we
o ef c*- ef «Al Cs CM c- CM o re er o r- OS re VO c- VO o o VO c~
of Banking, Various Issues.

o OO On* we CM CM CM d d CM 00 rd d Cs vd d 00 o d id eh re rd eh rd vd
CM r- r- r- OO OO c- 00 oo c- 00 00 c 00 00 OO 00 r- 00 c- Cs Cs O' Cs Cs O' Cs
V© CM Os VO r- so CM VO CM rc oo Cs CM o C" tn •rf r- X SO VO O' Cs O ©

o 00 o r- 00 ce ici O VO O' Cs 00 o CM CM we CM re vO OO O re OO
00* we ef CM we CM rd CM rd CM d CM Cs vd vd id d rd d rd o CM eh
CM r- £ Cs
r- 00 c- oo 00 00 oo 00 oo OO oo OO oo OO 00 oo oo oo c Cs Cs O' ©
iTt we ef Tt Cs so so c- 1C; re re VO o Cs o 00 oo CM ’^r CM Tf CM CM re CM ©

© re ef CM oo ef Cs o Cs tr> VO re re CM o we VO CM O sO X re sO we
cm CM OO © oo sd 00 td rd Cs o CM Cs d SO c- d CM ef O' CM re we
N oo OO r- C- oo r- 00 00 00 oo r- 00 00 Cs OO SO oo OO oo Cs Cs Cs oo Cs Cs Cs
Tt o OS 00 ef ef o 00 to c- Cs ir> 00 CM CM re oo o we C- - re we Cs we re
O VO re 00 CM CM VO o Tf CM we CM Os Cs o c- oo r- re re
O we to rd d oo rd d d rd vd d rd d d d CM ef

CM © 00 00 OO Cs CM CM we
c- oo r- VO 00 r-- oo r- OO 00 r- r- r-' 00 c- r- 00 00 oo Cs 00 Cs 00 oo Cs ©
fO we ef Os C' c- CM re CM tT tc c- oo Os CM c- so CM CM c we re so c-
o eh eh O' re CM we CM CM m o re SO re Tf Cs OO 00 SO re c- CM re c- re SO
vd ef CM vd vd vd rd oo d d 00 K ^t* id Cs* CM Os d rd 00 d d d sd d CM
CM oo c- vO 00 c- r- r- c- 00 00 VO VO c- 00 SO r- r- r- OO 00 00 Cs 00 oo ©
N CM re we OS r- Cs CM CM r~> SO so c- oo re re vO CM we so SO CM vO
o we o eh vO o re we oo C- re Cs re c Tt 00 CM X so oo CM re CM OO CM
N
d we eh d CM Cs CM OO d CM 00 Cs d so we d VO Tf oo r- d ©
c- oo SO SO 00 r- SO r- VO OO oo so o so 00 SO so f"- c- 00 OO 00 oo r- oo 00 ©
oo — O' 00 VO 00 ro r- CM o c- c- o VO Cs r- re re c- Cs Os re 00 r- SO
O CM SO VO re re re CM oo CM m oo oo 00 Cs N't rf VO e* re Cs r- VO © re
o sd vd © d o CM vd Cs* Cs rd rd r-* vd vd CM* o 00 d eh rf eh we rd 00
CM oo c-
c- oo VO r- VO c- vO vO c- c- ie so c- SO X C*- c- r- oo 00 OO c- c- r- oo
o Os OS OO Os ef 00 o VO O so 1C 0© VO rt X Cs o o oo CM we !>• o 00 CM ©
o CM VO o fC 00 r- O IO so CS r- r- 00 o re ue we o SO o SO Os o © ©
CM CM* © vd 00 d CM CM id sd CM 00 rd d CM vd d CM CM CM vd we we
n r- oo SO c-* »/e VO vO c- 00 in so r- r- SO c- C- so r- OO OO 00 h- r- c- 00
ON Os o r- o we ef c- re 00 VO o Tf re re C- so o CM 00 we eh r- 00 re
os o VO CM we eh T}* rc c- CM c o rt CM o OO c- so CM vO r- eh r- CM
oo vd rd Os rd d rc rd d K C'* d so’ d CM d CM CM d d d d CM d d
VO VO VO so c- 1C C' to SO c- r- m so so c- SO r- C- so r- c~ c~ 00 c- c- so 00
06 oo re re oo o Cs 00 re CM re IO tc> r- VO o VO CM ef Cs Cs SO re
Os oo OS 00 eh Os oo c- oo SO oo r- oo to tj- r- c- o CM we Cs eh OO CS
ef c- ef 00 CM 00 d Cs CS re C< d X CM so cm d d CM oo c- CM
VO vo VO so r- We c- »o vo 00 C' Tf to so VO so r- C- c- 00 C- VO C- 00
u
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177
In the case of coefficient of variation register, an indicator of the volatility in the
ratio of investments in government securities to total investment, Bank of India (3.06 per
cent) followed by Indian Overseas Bank (3.97 per cent), Indian Bank (4.34 per cent),
State Bank of Travancore (5.27 per cent), Central Bank of India (5.46 per cent), Union
Bank of India (5.82 per cent), State Bank of Indore (6.11 per cent), United Bank of India
(6.73 per cent), State Bank of India (6.85 per cent), Bank of Maharashtra (6.97 per cent),
Allahabad Bank (6.98 per cent), State Bank of Hyderabad (7.17 per cent), Punjab
National Bank (8.74 per cent), State Bank of Bikaner and Jaipur (8.94 per cent), Andhra
Bank (8.98 per cent), Bank of Baroda (9.38 per cent), Vijaya Bank (9.76 per cent),
Syndicate Bank (9.81 per cent) have all recorded a volatility percentage of less than 10,
while it is the highest with 18.46 per cent in the case of Oriental Bank of Commerce.
The linear growth rate, an indicator of the growth in investment in government
bonds indicates that it has increased at the highest rate in the case of Oriental Bank of
Commerce (6.05 per cent). This is being followed by Corporation Bank (5.26 per cent).
The least growth in the ratio has been recorded by Bank of India (0.50 per cent).
Thus from the analysis it can be concluded that in the case of ratio, the highest
ratio is being recorded by Allahabad Bank while in terms of volatility, Bank of India
recorded the least. The highest growth in investment is being made by Oriental Bank of
Commerce.
5.1.8 ANOVA RESULTS OF GOVERNMENT SECURITIES TO TOTAL

INVESTMENTS
With a uniform policy adapted by RBI to all the commercial banks, a moot
question that arises is that ‘whether the share in investment of the public sector banks is
same”. This is being tested with the help of ANOVA.
178
TABLE: 5.8
TABLE SHOWING ANOVA RESULTS OF GOVERNMENT SECURITIES
TO TOTAL INVESTMENTS
Mean Square F Value
Between 11019.7 26 423.8338 1.82
Within 56518.7 243 232.5874
Total 67538.42 269
ndicates significant at 5 percent evel
among the banks in terms of share in investment in government bonds to totai
investment”. The calculated value is 1.82. The table value for 26 and 243 degrees of
freedom and at 5 per cent level of significance is 2.01. A comparison of the calculated
value with that of the table value indicates that the calculated value is less than the table
value and hence the null hypothesis that “there is no significant difference among the
banks in terms of share in investment in government bonds to total investment” has been
accepted.
This gives the conclusion that there is a no significant difference among the banks
in terms of share in investment in government bonds to total investment.
5.2.0 ASSET QUALITY
The capability and strength of a bank lies on the quality of its assets. A
comprehensive analysis of asset quality is vital to assess the current state of affairs and
future viability of the bank. The efficiency of bank in assessing credit risk and recovering
debts is indicated by Net Non-Performing Assets (NNPA) to the Total Asset (TA) ratio.
The lower the ratio the better will be the performance of the bank. Net NPA as a
percentage of Net Advances is the most standard measure of asset quality.
179
Total investment to total assets indicates the extent of deployment of assets
investments as against advances. A higher level of investment means lack of credit off
take and the banks choosing other avenues such as government securities and approved
securities to park their funds. Ideally, this ratio has to be low as the primary business of
banks is lending.
Banks have to consistently work on their NPAs. Percentage change in NPAs is a
very important indicator of the way the bank is working on the recovery of its NPAs or
writing off these NPAs and improving the quality of the assets in balance sheet.
5.2.1 GROSS NPA TO GROSS ADVANCES
In a situation of stiff competition due to globalization, a crucial factor that
determines the profitability and the performance of the commercial banks, particularly
the public sector banks is the Non Performing Assets. The non performing assets are
expected to have a positive relationship with the advances made. However, the amount
of gross advances has again a direct relationship with the profitability of the banks.
Hence, it becomes pertinent on the part of the public sector banks to reduce the Non
Performing Assets with the increasing advances. In the present paragraph it is attempted
to discuss the trends in the ratio of Non Performing Assets to Total Advances. Lower the
ratio better is the quality of advances.
As it could be seen in Table 5.9, in the year 1998, the least NPA to total advances
ratio of 6.16 per cent is being recorded by Oriental Bank of Commerce. The next least
ratio is being registered by Corporation Bank (7.60 per cent). The highest ratio could be
seen in the case of Indian Bank (38.9 6 per cent).
180
. t 4 9
<N to cO ON Tf tt CO CO to NO VO Os — 00 — — CO CN r- 00 r- ON ON fN to
0£ CN CN 00 fN r- 00 co — CN •— NO to to NO Tf Tf ON o to o fN »o ON
d d CN — d d d NO
o _ NO tr> CN (O _ to Tf rn — Tf rn o NO to —
CN CN i CO -7 CN CN CN CN fN CN CN CN fN CN
U i » i i i l i l 1 t i 1 i i
. < « m
OO to as rN CN O NO r~ * OO Qs r\ r~- *o fN OC CO o to r- CO o CN 00 to SO
io NO
os. — o r- co co NO O — NO ON Os Tf 00 OO CN ON o to o Tf ON Tf
co d CN CN d I NO Tf d fN _ CN r>i d to OO CN d d d —
o OO OO <0 „
j CN CN CN CN T CN CN CN CN
1 1 i i i i i i 1 t 1 i i i 1 i i ■ i i
o o Tf NO CN 00 rf 00 OO to O r- 00 NO O to r^- Tf NO to CO r-' 00 CO
o Tf o CN r- to CN Tf Tf CN CN — — ON O Os Tf to 00 O CO Tf »— CO ON Tf
K K d tri — d
> 'O to Tf CN co Tf Tf __ NO Tf o OO 00 NO Tf Tf •—. 00 NO
u to tO Tf Tf Tf r- CO CO Tf OO Tf CN Tf Tf Tf NO Tf NO NO Tf NO NO NO v*! NO w NO
_ _
SO 00 On o NO to Tf OO 00 CO CO 0G CN CN OO 00 Tf fN o NO cO CO Tf r-
a CO r- co CN — CN f" NO ON — o OO Os r- CO NO NO OO 00 CO Tf — o to to
K d d d d
> co »o o OO © 00 CO Tf Tf L"- On NO NO Os — 00 NO r- ON OO 00 ON
< ~
Source : RBI Report, Trends and Progress of Banking, Various Issues

r- . . CN tO , .. ,...., to OO to Tf fN CO to to r- Tf Os CN CO Tf On Os 00 NO
o so Tf Tf Tf
CO to 00 o p CO CO (O Tf Tf Os — O o fN ON CN CN CN —
fN CN CN CN ,'G' CN Tf CN fN CO CN co CN CO CN fN CN CN CN
, . x , , . r- Tf ■
so Tf Tf O' CN CO to to NO Tf CO to Tf NO NO CN Tf CN CO to OO
TABLE 5.9: GROSS NPA TO GROSS ADVANCES
o 0)_ cy co C- to_ CN 00 Tf_ p_ Tf_ Os NO Tf

CN_ OO NO *7_ rT Tf o_ CO" Tf OO
co <0 to CN NO CN NO CN CO to CN CO CO Tf co CN CN CO CN CO
N
to r- , . ON r- r- ON
in OO NO CO O to r- OO NO NO NO Tf Tf NO NO NO 00 NO (O
o t/~i Tf d Tf 00 Tf NO — CN O — ON — Os o — ON ON CN Tf CN •o •— CN
Os CN
CN tri CO CO CN Tf to ON to to Tf to NO CN to CO CO CO Tf Tf Tf
fN
Tf sO NO CN NO r- co to co CN CN Tf 1^- NO to CO CO Os r- Tf to NO NO On NO 00 CO
© sq Tf tO OO d CO to o 00 ON 00 —* CO CO Os to o Tf r- CO »o" On r~- SO sq
oi OO d d NO CN tri Tf r- *o OO ON r~" NO K d CO d to co d CO CO to
fO to Os CN to «o NO NO r-~ NO ON ON Tf to 00 Tf Tf NO »o 00 Tf to OO CO Tf 00 fN r-
o NO 00 © «o Os o CN 00 CO CN Os CN to fO CN CN CO CN to Tf CO NO
o CO Tf OO d to CO to K CN d NO Os 00 OO OO fN NO d OO d tri o d NO
N
n Tf NO ON r- Tf (N ON _
NO to r- Cs 00 OO Qs r- NO On to to OO OO r- Tf 00
__
o ON (N <o co Tf CN —• 00 CO to — CO CO to r- — CO On 00 o »— o ON — Tf
so tri CN O' © NO to Tf — NO 00 — OO d o NO d r-~ d d d CN NO o d
n CN
, . . .
so co to to OO NO Tf NO to Tf fN o CO OO NO fO NO OO
© so *—• — CN co Tf o to CO OO CN Tf r- OO NO • to ON ON o OO NO «o CO
d NO Tf o CN d NO to — — to 00 *— .— — _ fN CN Tf d CN d Tf —
fS CN CN CN
o r- to co On to CN CO CN to 00 Tf Qs Tf CN r- NO CN »o to 00 00 On ON CO
o o 00 r-
CN NO NO CO — r-* — to CN r- r-- CN to fN — '— 00 On r- Tf
On d Tf CN o NO to OO CN CO to to <o OO fN CN *— Tf NO Tf CO d CO Tf
fN CO _
■“ ■” ~
9s ON CN co r- CN NO fN co fN fN to 00 to NO Tf OO NO 00 CO NO
9s o Tf o OO O' CO Tf NO CO CO O *— r-- to Tf CO NO »o ON NO On ON Tf Tf
9s so
o ON NO — to 00 to fN co CO CO Tf d CN fN CN CO to NO to Tf NO CO to OO
CN CN CN CO
~ ~ ~ ~
00 OO NO <o «o o On NO CO NO 00 NO On to _ Tf 00 to (MX Tf co NO •O r- 00 co NO
9s
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181
In the year 2007, the least ratio is being recorded by State Bank of Saurashtra
(1.10 per cent), it is found to be the highest in the case of Central Bank of India (4.81 per
cent).
During the entire study period, the average ratio of NPA to total advances has
recorded the least in the case of Corporation Bank (4.76 per cent), foiiowed by Andhra
Bank (5.38 per cent) and Oriental Bank of Commerce (6.08 per cent). The highest could
be found in the case of Indian Bank (17.94 per cent).
In terms of coefficient of variation, the highest coefficient of variation is being
resisted by Indian Bank (81.23 per cent), followed by the other banks like, Canara Bank
(74.58 per cent), while it is the highest in the case of Oriental Bank of Commerce (24.10
per cent).
The linear growth rate worked out indicates that all banks have recorded the
negative growth rate implying the better performance of the banks. The highest negative
growth rate has been recorded by Indian Bank (-26.16 per cent). The second highest
negative growth rate could be seen in the case of Canada Bank (-22.69 per cent). The
highest has been recorded by Oriental Bank of Commerce (-0.91 per cent).
Thus from the analysis it can be concluded that in terms of percentage share of
Gross NPA to total advances, the least is being recorded by Corporation Bank (4.76 per
cent), while in terms of lowest coefficient of variation and highest negative growth rate
registered, Indian Bank is in favorable position.
182
5.2.2 ANOVA RESULTS OF GROSS NPA TO GROSS ADVANCES
With almost equal competition faced by the public sector banks, the share of NPA
to total advances is expected to be equal. This assumption is being tested with the help
of ANOVA.
TABLE: 5.10
TABLE SHOWING ANOVA RESULTS OF GROSS NPA TO GROSS
ADVANCES
Mean Square F Value
Between 3007.87 26 115.6873 0.56
Within 49860.8 243 205.1883
Total 52868.63 269
Indicates signi leant at 5 percent level
The null hypothesis framed for this purpose is ;ithere is no significant difference
among the banks in terms of gross NPA to Gross Advances”. The calculated value is
0.56. The table value for 26 and 243 degrees of freedom and at 5 per cent level of
significance is 2.01. A comparison of the calculated value with that of the table value
indicates that the calculated value is less than the table value and hence the null
hypothesis that "there is no significant difference among the banks in terms of share of
gross NPA to gross advances” has been accepted.
Thus from the analysis it can be concluded that there is no significant difference
between gross NPA to Gross Advances
5.2.3 NET NPA TO NET ADVANCES
It is a most standard measure of assets quality. In this ratio, Net NPAs are
measured as a percentage of Net Advances. Net NPAs are Gross NPAs net of provisions
on NPAs and interest in suspense account. As it could be seen in Table 5.11, in the year
183
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184
1998, Andhra Bank (2.92 per cent) has recorded the least share. This is being followed
by Corporation Bank (2.93 per cent). Indian Bank (26.01 per cent) has recorded the
highest ratio of Net NPA to net advances. However, in the year 2007, Andhra Bank (0.17
per cent) could show a negligible ratio, while it is found to be the highest with UCO Bank
(2.14 per cent) though it is also minimal.
In terms of the average share worked out for the entire study period, Corporation
Bank (1.68 per cent) recorded the least while Dena Bank (9.55 per cent) recorded the
highest.
In terms of coefficient of variation, the descending order of the variable indicates
that it is highest in the case of Indian Bank (97.59 per cent) followed by State Bank of
Hyderabad (89.53 per cent) while it is the least in the case of State Bank of India (44.67
per cent),
As found in ratio of gross NPA to gross advances, the ratio of net NPA to net
advances also have recorded the negative growth rates. The increasing order of the banks
in terms of growth rate is: Indian Bank (-30.80 per cent) followed by State Bank of
Hyderabad (-28.59 per cent) while Dena Bank (-10.24 per cent) recorded the least.
Thus from the analysis it can be concluded that in the case of net NPA to Net
advances, all the banks have recorded the negative growth rates with Indian Bank
registering the highest negative growth, indicating the improving performances of the
banks.
185
5.2.4 ANOVA RESULTS OF NET NPA TO NET ADVANCES
With almost equal competition faced by the public sector banks, the share of net
NPA to net advances is expected to be equal. This assumption is being tested with the
help of ANOVA.
TABLE: 5.12
TABLE SHOWING ANOVA RESULTS OF NET NPA TO NET ADVANCES

Mean Square F Value
Between 1075.94 26 41.38212 0.87
Within 11555.3 243 47.55251
Total
■y...... —
12631.2 269
.................... ......... ...................................................................... 1------------------------------------------------------------1-------------------------------------------------------- —I--------------------------------

among the banks in terms of net NPA to net Advances". The calculated value is 0.87. The
table value for 26 and 243 degrees of freedom and at 5 per cent level of significance is
2.01. A comparison of the calculated value with that of the table value indicates that the
calculated value is less than the table value and hence the null hypothesis that “there is no
significant difference among the banks in terms of share of net NPA to net advances” has
been accepted.
There is no significant difference between Net NPA to Net Advances.
5.2.5 TOTAL INVESTMENT TO TOTAL ASSETS

The purpose of any bank is to create assets and revenue from the fund borrowed.
The banks carry out this objective provide lending their borrowings on the one hand and
investing in financial and other assets of government and non government institutions.
While, the idle assets do not give any revenue which has the higher opportunity cost.
Hence, the trends in the share of investments to total assets of the banks have to be
examined.
186
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TABLE 5.13: TOTAL INVESTMENT TO TOTAL ASSETS
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187
As it could be seen in Table 5.13, in the year 1998, among the public sector banks
considered, the share of investment to total assets is found to be the highest in The case of
United Bank of India (49.87 per cent) followed by Bank of Maharashtra (44.31 per cent)
and it is the least in the case of Bank of India (28.12 per cent),
During the year 2007, the highest share is being recorded by Indian Bank (37.18
per cent) while the least is being recorded by Bank of Baroda (24.41 per cent),
The average level of investment to total assets stood highest in the case of United
Bank of India (49.05 per cent) and least in the case of Bank of India (29.58 per cent),
The coefficient of variation recorded the least in the case of Bank of India (7.41
per cent) and it is the highest in the case of State Bank of Indore (21.31 per cent).
In terms of growth rate, the highest linear growth of 1.49 per cent is being
registered by Indian Bank. This is being followed by State Bank of Saurashtra (1.13 per
cent). A negative growth rate could be seen in the case of the banks like State Bank of
Patiala (-0.12 per cent), Bank of India (-0.44 per cent), Indian Overseas Bank (-0.76 per
cent), Punjab & Sind Bank (-1.33 per cent), Central Bank of India (-1.38 per cent), State
Bank of Mysore (-1.46 per cent), Dena Bank (-1.55 per cent) Vijaya Bank (-1.78 per
cent), State Bank of Hyderabad (-1.99 per cent), State Bank of Travancore (-2.18 per
cent)„State Bank of Bikaner and Jaipur (-2.25 per cent), Syndicate Bank (-2.29 per cent),
Union Bank of India (-2.46 per cent), Canara Bank (-2.57 per cent), United Bank of India
(-2.58 per cent), Allahabad Bank (-2.66 per cent), Punjab National Bank (-3.07 per cent)
Corporation Bank (-3.13 per cent), Bank of Maharashtra (-3.42 per cent), UCO Bank (-
3.77 per cent), State Bank of Indore (-3.81 per cent), Oriental Bank of Commerce (-4.53
188
per cent), Andhra Bank (-4.99 per cent) which showed that the investment is declining
during the study period.
Thus from the analysis it can be concluded that in the case of the ratio of
investment to total assets, the ratio is found to be the highest for the entire study period
in the case of United Bank of India. In terms of coefficient of variation, the least is being
recorded by Indian bank. The growth rate recorded the highest in the case of Bank of
Saurashtra.
5.2.6 ANOVA RESULTS OF TOTAL INVESTMENT TO TOTAL ASSETS
Given the competition, the share of total investment to total assets is expected to
be equal. This is being tested with the help of ANOVA.
TABLE: 5.14
TABLE SHOWING ANOVA RESULTS OF TOTAL INVESTMENT TO TOTAL
ASSETS
Mean Square F Value
Between 3742.67 26 143.9489 2.30*
Within 15186.5 243 62.49572
Total 18929.13 269
among the banks in terms of total investment to total assets”. The calculated value is
indicates that the calculated value is greater than the table value and hence the null
hypothesis that “there is no significant difference among the banks in terms of share of
total investment to total assets” has been rejected.
189
Thus from the analysis it can be concluded that there is a significant relationship
among the banks during the study period in terms of total investment to total assets.
5.3.0 MANAGEMENT EFFICIENCY
The development and endurance of a bank is ensured by its management. The
management of a bank plays a very crucial role in making decisions depending on their
risk perception. It sets the vision and goals for the bank and sees that they are achieved
within the given time frame. The efficiency of the management can be measured in terms
of certain indicators like, Total Advances to Total Deposits, Business per Employee,
Profit per Employee, Profit per Branch and Interest Expenses to total Expenses.
5.3.1 PROFIT PER BRANCH
Earning profit is the prime objective of nay banks as it determines the survival of
the banks. An increasing rate of profit is the indicator of the improving performance of
the banks. More specifically, the increasing rate of profit is the increasing efficiency of
the banks. This measures the efficiency of the employee at the branch level. It also gives
valuable inputs to assess the real strength of a bank's branch network. The higher the
ratio, the higher the efficiency of management. However, it is advisable to look at the
number of branches too, as a bank with fewer branches can figure among the top players
in this category despite earning a lower net profit. Hence, an understanding of the
trends in the movement of the profit per branch.
In the year 1998, the highest profit per branch is being recorded by Corporation
Bank (Rs.0.25 lakhs) followed by Oriental Bank of Commerce (Rs.0.21 lakhs) and State
Bank of Patiala (Rs.0.21 lakhs) while it is the highest negative in the case of Indian
Bank (-0.21 lakhs)
190
TABLE 5.15: PROFIT PER BRANCH
le v .
N am e o f the bank 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 AVG LGR CGR
eo'o
r-
o
o
oo
r-*
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Allahabad Bank 0.02 0.04 0.23 0.27 0.34 0.36 0.15 88.74 25.68* 31.30*
© ©
© ©
800 HO 610
Andhra Bank 0.11 0.37 0.45 0.41 0.39 0.26 60.76 18.35* 25.70*
ir o
1 0.17 ! 0.24
©
910 o ro
Bank of Baroda 0.20 0.28 0.35 0.24 0.30 0.36 37.00 10.71’
00
© vq
*00
© ©
©
OO r^
010 610 8819
Bank of India 0.14 0.32 0.38 0.13 0.26 0.41 0.21 17.28*
1
© O
© ©
©
©
©
©
©
(N
©
810
0.07 0.12 0.23 67.60 12.83 14.07
ir o
Bank of Maharashtra 0.13
© ©
© ©
ir> OO
©
©
<N
*00
600 600
Canara Bank 0.29 0.52 0.42 0.51 0.53 0.30 63.58 19.74*
ir o
100
OO
©
©
©
©
©
to
©
1
o ro 610
Central Bank of India 0.05 0.05 ; 1
0.1 0.08 0.15 64.64
«
1
______
;
i
od
OO *©
©
OO
©
OO
*00 OO
CO NO ©
r-
0.25 09 0
*o
cn ro
890
Corporation Bank 1
0.29 0.34 0.45 0.50 0.52 0.46 30.62
,
______
1 19.40
600 o ro 900 100 o ro 900 610
Dena Bank -0.23 0.21 0.07 0.07 186.38 0.97
ZOO ©
©
Indian Bank -0.21 -0.54 -0.30 -0.19 0.13 | 0.29 0.29 | 0.35 0.51 931.15 289.10*
©
©
©
©
(N
©
m
NO
800 800
Indian Overseas Bank 0.15 0.27 0.33 0.41 0.49 0.59 0.25 82.45
| Oriental Bank of Commerce
© ©
oi © (N
OO r-
to *© V-i
0.21 0.23 0.28 0.20 0.32 0.45 0.65 0.62 0.47 0.46 0.39 42.46
1
©
©
©
©
600 800 600- 900 69' IS
Punjab & Sind Bank 0.02 0.13 0.25 9.58 14.87
rro 'o
i
I
______
!
ZVO
Punjab National Bank 0.37
*CN
© ©
OO ©
NO
ro
600
0.12 0.14 0.27 0.34 0.35 0.21 52.21 18.45’
ir o
©
OO
©
©
©
Syndicate Bank 0.12 0.13 0.14 0.19 0.23 0.21 0.26 0.33 0.17 51.07 16.48* 20.90*
i ! 1
600 610 910 600
UCO Bank -0.06 -0.04 0.02 0.02 0.12 0.24 114.96 32.17*
ir o
1 18.03’
1809
00
©
©
©
©
i cj
tn
0.07 0.15 0.26 0.34 0.34 0.31 0.37 0.21
rro
Union Bank of India
10*0 100 ZOO 100
i
<N
©
rn ©
i
co
© *m *©
600
United Bank of India ,
0.23 1
0.24 0.22 0.15 0.20 1
0.12 84.07
1 i 1
__ _ __ ______
©
©
©
00
<N
V
CO
©
©
©
CO
1
900 ZZ'0 610
Vijaya Bank 0.15 0.44 0.39 0.13 0.32 19.97*
oo -rj-
OO OO
©
©
OO CO
810
0.21 0.23 0.27 0.34 0.47 0.47 0.47 0.31 15.54*
ir o
State Bank of India
State Bank of Bikaner and Jaipur 0.12 0.12 0.15 0.13 0.20 0.25 i 0.37 0.25J 0.17 0.36 0.21 44.21
[ 0.52
fN
OO
CO © NO
<N Cn ©
©
tn
OO *©
Cv ©
0.41 \
e ro
0.14 0.17 0.25 0.33 0.27 0.45
ir o
State Bank of Hyderabad 0.28
| State Bank of Indore ICO
»n
©
©
r^
©
©
0.08 0.29 15.63* 23.31*

ir o
0.15 0.45 0.29 0.42 0.27 59.83
©
©
<N
*©
800
<N
NO
*oo
(N
600 900 iro 610 610

State Bank of Mysore 0.28 0.32, 0.33 0.38 68.63
tn
©
OO
©
©
810
State Bank of Patiala 0.21 0.14 0.22 0.32 0.43 0.38 0.47 0.33 42.37 11.37" 13.68*
81 0
©
© 610
j
900 o ro 610
0.20 0.21 0.22 0.14 60.34 5.29
ir o
State Bank of Saurashtra
r- *©
rn r-
rr, oo
o ro o ro 810
State Bank of Travancore 0.07 0.14 0.25 0.36 0.36 0.37 0.46 0.24 58.82 24.01*
Indicates significant at 5 percent level Source: RBI Report, Trends and Progress o f Banking, Various Issues
In the year 2007, the order of the profits per branch stood highest with (Rs. 0.59
lakhs) in the case of Indian Overseas Bank, while in the case Central Bank of India (Rs.
0.15 lakhs) it stood at the least.
The average level of profits per branch stood highest in the case of Corporation
Bank (Rs. 0.46 lakhs). The bank which has recorded the least is Indian Bank (Rs. 0.04
lakhs).
The coefficient of variation registered the least with 30.62 per cent in the case of
Corporation Bank. This is found to be the highest in the case of Indian Bank (Rs.
931.15 lakhs).
In terms of growth rate, the highest rate of linear growth rate is being recorded by
Indian Bank (Rs. 289.10 lakhs). The second highest is being recorded by UCO Bank
(Rs. 32.17 lakhs) while it is the least in the case of State Bank of Saurashtra (Rs. 3.37
lakhs).
5.3.2 ANOVA RESULTS OF PROFIT PER BRANCH

It is hypothesized that there is no significant relationship between among the
banks in terms of profit per branch. The hypothetical relationship is being tested with the
help of ANOVA.
TABLE: 5.16
TABLE SHOWING ANOVA RESULTS OF PROFIT PER BRANCH

Mean Square F Value
Between 2.74 26 0.105249 1.46
Within 17.50 243 0.072016
Total 20.24 269
Source'. RBI Report, Trends and Progress of Banking, Various Issues.
192
among the banks in terms of profit per branch". The calculated value is 1.46. The table
value for 26 and 243 degrees of freedom and at 5 per cent level of significance is 2.01. A
significant difference among the banks in terms of profit per branch” has been accepted.
Thus from the analysis it can be concluded that there is no significant relationship
among the banks during the study period in terms of Profit per Branch.
5.3.3 TOTAL ADVANCES TO TOTAL DEPOSITS
This ratio measures the efficiency and ability of the bank’s management in
converting the deposits available with the bank the ratio of total advances to total deposits
stood highest in the case of State Bank of Saurashtra (60.05 per cent) in the year 1997.
This is being followed by State Bank of India (56.63 per cent). The least is recorded by
United Bank of India (28.00 per cent).
In the year 2007, the order of the banks have changed to take State Bank of
Travancore (80.00 per cent) the lead, while United Bank of India (59.61 per cent) took
the least position.
For the entire study period the ratio stood highest in the case of Bank of India
(63.11 per cent), followed by State Bank of Mysore (60.19 per cent) and it is the least in
the case of United Bank of India (37.51 per cent).
193
TABLE 5.17:TOTAL ADVANCES TO TOTAL DEPOSITS
Name of the bank 1998 1999 2000 2001 2002 2003 2004 2005 L 2006 2007 AVG CV LGR CGR
<N
<N
r-
oro9
Allahabad Bank 45.04 46.71 47.66 48.50 49.26 48.74 51.89 69.34 50.95 15.70 4.51* 4.39*
‘o'
so
o
SO
Andhra Bank 41.61 43.34 38.66 40.58 52.34 54.66 56.17 63.58 65.15 67.28 52.34 20.69 *<N
rn
00
<N
Bank of Baroda 50.61 47.54 50.79 54.47 53.26 48.79 53.36 63.97 66.94 53.70 12.46 3.12"
rn
Bank of India 55.98 54.75 52.85 61.58 64.16 66.14 64.58 70.45 69.38 71.18 63.11 10.55 3.25*
*00
rn *o
LVZZ\
Bank of Maharashtra 39.34 37.17 39.17 39.20 43.15 42.88 i 44.36 ! 45.28 61.21 67.57 45.93
| 62.42
Canara Bank 44.22 46.55 49.06 47.12 51.74 56.14 55.17 68.00 69.18 54.96 16.30
1
*CN
<o rn
Vi *oo
o tri ro
o (N to
Central Bank of India 40.49 41.76 44.06 45.36 45.16 45.26 40.79 44.90 56.38 62.57 46.67 15.32
46.01 J
00
r- \o
Corporation Bank 49.88 54.46 52.33 58.06 55.37 i 59.89 ; 68.10 72.89 70.71 , 58.77 15.47 4.97*
6101
(N
Dena Bank 50.88 54.23 53.57 48.05 48.99 51.16 51.29 54.12 60.24 66.10 53.86 2.18*
ZL'Z I
rf
oo
o
*oo
Indian Bank 47.07 i 43.70 42.92 43.49 45.38 45.44 46.40 52.80 55.10 61.71
! 48.92 ! 52.47
*'sO
t"
Indian Overseas Bank 44.84 46.17 47.59 47.67 47.54 56.97 68.78 68.46 17.35
<o 00 00
o*
to V O'
V* “so O' O’
o r-i SO r-
00
*tN
00
Oriental Bank of Commerce 48.38 45.87 42.21 49.70 52.59 55.17 52.87 66.89 68.97 52.75 16.93
j
Punjab & Sind Bank 41.87 i 43.17 45.14 43.52 44.68 44.56 44.20 44.61 53.81 60.76 46.63 12.70 3.17* 3.00*
1
18£1
53.06
•or
V
rf
to
Punjab National Bank 45.61 46.71 47.54 49.93 53.60 53.72 58.56 62.35 69.07 54.01
O'
O’
00
to to
*oo
"O
oo
0089
Syndicate Bank 41.39 46.77 51.60 52.27 52.14 53.18 57.74 65.71 53.73 15.21
!
O’
00
00
O' 04 a
©
52.56
to
o
NO
UCO Bank 38.80 38.29 41.56 ; 47.69 55.90 68.53 72.45 51.34 22.68
so
O'
O'
00 *00
r-
(O
<N
s6
*so *sO
Union Bank of India 44.57 40.19 46.98 50.17 53.73 57.02 58.20 64.86 72.04 56.10 20.06
Os
United Bank of India 28.00 26.48 27.18 31.06 34.79 34.96 34.99 44.93 53.07 59.61 37.51 30.35 9.23*
«
O'
SO
’© CnJ ©
Vijaya Bank 39.25 38.88 40.44 45.28 42.21 46.36 52.56 55.96 60.14 64.42 48.55 18.91 5.98*
o
WLL
tri
G'l
State Bank of India 56.63 48.72 49.84 46.78 44.65 46.52 49.57 68.89 54.42 19.74 4.07 3.68
r^
r-
rn
fN
State Bank of Bikaner and Jaipur 56.09 49.62 48.50 50.05 50.86 51.18 54.96 63.22 72.07 56.98 16.36 4.08*
53.53 | 53.92 |
O'
r-
C-J NO
to *00
od
o
O' c4
State Bank of Hyderabad 50.23 48.60 47.78 48.40 46.91 61.32 67.73 52.71 12.92 2.49
*©
State Bank of Indore 56.46 52.63 55.77 51.16 54.17 56.23 61.48 65.48 71.28 76.85 60.15 14.17 3.99’
State Bank of Mysore 55.19 53.56 52.70 i 56.35 57.64 58.37 56.90 64.64 71.81 74.77 60.19 12.72 3.69*
vq
to rn ro
OO o *<N
6009
State Bank of Patiala 53.06 54.41 56.72 59.04 62.23 60.13 58.23 57.97 65.66 73.42 9.85 2.66*
o
NO
o
»Ti
State Bank of Saurashtra 56.94 55.43 53.93 54.07 51.36 49.09 53.23 61.00 70.11 56.52 10.62 0.97 0.82
V
Tt
VO
r-
0008
Bark of Travancore 53.58 49.16 50.39 55.28 55.25 57.59 56.45 61.53 72.57 59.18 16.60
H State
r — ----- ; — -------------- — : 1
Indicates significant at 5 percent level Source: RBI Report, Trends and Progress of Banking, Various Issues
The coefficient of variation recorded the least in the case of State Bank of Patiala
(9.85 per cent) followed by Dena Bank (10.19 per cent). United Bank of India (30.35 per
cent) could show a highest variation.
The liner growth rate recorded the highest with 9.23 per cent in the case of United
Bank of India. This is being followed by UCO Bank (7.16 per cent). State Bank of
Saurashtra (0.97 per cent) recorded a least and negligible growth rate.
Thus from the analysis it can be concluded that in terms of share of total advances
to total deposits, Bank of India recorded the highest, while in terms of growth rate
United Bank of India register the highest.
5.3.4 ANOVA RESULTS OF TOTAL ADVANCES TO TOTAL DEPOSITS
It is hypothesized that there is no significant relationship among the banks in
terms of total advances to total deposits. This hypothetical relationship is being tested
with the help of ANOVA.
TABLE: 5.18
TABLE SHOWING ANOVA RESULTS OF TOTAL ADVANCES TO TOTAL
DEPOSITS
Mean Square F Value
Between 7880.33 26 303.0895 2.39*
Within 30752.5 243 126.5535
Total 38632.84 269
among the banks in terms of total advances to total deposits”. The calculated value is
195
hypothesis that “there is no significant difference among the banks in terms of total
advances to total deposits’" has been rejected.
among the banks during the study period in terms of total advances to total deposits.
5.3.5 PROFIT PER EMPLOYEE
This ratio shows the productivity of human forces of the bank. It is used as a tool
to measure the efficiency of all the employees of a bank in generating business for the
bank. Higher the ratio, the better efficiency of the management. As it could be seen in
the table, during the year 1998, Corporation Bank recorded the highest profit per
employee of Rs. 1.64 Lakhs while UCO Bank (Rs. -0.28 Lakhs) could show a net loss per
employee.
In the year 2007, the order of the banks in terms of profit per employee has
changed to have Oriental Bank of Commerce (Rs. 5.61 Lakhs) as the highest earnings
per employee, while it is the least in the case of State Bank of Saurashtra (Rs. 1.21
Lakhs). The average level of profits per branch stood highest with Rs. 22.68 lakhs in
the case of Bank of Baroda. This is the least in the case of Punjab & Sind Bank (Rs.
0.47 lakhs).
The coefficient of variation recorded the highest in the case of State Bank of
Bikaner and Jaipur (32.20 lakhs) and it is the least in the case of Bank of Baroda (294.94
lakhs).
196
TABLE 5.19: PROFIT PER EMPLOYEE
(Rs in Lakhs)
6661
Name of the bank 1998 2000 2001 2002 2003 2004 2005 2006 2007 AVG CV LGR CGR
90 610 V0 9VZ
Allahabad Bank 0.57 0.31 0.87 2.86 3.69 3.97 .59 93.59 27.49 35.14
190
Andhra Bank 0.51 0.82 0.95 1.58 3.1 3.54 3.97 3.69 4.14 2.29 66.48 20.97 30.53
660 160 29'ZZ
Bank of Baroda 1.07 0.59 1.4 1.92 2.43 1.71 213 2.73 294.94 40.35 38.90
690 911 80 99
Bank of India 0.38 0.33 0.57 .97 2.35 2.71 .26 67.96 17.12 21.30
660
Bank of Maharashtra 0.35 0.32 0.56 0.32 .02 1.58 2.16 1.25 0.36 1.95 72.45 14.89 17.45
9ZZ LLL9
Canara Bank 0.39 0.43 0.45 0.63 .64 2.97 2.48 3.02 3.24 .75 21.32 32.36
fO ICO I'O f'O 890 890
Central Bank of India 0.36 0.77 1.58 0.93 1.35 71.74 17.43 21.46
Z'Z ,911
Corporation Bank 1.64 1.89 2.55 4.06 4.98 3.95 4.13 4.79 3.32 36.66 13.12
VN 90
Dena Bank 0.73 0.76 0.45 1.08 2.23 0.72 1.99 0.87 84.17 13.65 9.41
Sl'O
Indian Bank NA NA NA NA 0.85 1.85 1.87 2.36 3.64 1.07 120.40 36.68 15.90
997
Indian Overseas Bank 0.41 0.2 0.14 0.45 0.93 3.22 4.04 .58 87.33 27.59 43.87
91 61
Oriental Bank of Commerce 1.46 1.5 2.4 3.4 5.2 5.37 5.61 3.35 53.28 16.63 19.68
Punjab & Sind Bank 0.50 0.46 0.51
ero
0.23 0.05
600
-0.74
Ml
2.34 0.47 172.16 19.08 13.62
80
Punjab National Bank 0.73 0.57 0.63 0.97 .43 .88 2.42 2.48 2.68 1.46 57.41 18.09 21.15
197
ZV0 990 180 680
Syndicate Bank 0.24 1.3 1.62 1.53 2.05 2.76 1.23 63.68 20.35 27.13
990 990
UCO Bank -0.28 - 0.2 0.12 0.12 0.85 1.79 .43 0.82 1.3 107.69 30.41 14.07
180 997 LYLZ
Union Bank of India 0.52 0.33 0.55 1.22 2.15 2.78 2.81 3.25 1.71 66.28 20.2
Sl'O 10 990 ZL 060
United Bank of India 0.05 0.07 1.77 1.76 1.59 85.64 23.86 56.10
911 911
Vijaya Bank 0.17 0.22 0.36 0.53 .76 3.73 3.48 3.04 .56 88.50 22.6 39.75
911 LYZ
State Bank of India 0.42 0.43 0.87 0.7 1.48 1.77 2.07 2.37 1.34 54.43 17.69 23.03
660 1 69 '91
.14
7
State Bank of Bikaner and Jaipur .96 1.63 1.69 2.57 .66 32.20 5.97
If wz n
161 Z6£ 007
State Bank of Hyderabad .38 0.76 0.87 .68 2.25 2.87 3.26 53.07 15.55 17.52
90' 607
State Bank of Indore 1.49 .67 .07 2.6 .91 3.45 2.07 2.91 2.23 33.82 6.63 7.68
9Z0 917
State Bank of Mysore 1.58 .05 1.42 0.67 .19 .82 2.22 2.6 .50 48.80 10.63 1.68
660 607
State Bank of Patiala 1.09 0.77 1.23 .97 2.76 5.69 2.48 2.66 3.24 49.26 14 17.58
VZ
State Bank of Saurashtra 0.95 0.31 1.09 0.21 .25 0.56 0.64 1.21 0.97 64.15 5.40 7.10
967
State Bank ofTravancore 0.51 0.35 0.54 0.85 1.06 1.51 2.16 2.21 2.34 1.45 63.36 20.36 26.88
Indicates significant at 5 percent level Source: RBI Report, Trends and Progress o f Banking, Various Issues. NA - Not available
In terms of linear growth rate the highest rate of growth of (40.35 per cent) lakhs
is being registered by Bank of Baroda. The order of the other banks in terms of the
descending growth rate is: Indian Bank (36.68 per cent), UCO Bank (30.41 per cent),
Indian Overseas Bank (27.59 per cent), Allahabad Bank (27.49 per cent), United Bank
of India (23.86 per cent), Vijaya Bank (22.60 per cent), Canara Bank 21.32 per cent),
Andhra Bank (20.97 per cent), State Bank of Travancore (20.36 per cent) and Syndicate
Bank (2035 per cent).
A few banks which have recorded less than 10 per cent increase in the ratio
include: State Bank of Indore (6.63 per cent), State Bank of Bikaner and Jaipur (5.97 per
cent) and State Bank of Saurashtra (5.41 per cent). Thus from the analysis it can be
concluded that an in terms of share as well as growth rate, Bank of Baroda has register
the highest.
5.3.6 ANOVA RESULTS OF PROFIT PER EMPLOYEE

terms of profit per employee. This hypothetical relationship is being tested with the help
of ANOVA.
TABLE: 5.20
TABLE SHOWING ANOVA RESULTS OF PROFIT PER EMPLOYEE
Mean Square F Value
Between 4429.13 26 170.3513 1.04
Within 39631.5 243 163.0924
Total 44060.58 269
ndicates significant at 5 percent evel
among the banks in terms of profit per employee”. The calculated value is 1.04. The table
198
calculated value is less than the table value and hence the null hypothesis that ‘"there is no
significant difference among the banks in terms of profit per employee’" has been
accepted.
among the banks during the study period in terms of profit per employee.
5.3.7 BUSINESS PER EMPLOYEE
Business per employee is another indicator of the efficiency of the employees. In
the present paragraph it is attempted to discuss the trends in it.
As it could be seen in Table 5.21, in the year 1998 State Bank of Hyderabad
recorded the highest business per employee of (Rs. 151.83 lakhs). This is being followed
by State Bank of Bikaner and Jaipur (Rs. 135.73 lakhs), Oriental Bank of Commerce (Rs
134.72 lakhs), Corporation Bank (Rs 134.39 lakhs), and Bank of Baroda (Rs 127.24
lakhs), Bank of India (Rs. 115.92 lakhs) and Union Bank of India (Rs 108.18 lakhs). The
least could be shown in the case of State Bank of India (Rs 47.67 lakhs).
In the year 2007, Oriental Bank of Commerce (Rs 742.64 lakhs) followed by
Corporation Bank (Rs 637 lakhs) have recorded the highest value while it is the least in
the case of Central Bank of India (Rs. 303.85 lakhs),
The average level of business per employee stood highest in the case of Oriental
Bank of Commerce (Rs 369.07 lakhs), followed by Corporation Bank (Rs 335.90 lakhs),
State Bank of Patiala (Rs 266.35 lakhs), Canara Bank (Rs 265.16 lakhs), Union Bank of
India (Rs 258.31 lakhs) and Bank of Baroda (Rs 254.52 lakhs). It is the least in the case
of Bank of India (Rs 166.18 lakhs), Central Bank of India (Rs. 160.86 lakhs).
199
2 1 .1 3 '
*NO *nO *NO *NO d
V V *oo r-n V Vo V *00 *00 o 40 40 00 o Cs
CGR
SO CN o NO r^j Cs rn NO *n NO NO “O; 40 ro NO p o p p CN 40 p
o' d d d Cs* o NO r~" ob Os* d CN d d d CN d d d ob
( Rupees in Lakhs)
NO NO 40
CN CN CN CN CN CN CN CN CN
r- 40 O r- V-
SC 40 OO r- ’<$• Cs oo r- NO CN o ■cf Cs NO O' Cs CO
cn *n NO CN CN 40 CN OO r-- CO in O o O o NO 40 o p O; 40 NO ro
o ob d NO •n NO K N-' n N1 40 K NO CN d d CN d NO d NO 40 NO OO ob d NO ob
_! CN CN CN
o Cn CN IT) TJ- in NO 40 CO CO 00 CN 40 NO NO i> 00 CN O Cs rO Cs

O ro CN p 40 CN n N; CO 40 oo p in NO o o Cs CN O 00 r-
> d rb rb OO Cs* n NO 40 ob 40 CN Cs cb CN d cb d O' CN d CN 40 d
u 40 NO 40 "S’ rt in Tf rf Tf 40 40 CO 40 NO NO 40 40 in 40 40 40 40 NO NO 40 40
NO ST) CN ro *n NO NO O of o o r- CO CO CO CN oo CN o r- NO 40 CN 40 40
o p in NO OO CN 40 o o CO COr^ o CO ro P Cs r- ro CN p
rb
> O
rb d CN rb n o in 40 NO NO CN d CN d oo
d NO in NO rb NO d NO d d
40 NO NO m Tf OO NO OO O o o 40 NO 00 r-- O' CN NO NO r*- CO
< CN CN cn CN CN (N m CN CN CO CN CN CN CN CN CN CN CN
r- NO NO 40 OO rt NO *n OO CO rf CN r- Tf o r^ r- Cs O' r- OO Tf CO CO
o 40 O 40 Cs C 00 <n n NO CN NO 40 N" NO CN 40 40 p P P CS 40 Tt
o NO
tn Tf rt ob rb NO rfr CO K CN oo d d Tf d CO 40 CO ob CO NO CO d ro NO
M ro O o NO CN O 00 o 40 NO r-*- r- Cs O
Source: RBI Report, Trends and Progress o f Banking, Various Issues

40 rf n O" CO •O' •^ 40 ■cf ro O' O' 40 40
n© NO in NO 00 r- NO NT 40 CO NO CO CN tj- r-> r*» Tf NO ro 40 O' CN ro Cs

o ro CN OO sn N- CN NO Cs r- CN CN O' p 00 p 40 CN CN OO ro ro Cs O p
o ro
CN NO
co ro NO d in CO CN O' o d d oo co NO (N d d NO O' d d cb cb
CN o 40 r- co rf CO NO Cs r- CN oo CS o OO
Tf co CN CO 40 CN ro ro CO CN CN O’ O' CN ’'S' ro m
CN 40 r- © in CN CN 00 CO NO 00 40 r- r- CN CN 00 OO CS O' oo d* 40 NO 40
TABLE 5.21: BUSINESS PER EMPLOYESS
o 00 CN ro cn 00 <n ■of N* 40 oo CN (N r- o 00 o CN r- oo 40 d CN
o CN NO © ro rf NO CO CN Cs 40 d NO o CO NO CN CN cb d d rb cb rf NO
n Tf CN in o NO r- 00 2 Tj* CN CO Cs o NO CN N-
ro ro CN m CN CN CN CN CN CO CN CN CO CN CN CO CO
IT) n CN in 00 Tt CN
NO NO OO CN Cs OO Cs Cs NO CNr- NO"S' NO oo
o ro 40 r- NO in in »n r- 00 40 O CN CO rt rf NO CO 4000 00 p 00 CN p
o <N d CN NO 00 CN CN 40oo o CN NO d d d 40 d CN 40 cb
CN r- 40 NO NO Cs oo NO CO o CN Tf oo NO NO CO NO o Cs r-
CN cn IN CN CN m CN CN CN CN CN CN CN CN CN CO CN
fOro r*- r-* NO n Cs CN Tf NO CO 40 40 r- r- CN CN o- CN CN Cs r- r- OO

o oo p NO CN p oo Tj- r- CO T}* ■cf NO Cs Cs d NO p Cs P 40 rf ro oo p
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The coefficient of variation registered the least in the case of Punjab & Sind Bank
(39.53 per cent) while it is the highest in the case of UCO Bank (69.15 per cent).
The bank that has registered the highest linear growth of 22.01 per cent in the case
business per employee is UCO Bank. This is being followed by: State Bank of Patiala
(20.51 per cent), Andhra Bank (20.28 per cent), Syndicate Bank (19.59 per cent), Vijaya
Bank (19.00 per cent) and State Bank of Indore (18.61 per cent), while Punjab & Sind
Bank (12.70 per cent) has recorded the least growth rate..
Thus from the analysis it can be concluded that in terms of business per employee,
the highest share is being recorded by Oriental Bank of Commerce, while in terms of
growth rate it is UCO bank that resisted the highest.
5.3.8 ANOVA RESULTS OF BUSINESS PER EMPLOYEE
terms of business per employee. This hypothetical relationship is being tested with the
help of ANOVA.
TABLE: 5.22
TABLE SHOWING ANOVA RESULTS OF BUSINESS PER EMPLOYEE
Sources of Degrees of
Sum of Squares Mean Square F Value
Variance Freedom
Between 621847.76 26 23917.22 0.46
Within 12673168.18 243 52152.96
Total 13295015.94 269
* Indicates signi leant at 5 percent level
among the banks in terms of business per employee”. The calculated value is 0.46. The
201
calculated value is less than the table value and hence the null hypothesis that '‘there is no
significant difference among the banks in terms of business per employee” has been
accepted.
among the banks during the study period in terms of business per employee.
5.4.0 EARNING QUALITY

It is a measure of the banks' ability to earn income from the two major sources of
revenue namely, interest income and non-interest income. Also, it helps to understand the
ability of the bank to generate income from its core business, i.e., lending. The major
indicators of the earning quality include: Operating Profits to Average Working funds,
Spread to Working Fund, Net Profit to Average Assets, Interest Income to Total Income,
Non-Interest Income to Total Income, Percentage Growth in Net Profit and Profit to
Spread. A higher or increasing ratio indicates the improving quality of the bank in
earnings.
5.4.1 OPERATIONAL PROFIT TO WORKING FUND
This ratio indicates how much a bank earns from its operations net of the
operating expenses for every rupee spent on working funds. The higher the ratio, the
better it is. This ratio determines the operating profits generated out of working funds
employed. The better utilization of funds will result in higher operating profits. Thus, this
ratio will indicate how a bank has employed its working funds in generating profits.
Banks which use their assets efficiently will tend to have a better average than the
industry average. Hence, it becomes pertinent to understand the trends in it.
As it could be seen in Table 5.23, among the public sector banks, Corporation
Bank (2.70 per cent) recorded the highest operational profit. This is being followed by
202
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o f Banking, Various Issues

p o p SO *o rp Cs sO - fN r- so 04 ro 00 fN oo ro fN SO SO <o fN ro 00 rp
o so fS p p OO p ro sO © © © © © ro © 00 © SO P © so © SO 00
TABLE 5.23: OPERATIONAL PROFIT TO WORKING FUND
o IN *-*" pi oi oi oi * fN i— •— '
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Source'. RBI Report, Trends and Progress

fN pi fO PI pi PI fN pi ro ro <N <N ro © ro fN fN fN fN ro fN ro ro rp* ro ro ro fN
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State Bank of Bikaner and Jaipur
Oriental Bank of Commerce
State Bank of Travancore

State Bank of Hyderabad

Indian Overseas Bank
Punjab National Bank

Central Bank of India
State Bank of Mysore

United Bank of India
Bank of Maharashtra
State Bank of Patiala

State Bank of Indore
Punjab & Sind Bank
Union Bank of India
State Bank of India

Name of the bank
Corporation Bank
Allahabad Bank
Bank of Baroda
Syndicate Bank
Bank of India
Andhra Bank
Canara Bank
Vijaya Bank
Indian Bank
Dena Bank
UC0 Bank
203
State Bank of Hyderabad (2.69 per cent), State Bank of Bikaner and Jaipur (2.29 per
cent), State Bank of Saurashtra (2.29 per cent), Oriental Bank of Commerce (2.27 per
cent) and Dena Bank (2.23 per cent). Indian Bank (-1.08 per cent) recorded the least.
In the year 2007, the order of the banks have changed slightly to have: Indian
Bank (2.67 per cent), Andhra Bank (2.27 per cent), Dena Bank (2.12 per cent),
Corporation Bank (2.11 per cent) and Indian Overseas Bank (2.05 per cent) while
Central Bank of India (1.36 per cent) and State Bank of Saurashtra (1.18 per cent) have
recorded the least.
The average level of operational profits to working fund has recorded the highest
in the case of Corporation Bank (2.61 per cent), which is being followed by the other
banks like: State Bank of Patiala (2.56 per cent), State Bank of Indore (2.51 Per cent),
Oriental Bank of Commerce (2.39 per cent), State Bank of Bikaner and Jaipur (2.16 per
cent) and Andhra Bank (2.09 per cent). United Bank of India (0.86 per cent) has
recorded the least share.
The coefficient of variation recorded the lowest in the case of Corporation Bank
(14.47 per cent), followed by State Bank of India (18.39 per cent), Canara Bank (20.96
per cent), Bank of Baroda (21.20 per cent), Allahabad Bank (22.33 per cent) and State
Bank of Travancore (24.14 per cent). United Bank of India (170.32 per cent) has
recorded the highest variation..
In terms of growth rate, the highest growth rate of 170.32 per cent in the case of
operational profits to total working fund has been registered by United Bank of India,
followed by Indian Bank (134.79 per cent), State Bank of Hyderabad (66.67 per cent),
UCO Bank (61.38 per cent), Vijaya Bank (49.25 per cent) and Indian Overseas Bank
(48.23 per cent). Corporation Bank (14.47 per cent) has recorded the least growth rate.
204
Thus from the analysis it can be concluded that in the case of operational profits to
total working fund, corporation bank has registered the highest share, while in terms of
growth rate, United bank of India registered the highest.
5.4.2 ANOVA RESULTS OF OPERATIONAL PROFIT TO WORKING FUND
terms of operational profits to working fund. This hypothetical relationship is being
tested with the help of ANOVA.
among the banks in terms of operational profits to working fund”. The calculated value is
hypothesis that “there is no significant difference among the banks in terms of
operational profits to working fund” has been rejected.
TABLE: 5.24
TABLE SHOWING ANOVA RESULTS OF OPERATIONAL PROFIT TO
WORKING FUND
Mean Square F Value
Between 56.91 26 2.188939 3.15*
Within 168.68 243 0.694156
Total 225.59 269
among the banks during the study period in terms of operational profits to working fund.
205
5.4.3 GROWTH IN NET PROFIT
It is highly essential for an organization to earn a reasonable amount of profit for
its survival and growth. Moreover, profit plays a vital role in measuring the degree of
efficiency, progressiveness and stability of an undertaking. Hence, profit is also
considered as the acid test of ability and competence in business planning and
programming. The higher the ratio indicates the efficiency of the bank. Hence, it becomes
pertinent to understand the trends during the study period.
As it could be seen in the table, during the year 1998, Punjab & Sind Bank has
resisted the highest growth in net profit. (325.00 per cent). This has being followed by
the other banks including State Bank of Patiala (242.37 per cent), State Bank of Bikaner
and Jaipur (225.00 per cent), Andhra Bank (208.33 per cent), Allahabad Bank (201.56
per cent) and Punjab National Bank (200.42 per cent). United Bank of India (-8.77 per
cent).
In the year 2007, Bank of Maharashtra (535.22 per cent) recorded the highest
share followed by Dena Bank (276.15 per cent),Vijaya Bank (261.14 per cent),State
Bank of Bikaner and Jaipur (210.85 per cent) and Punjab & Sind Bank (201.73 per
cent). Andhra Bank (97.85 per cent) has recorded the least share.
The average level of growth in the net profit has been recorded by State Bank of
Saurashtra (170.64 per cent) and the least is being recorded by Punjab & Sind Bank
(22.09 per cent).
The coefficient of variation has shown the least in the case of Corporation Bank
(13.07 per cent). The highest could be seen in the case of Punjab & Sind Bank (1423.06
per cent).
206
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TABLE 5.25: PERCENTAGE OF GROWTH IN NET PROFIT
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207
The linear growth rate has registered the highest with Dena Bank (15.95 per cent)
followed by Bank of Maharashtra (10.21 per cent). The negative growth rates could be
seen in the case of United Bank of India (-0.43 per cent),Oriental Bank of Commerce (-
1.06 per cent), Bank of Baroda (-1.27 per cent), State Bank of Travancore (-1.36 per
cent), State Bank of India (-1.53 per cent), State Bank of Saurashtra (-1.55 per cent),
Corporation Bank (-1.61 per cent), Syndicate Bank (-1.87 per cent),Canara Bank (-1.94
per cent), State Bank of Hyderabad (-2.16 per cent), State Bank of Bikaner and Jaipur (-
2.33 per cent), Punjab National Bank (-2.45 per cent), State Bank of Indore (-3.88 per
cent), State Bank of Patiala (-5.41 per cent), Andhra Bank (-5.46 per cent), Punjab &
Sind Bank (-187.04 per cent).
Thus from the analysis it can be concluded that in terms of percentage growth in
net profits Dena bank has recorded the highest growth rate.
5.4.4 ANOVA RESULTS OF PERCENTAGE OF GROWTH IN NET PROFIT
terms of growth rate in profits. This hypothetical relationship is being tested with the help
of ANOVA.
TABLE: 5.26
TABLE SHOWING ANOVA RESULTS OF PERCENTAGE OF GROWTH IN
NET PROFIT
Mean Square F Value
Between 190939.51 26 7343.827 0.52
Within 3463142.17 243 14251.61
Total 3654081.68 269
* Indicates significant at 5 percent level
Source'. RBI Report, Trends and Progress of Banking, Various Issues.
208
among the banks in terms of growth in profits". The calculated value is 0.52. The table
significant difference among the banks in terms of growth in profits of the public sector
banks” has been accepted.
among the banks during the study period in terms of growth in profits.
5.4.5 SPREAD TO TOTAL ASSETS

Spread is the indicator of the performance of the bank. It is the difference
between the interest earned and the interest spent. A higher spread indicates the better
performance of the bank and vice versa. Spread to Total Assets indicates the efficiency of
the banks in utilizing their assets in generating Spread. A higher ratio indicates the better
income generating capacity of the assets and better efficiency of management. Thus, this
ratio measures the return on assets employed.
As it could be seen in the table, in the year 1998 State Bank of Mysore (3.96 per
cent) recorded the highest share in spread to total assets. This is being followed by State
Bank of Indore with 3.86 per cent. The least could be seen in the case of Indian Bank
(0.57 per cent).
In the year 2007, the order has changed slightly to take State Bank of India (3.70
per cent) the leading position. State Bank of Hyderabad (2.15 per cent) registered the
least share.
The average level of profits stood highest in the case of State Bank of Patiala
(3.40 per cent), followed by: State Bank of Mysore (3.37 per cent), Punjab National Bank
209
TABLE 5.27: SPREAD TO TOTAL ASSETS
! 3.18 LL'Z
o
00
rK
690
*
Allahabad Bank 2.82 2.82 2.86 3.08 2.95 3.24 3.13 2.99 5.66 0.70
r-
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Andhra Bank 3.37 2.91 2.63 2.45 2.75 3.05 3.38 3.08 3.11 3.01 10.74 1.15 1.22
o1
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too
Bank of Baroda 2.91 3.01 2.92 3.06 2.65 2.75 3.02 3.23 2.99 2.93 5.85
LL'Z 997 997 692
Bank of India 2,61 2.31 2.78 2.64 2.59 2.68 3.22 8.42 1.27 1.23
ZL'Z €911
Bank of Maharashtra 3.50 3.29 3.07 2.93 2.73 2.39 3.09 3.50 3.10 3.03 -0.74 -0.76
ZL'Z
vO
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Canara Bank 2.49 3.24 2.64 2.83 2.52 2.69 3.07 2.90 2.73 2.78 8.41 0.43
oe
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267
Central Bank of India 3.11 2.97 2.96 3.07 3.32 3.35 3.61 3.31 2.82 3.14 0.78
160
Corporation Bank 3.47 2.52 2.73 2.95 2.65 3.02 3.31 3.35 3.20 2.95 3.01 10.46 1.02
! 2.95 OO
Dena Bank 3.47 2.96 2.48 2.51 2.35 2.82 2.67 3.04 2.85 11.71 -0.42 -0.26
Tf
Indian Bank i 0.57 0.92 1.62 1.84 1.75 2.32 2.85 3.23 3.31 3.63 2.20 47.25 20.45'
9PZ
Indian Overseas Bank 2.30 2.31 |
2.90 2.74 2.97 3.38 3.76 3.51 3.57 2.99 18.05 5.65'
i
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Oriental Bank of Commerce 3.38 2.91 2.92 3.01 3.55 3.55 2.90 2.85 2.52 10.75 -1.49
£ V"
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Punjab & Sind Bank 2.62 2.38 2.34 2.51 2.30 3.28 3.49 19.70 5.37"
so
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3.25 3.57 2.99 3.21 3.15 3.62 3.54 3.37 3.64 3.37
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Syndicate Bank 2.85 2.95 3.04 3.87 3.49 3.51 3.03 3.36 3.26 2.67 3.20 11.27
ZP'Z
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UCO Bank 1.94 2.15 2.35 2.33 2.53 2.73 2.69 2.71 2.79 2.46 11.31 : 3.54 ’
ere ZL'Z
Union Bank of India 3.17 2.66 2.74 3.01 2.93 2.98 2.96 3.25 2.96 6.73 0.35 0.36
! 2.74
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United Bank of India 2.77 2.39 2.64 2.96 3.02 3.25 3.23 2.98 16.14 4.32'
! 3.48 611
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Vijaya Bank 2.75 2.86 3.04 3.23 3.38 3.49 3.33 2.71 3.13 9.42 1.22
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State Bank of India 3.01 2.73 2.65 2.61 2.61 2.65 2.74 2.95 3.24 3.70 2.89 12.22 2.32
1 3.29 1 3.36
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State Bank of Bikaner and Jaipur 3.68 3.23 3.00 3.15 3.05 3.54 3.71 3.63 3.36 0.74 0.76
Tj*1
287
State Bank of Hyderabad 3.62 3.53 3.35 3.33 2.93 2.86 2.74 2.81 2.15 3.02 14.67
r-
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State Bank of Indore 3.86 3.93 2.99 2.85 2.90 3.23 3.47 2.93 2.73 2.86 3.18 13.72 -2.79 ’
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State Bank of Mysore 3.96 3.58 3.39 3.33 3.04 3.41 3.30 3.42 2.95 8.17
t
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297
State Bank of Patiala 3.67 3.53 3.87 4.22 3.79 3.71 3.06 3.02 2.54 3.40 16.50 -4.30 ’
| 61*01
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State Bank of Saurashtra 3.63 3.50 3.20 2.92 2.99 2.93 3.15 2.83 2.76 2.68 3.06 -2.88 ’
I
LZ'Z 3.29
State Bank of Travancore 2.93 2.18 2.73 2.58 2.74 2.85 3.33 3.53 2.84 15.64 4.04 ’ 4.11'
(3.37 per cent), State Bank of Bikaner and Jaipur (3.36 per cent), Syndicate Bank (3.20
per cent) and State Bank of Indore (3.18 per cent). UCO Bank (2.46 per cent) Indian
Bank (2.20 per cent) has recorded least..
In the case of coefficient of variation, the least variation has been recorded by
Allahabad Bank (5.66 per cent), followed in the increasing order by: Bank of Baroda
(5.85 per cent), Punjab National Bank (6.58 per cent), Union Bank of India (6.73 per
cent), State Bank of Bikaner and Jaipur (7.80 per cent) and Central Bank of India (7.87
per cent),. Indian Bank (47.25 per cent) has recorded the least share.
The highest linear growth rate has been recorded by Indian Bank (15.40 per cent),
followed by: Indian Overseas Bank (5.65 per cent), Punjab & Sind Bank (5.37 per cent),
United Bank of India (4.07 per cent), State Bank of Travancore (4.04 per cent) and UCO
Bank (3.54 per cent). Syndicate Bank (-0.07 per cent), Dena Bank (-0.42 per cent) Bank
of Maharashtra (-0.74 per cent), Oriental Bank of Commerce (-1.39 per cent), State Bank
of Mysore (-1.81 per cent), State Bank of Indore (-2.97 per cent), State Bank of
Saurashtra (-2.97 per cent), State Bank of Patiala (-4.30 per cent), State Bank of
Hyderabad (-4.55 per cent) have registered the negative growth rate.
5.4.6 ANOVA RESULTS OF SPREAD TO TOTAL ASSETS

terms of the ratio of spread to total assets. This hypothetical relationship is being tested
TABLE: 5.28
TABLE SHOWING ANOVA RESULTS OF SPREAD TO T<DTAL ASSETS
Mean Square F Value
Between 19.09 26 0.734073 1.38
Within 129.71 243 0.533786
Total
1--------- ----------- --------------------------J
148.80 269
211
among the banks in terms of spread to total assets”. The calculated value is 1.38. The
significant difference among the banks in terms of spread to total assets” has been
accepted.
among the banks during the study period in terms of the ratio of spread to total assets.
5.4.7 PROFIT TO SPREAD

Net Profit is the most important element of income statement for measuring the
profitability of a bank in a particular year. When it is compared with the spread, being the
difference between the interest income and the interest expended, then over all
performance of earning capacity of the bank activities are assessed. Net profit to spread
represents the earning quality of the bank. Higher the ratio of profit to spread indicates
more favorable for bank. An increasing ratio of profits to spread indicates the increasing
efficiency of the bank in reducing the operational and other expenditure.
As it could be seen in Table, in the year 1998, Corporation Bank (42.93 per cent)
has resisted the highest profits to spread ratio. This is being followed by the Oriental
Bank of Commerce (42.08 per cent), State Bank of Saurashtra (41.27 per cent), State
Bank of Patiala (40.40 per cent), Punjab National Bank (36.89 per cent) and Bank of
Baroda (34.43 per cent). Indian Bank (-272.07 per cent) has recorded the least profits to
spread ratio.
212
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Source: RBI Report, Trends and Progress o f Banking , Various Issues

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TABLE 5.29: PROFIT TO SPREAD
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Bank of Maharashtra

Punjab & Sind Bank
Union Bank of India
State Bank of India

Name o f the bank
Corporation Bank
Allahabad Bank
Bank of Baroda
Syndicate Bank
Bank of India
Andhra Bank
Canara Bank
Vijaya Bank
Indian Bank
Dena Bank
UCO Bank
213
In the year 2007, the order has changed with Corporation Bank (59.27 per cent)
having the highest profit to spread ratio. State Bank of Hyderabad (55.00 per cent),
Indian Overseas Bank (53.63 per cent), and State Bank of Mysore (51.24 per cent),
Andhra Bank (50.94 per cent) and State Bank of Indore (50.12 per cent) followed it.
UCO Bank (21.16 per cent) recorded the least ratio.
During the entire study period, the average level of profit to spread stood highest
in the case of Corporation Bank (51.11 per cent), followed by: Oriental Bank of
Commerce (41.64 per cent), Andhra Bank (41.26 per cent), State Bank of Patiala (38.55
per cent), State Bank of Indore (35.96 per cent) and State Bank of India (33.43 per cent).
United Bank of India (912.90 per cent) has the highest profit to spread ratio.
In terms of growth rate, the highest linear growth rate of 44.10 per cent has been
recorded by UCO Bank, followed by Indian Overseas Bank (17.29 per cent), State Bank
of Mysore (14.96 per cent), Dena Bank (13.51 per cent), Vijaya Bank (13.35 per cent)
and Allahabad Bank (12.30 per cent). State Bank of Saurashtra (-0.06 per cent), Punjab &
Sind Bank (-5.21 per cent), State Bank of Hyderabad (-9.80 per cent), United Bank of
India (-17.02 per cent), Indian Bank (-64.29 per cent) have recorded the negative growth
rates in their order.
Thus from the analysis it can be concluded that profit to spread has registered the
highest share n the case of corporation Bank while in terms of growth rate, UCO bank
has recorded the highest.
5.4.8 ANOVA RESULTS OF PROFIT TO SPREAD

terms of profit to spread. This hypothetical relationship is being tested with the help of
ANOVA.
214
TABLE: 5.30
TABLE SHOWING ANOVA RESULTS OF PROFIT TO SPREAD
Mean Square F Value
Between 110630.49 26 4255.019 0.13
Within 8055299.05 243 33149.38
Total 8165929.54 269
among the banks in terms of profit to spread". The calculated value is 0.13. The table
calculated value is less than the table value and hence the null hypothesis that "there is no
significant difference among the banks in terms of profit to spread” has been accepted.
among the banks during the study period in terms of profit to spread.
5.4.9 NET PROFIT TO AVERAGE ASSETS

The ratio of net profit to average assets is an indication of the banks' efficiency in
generation profits from the assets. A higher share indicates the higher efficiency of the
bank in converting its assets into profits.
As it could be seen in Table 5.31, Corporation Bank (1.72 per cent) has resisted
the highest share of profits to average total assets. This is being followed by Oriental
Bank of Commerce with 1.59 per cent the least could be seen in the case of Indian Bank
(-1.66 per cent).
During the year 2007, the order has changed to have Indian Overseas Bank (1.94
per cent) as the net profit to average assets earner. Corporation Bank (1.75 per cent),
215
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Source: RBI Report, Trends and Progress o f Banking , Various Issues

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TABLE 5.31: NET PROFIT TO AVERAGE ASSETS
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State Bark of Hyderabad



Bank of Maharashtra

Union Bank of India
Punjab & Sind Bank
State Bank of India

Name o f the bank
Corporation Bank
Allahabad Bank
Bank of Baroda
Syndicate Bank
Bank of India
Andhra Bank
Canara Bank
Vijaya Bank
Indian Bank
Dena Bank
UCO Bank
216
Indian Bank (1.70 per cent), State Bank of Hyderabad (1.66 per cent), Andhra Bank (1.64
per cent) and State Bank of Mysore (1.58 per cent) followed it. UCO Bank (0.52 per
cent) recorded the least.
During the study period, the average level of this ratio stood highest with 1.65 per
cent in the case of Corporation bank followed by: Oriental Bank of Commerce (1.37 per
cent), State Bank of Patiala (1.37 per cent), Andhra Bank (1.35 per cent), State Bank of
Bikaner and Jaipur (1.19 per cent) and State Bank of Indore (1.19 per cent). UCO Bank
(0.33 per cent), Indian Bank (-0.26 per cent) have recorded one of the east average ratio.
The coefficient of variation recorded the least in the case of Indian Bank (-686.44
per cent) with a negative value indicating the huge loss incurred. Even this loss is said
have high volatility. It is positive and least in the order of the following banks:
Corporation Bank (11.24 per cent), State Bank of Patiala (18.40 per cent), Syndicate
Bank (21.96 per cent), Oriental Bank of Commerce (22.06 per cent) and State Bank of
Bikaner and Jaipur (22.37 per cent). The highest coefficient of variation could be seen in
the case of Dena Bank (191.73 per cent).
In terms of growth rate, UCO Bank (37.34 per cent) followed by Indian Overseas
Bank (21.12 per cent), United Bank of India (20.81 per cent), Vijaya Bank (13.38 per
cent) and State Bank of Mysore (12.90 per cent) are recorded one of the highest growth
rate, while, Punjab & Sind Bank (-1.52 per cent), State Bank of Saurashtra (-3.70 per
cent), Indian Bank (-204.84 per cent). Have registered the negative growth rate.
Thus from the analysis it can be concluded that in the net profit to average assets
for the entire study period stood highest in the case of Corporation bank, while in terms
of growth rate, UCO bank recorded the highest.
217
5.4.10 ANOVA RESULTS OF NET PROFIT TO AVERAGE ASSETS
terms of net profit to average assets. This hypothetical relationship is being tested with
the help of ANOVA.
TABLE: 5.32
TABLE SHOWING ANOVA RESULTS OF NET PROFIT TO AVERAGE
ASSETS
Mean Square F Value
Between 39.42 26 1.516005 3.78*
Within 97.55 243 0.40144
Total 136.97 269
among the banks in terms of net profit to average assets". The calculated value is 3.78.
The table value for 26 and 243 degrees of freedom and at 5 per cent level of significance
is 2.01. A comparison of the calculated value with that of the table value indicates that
the calculated value is greater than the table value and hence the null hypothesis that
"there is no significant difference among the banks in terms of net profit to average
assets” has been rejected.
among the banks during the study period in terms of net profit to average assets.
5.4.11 INTEREST INCOME TO TOTAL INCOME
In a situation of deregulated financial system and in a competitive environment, it
becomes essential for banking industry to make the interest rates flexible. Interest income
is a basic source of revenue for the banks. The interest income to total income indicates
218
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. Hence, it becomes essential to understand the trends in
the interest earned to total income of the public sector banks.
As it could be seen in Table 5.33, in the year 1997, the highest share of interest
income to total income has been earned by Union Bank of India (92.33 per cent). This is
being followed by the other banks like, Bank of Maharashtra (91.42 per cent), Oriental
Bank of Commerce (91.35 per cent), Vijaya Bank (90.81 per cent), State Bank of Patiala
(90.56 per cent) and Indian Overseas Bank (90.55 per cent). The least share could be
seen in the case of State Bank of Bikaner and Jaipur (84.01 per cent).
However, in the year 2007, the position of the banks have changed to have:
Vijaya Bank (94.18 per cent) highest earner of interest income to total income and this is
being followed by the banks like, UCO Bank (94.13 per cent), United Bank of India
(93.94 per cent), Indian Bank (93.94 per cent), Syndicate Bank (93.80 per cent) and
Canara Bank (93.10 per cent). The least is recorded by State Bank of Bikaner and Jaipur
(84.50 per cent)
The average level of interest income to total income for the entire study period
stood highest at 89.23 per cent in the case of Union bank of India, followed by Central
Bank of India (89.05 per cent), Oriental Bank of Commerce (88.95 per cent), Syndicate
Bank (88.84 per cent), Vijaya Bank (88.69 per cent) and Bank of Maharashtra (88.22 per
cent). State Bank of Hyderabad (80.22 per cent) has shown the least ratio.
In the terms of coefficient of variation, an indicator of the volatility in the
earnings, State Bank of India (2.52 per cent) recorded the least variation. This is being
followed by: Punjab National Bank (2.89 per cent), Central Bank of India (2.91 per
219
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TABLE 5.33: INTEREST INCOME TO TOTAL INCOME
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Bank of Maharashtra

Punjab & Sind Bank
Union Bank of India
State Bank of India

Name o f the bank
Corporation Bank
Allahabad Bank
Bank of Baroda
Syndicate Bank
Bank of India
Andhra Bank
Canara Bank
Vijaya Bank
Indian Bank
Dena Bank
UCO Bank
220
cent), Indian Overseas Bank (2.98 per cent), Bank of Maharashtra (3.22 per cent) and
Union Bank of India (3.40 per cent). The least could be seen in the case of United Bank
of India (20.94 per cent).
The UCO Bank has recorded the highest growth rate 0.48 per cent in the ratio of
interest income to total income during the study period. This is being followed by the
other banks like, Canara Bank (0.47 per cent), Indian Bank (0.38 per cent), Syndicate
Bank (0.25 per cent), State Bank of Indore (0.22 per cent), State Bank of Saurashtra
(0.16 per cent), Corporation Bank (0.05 per cent) and State Bank of Travancore (0.02
per cent), Bank of India (0.01 per cent).
It is also disheartening to note that out of 27 banks selected, a majority that 18
banks have recorded a negative growth in the ratio of interest income to total income,
while implies the declining income from this major source. The order of the banks in
terms of declining growth is: Central Bank of India (-0.05 per cent), Vijaya Bank (-0.09
per cent), Punjab & Sind Bank (-0.12 per cent), Allahabad Bank (-0.15 per cent), State
Bank of India (-0.19 per cent), Andhra Bank (-0.20 per cent), State Bank of Bikaner and
Jaipur (-0.20 per cent). Bank of Baroda (-0.26 per cent), Dena Bank (-0.29 per cent),
Bank of Maharashtra (-0.32 per cent), Punjab National Bank (-0.36 per cent), Oriental
Bank of Commerce (-0.39 per cent), Indian Overseas Bank (-0.54 per cent), State Bank
of Patiala (-0.55 per cent), Union Bank of India (-0.60 per cent), State Bank of Mysore (-
0.68 per cent), State Bank of Hyderabad (-1.66 per cent), United Bank of India (-2.32
per cent).
A striking conclusion that can be made from the above analysis is that a majority
of the banks have experienced negative growth rates in the case of interest income to
total income and even the banks which have recorded the positive growth rate could
221
record only a negligible rate of increase. This implies that the public sector banks could
not withstand the severe competition from the other private sector and foreign banks and
they are handicapped in expanding their interest incomes from this source.
5.4.12 ANOVA RESULTS OF INTEREST INCOME TO TOTAL INCOME
Given the competitive environment, it is expected that the ratio of income to total
income to almost the same. This hypothetical relationship is being tested with the help of
ANOVA.
TABLE: 5.34
TABLE SHOWING ANOVA RESULTS OF INTEREST INCOME TO TOTAL
INCOME

Mean Square F Value
Between 1486.28 26 57.1646 0.21
Within 64886.6 243 267.023
Total 66372.88 269
among the banks in terms of interest income to total income”. The calculated value is
hypothesis that “there is no significant difference among the banks in terms of interest
income to total income” has been accepted.
among the banks during the study period in terms of interest income to total income.
222
5.4.13 NON INTEREST INCOME TO TOTAL INCOME
The public sector banks, for the purpose of survival and the earn profits, are
forced to increase their earnings from some other source which resulted in the
introduction of innovative products and services. This helps in obtaining the non interest
income. Hence, in a competitive environment, an understanding of the trends in the non
interest income is also essential as it is also one of the important sources of income to the
banks. The higher ratio of non-interest income/total income indicates the increasing
proportion of fee-based income.
As it could be seen in Table 5.35, in the year 1997, State Bank of Bikaner and
Jaipur could receive the highest share of non interest income to total income (16.09 per
cent). The next highest share of non interest income to total income has been obtained
by State Bank of Saurashtra (15.60 per cent). The order of other banks in terms of the
non interest earnings is: State Bank of Indore (15.21 per cent), State Bank of India
(15.08 per cent), State Bank of Hyderabad (14.11 per cent), Punjab National Bank
(13.76 per cent) and Canara Bank (13.72 per cent) while Union Bank of India (7.67 per
cent) has recorded the least.
In the year 2007, the order of the banks in terms of the share has changed to have:
State Bank of Bikaner and Jaipur (15.50 per cent), State Bank of Mysore (14.52 per cent),
State Bank of Indore (14.16 per cent), State Bank of India (14.05 per cent) and Punjab &
Sind Bank (13.42 per cent) in their order of the few banks. While, Vijaya Bank (5.82 per
cent) has shown the least share.
The overall share of non interest income to total income for the entire study
period stood highest with 19.78 per cent in the case of State Bank of Hyderabad. The
other banks following it are in the order of: State Bank of Mysore (18.23 per cent), State
223
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224
Bank of Indore (18.18 per cent), State Bank of Bikaner and Jaipur (17.26 per cent),
United Bank of India (16.71 per cent) and State Bank of Saurashtra (15.19 per cent). As
found in the case of many of the indicators, Union Bank of India (10.71 per cent) has
recorded the least share.
In terms of instability in growth, the least coefficient of variation of 14.27 per cent
has been recorded by State Bank of India implying the less volatility in the growth of
non interest income to total income. This is being followed by Punjab National Bank
(18.12 per cent), State Bank of Bikaner and Jaipur (18.92 per cent), State Bank of
Mysore (20.38 per cent), State Bank of Travancore (21.41 per cent) and Indian Overseas
Bank (21.69 per cent). The least could be seen in the case of United Bank of India
(104.3 percent).
The growth rate registered in the case of United Bank of India formed highest
during the study period with 11.54 per cent. The next highest growth rate is being
recorded State Bank of Hyderabad with 6.74 per cent. The order of other few banks is:
Union Bank of India (4.96 per cent), Indian Overseas Bank (3.90 per cent), and State
Bank of Patiala (3.37 per cent), Oriental Bank of Commerce (3.16 per cent) and State
Bank of Mysore (2.99 per cent). Central Bank of India (0.37 per cent) could registered
the least positive growth rate, while Bank of India (-0.08 per cent), State Bank of
Travancore (-0.12 per cent), Corporation Bank (-0.29 per cent), State Bank of Saurashtra
(-0.88 per cent), State Bank of Indore (-1.02 per cent), Syndicate Bank (-2.02 per cent),
Indian Bank (-2.53 per cent), Canara Bank (-2.87 per cent) and UCO Bank (-3.49 per
cent) have recorded the negative growth rate in the non interest income earnings.
225
A striking conclusion that can be made from the above discussion is that a
majority of the banks namely, 18 banks out of 27 could record a positive growth in the
non interest income indicating the improved service facility. A comparison of the rate of
growth of interest income to non interest income indicates that the rate of growth in the
non interest income is far higher than the rate of growth in the interest income which
provides the inference that the public sector banks have realized the need for providing
better services to their customers.
Thus from the analysis it can be concluded that in terms of average ievel of non
interest income to total income, State Bank of Hyderabad has recorded the highest share
while in terms of growth rate United Bank of India recorded the highest.
5.4.14 ANOVA RESULTS OF NON INTEREST INCOME TO TOTAL INCOME
terms of non interest income to total income. This hypothetical relationship is being
tested with the help of ANOVA.
TABLE: 5.36
TABLE SHOWING ANOVA RESULTS OF NON INTEREST INCOME TO
TOTAL INCOME
Mean Square F Value
Between 1489.36 26 57.28293 1.56
Within 8945.97 243 36.81469
Total 10435.33 269
among the banks in terms of non interest income to total income”. The calculated value is
226
hypothesis that “there is no significant difference among the banks in terms of non
interest income to total income” has been accepted.
among the banks during the study period in terms of non interest income to total income.
5.4.15 INTEREST EXPENSES TO TOTAL EXPENSES
The interest expenses are the spending of the bank for their borrowings by way of
deposits. A higher amount of deposit mobilization results in higher interest expenses of
the banks and vice versa. However, the efficiency lies in reducing the interest expenditure
payments for a given level of borrowings. In a competitive situation, the banks, for the
purpose of lending, attempts to attract more funds for which they are ready to pay
attractive rates of interest. This increases the interest expenses. This ratio shows how
effectively the management is controlling the non interest expenditure among total
expenses. The higher the ratio, higher the efficiency of the bank. Hence, so as to
understand whether the banks increase their payments or attempts to reduce it, and
examination of the trends in growth of interest expenses becomes inevitable..
As it could be seen in Table 5.37, in the year 1998 Syndicate Bank (63.95 per
cent) has recorded highest share of interest expenses to total expenses. This is being
followed by State Bank of Indore with 64.01 per cent. The least could be seen in the case
of State Bank of Travancore (76.69 per cent).
In the year 2007 this order has slightly changed to have Dena Bank (54.37 per
cent) taking the highest share in interest expenses to total expenses. A few other banks
227
TABLE 5.37: INTEREST EXPENDITURE TO TOTAL EXPENSES
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Allahabad Bank 70.32 67.86 68.53 64.40 62.27 55.64 59.39 65.66 7.76 -1.76' -1.78'
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Andhra Bank 68.74 74.06 75.10 76.21 70.55 66.68 52.42 59.79 61.97 67.45 11.13
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Bank of Baroda 72.62 72.92 72.91 70.39 72.28 66.44 48.06 52.02 61.60 13.90 -3.64'
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Bank of India 69,42 71.34 71.14 71.11 70.24 52.78 j 57.59 60.15 65.87
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Bank of Maharashtra 66.21 70.42 68.01 74.62 : 73.10 71.89 56.48 56.01 58.78 65.99 10.45 -1.67 -1.77
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Canara Bank 73.12 71.78 71.66 69.10 74.07 71.69 69.52 55.76 60.41 66.31 68.34 8.68 -2.01'
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Corporation Bank 73.53 78.30 79.03 78.15 73.51 68.30 52.16 56.48 64.10 70.10 13.75 -3.51'
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Indian Bank 72.31 70.65 68.41 70.83

69.40 59.34 50.06 55.75 58.54 64.72 12.40
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Indian Overseas Bank 73.15 72.00 70.6968.59 71.35 i

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Oriental Bank of Commerce 76.17 77.71 80.27 78.97 79.63

78.19 74.13 59.32 63.36 67.82 73.56
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Syndicate Bank 63.95 65.61 65.42 61.20 63.33 60.52 59.00 51.39 60.57 9.79 ; -i.7i
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UCO Bank 66.85 67.64 69.51 68.38 68.40 68.79 68.59 54.40 62.22 67.08 66.19 -1.01 -1.06
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Union Bank of India 71.42 72.18 73.16 71.16 73.48 73.37 71.93 61.90 65.72 68.99
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United Bank of India 71.40 73.40 72.33 65.37 70.28 65.75 51.83 51.14 58.28 65.26 -3.72'
LVL9
Vijaya Bank 66.43 68.78 68.04 71.39 64.84 68.88 54.12 54.31 62.17 64.61 9.30 -1.98' -2.05'
State Bank of India 68.93 68.87 70.81 68.15 74.19 72.66 67.58 57.18 56.82 60.42 66.56 9.35 -2.12' -2.19'
vo
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State Bank of Bikaner and Jaipur 65.65 65.70 65.51 68.38 66.34 61.92 43.90 51.56 61.50 61.80 12.84 -2.62 -2.77
i
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State Bank of Hyderabad 70.84 66.58 71.95 70.65 75.36 74.53 71.98 54.52 59.87 63.94 68.02 9.92 -1.72
!65.84 0089
State Bank of Indore 64.01 63.97 72.68 71.40 67.77 56.12 56.96 65.74 65.25 8.28 -0.78 -0.84
6119 6P Z I
State Bank of Mysore 65.46 64.71 64.71 63.50 67.63 66.56 61.97 44.54 49.94 62.91 -2.31 -2.47
1
997.9
State Bank of Patiala 70.60 70.87 70.56 66.28 70.43 71.17 70.36 53.22 62.61 70.52 8.52 -1.19 -1.26
9Z99
State Bank of Saurashtra 65.83 70.26 67.67 70.82 70.23 67.85 44.40 56.17 65.41 64.49 12.73 -1.91 -2.10
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State Bank of Travancore 76.42 74.91 71.93 75.50 74.27 53.87 58.45 69.88 11.36
are in the order of: Punjab & Sind Bank (54.61 per cent), Punjab National Bank (55.69
per cent), and United Bank of India (58.28 per cent), Indian Bank (58.54 per cent) and
Bank of Maharashtra (58.78 per cent). State Bank of Patiala (70.52 per cent) could
register the least share.
The average level of interest expenses to total expenses indicates that the highest
share has been taken by Syndicate Bank (60.57 per cent) followed by a few other banks
like, State Bank of Mysore (61.19 per cent), State Bank of Bikaner and Jaipur (61.80 per
cent), Punjab & Sind Bank (63.00 per cent), Central Bank of India (63.06 per cent) and
Punjab National Bank (64.15 per cent). Oriental Bank of Commerce (73.56 per cent)
registered the highest growth rate.
The coefficient of variation indicates that the volatility in the share of interest
expenses to total expenses for the entire study period is less in the case of UCO Bank
(6.97 per cent) followed by Allahabad Bank (7.76 per cent), State Bank of Indore (8.28
per cent), State Bank of Patiala (8.52 per cent), Canara Bank (8.68 per cent), Union Bank
of India (8.75 per cent) and Vijaya Bank (9.30 per cent). Punjab & Sind Bank (16.90 per
cent) has registered the least.
The decreasing expenses indicates the declining share of this expenses and this is
expected to be a favorable situation and Punjab & Sind Bank (-4.59 per cent) could
achieves a highest reduction in the interest expenses during the entire study period. The
next highest reduction in growth is achieved by Dena Bank (-4.16 per cent). The order of
the banks in terms of the declining share is: United Bank of India (-3.65 per cent), Bank
of Baroda (-3.52 per cent), Corporation Bank (-3.51 per cent), Indian Bank (-3.45 per
cent) and Punjab National Bank (-2.94 per cent). UCO Bank (-1.01 per cent) and State
Bank of Indore (-0.78 per cent) has recorded the least and negative growth iates.
229
Thus from the analysis it can be concluded that Syndicate bank could have the
least share in the interest expenses to total expenses, the growth is found to be the highest
in the case of Punjab & Sind Bank.
5.4.16 ANOVA RESULTS OF INTEREST EXPENSES TO TOTAL EXPENSES
terms of the share of interest expenses to total expenses. This hypothetical relationship is
being tested with the help of ANOVA.
TABLE: 5.38
TABLE SHOWING ANOVA RESULTS OF INTEREST EXPENSES TO TOTAL
EXPENSES
Sources of Sum of Degrees of Mean
F Value
Variance Squares Freedom Square
Between 2126.0929 26 81.7728 0.43
Within 46283.42 243 190.4667
Total 48409.51 269
among the banks in terms of percentage of interest expenditure payments to total
expenditure’'. The calculated value is 0.43. The table value for 26 and 243 degrees of
freedom and at 5 per cent level of significance is 2.01. A comparison of the calculated
value with that of the table value indicates that the calculated value is less than the table
value. Hence the null hypothesis that “there is no significant difference among the banks
in terms of percentage of interest expenditure payments to total expenditure” has been
accepted.
among the banks during the study period in terms of percentage of interest expenditure
payments to total expenditure.
230
5.5.0 LIQUIDITY
Liquidity is very crucial for any organization which deals with money. It is all the
more important for banks. Poor liquidity management not only leads to dwindling bank
earnings but can also jeopardize its continued operations. The parameter assesses the
ability of a bank to meet the demand from the deposit holders in a particular time. The
higher the ratio, the better off will be the banks. Liquidity of the bank can be measured in
terms of the indicators like, Liquid Assets to Total Assets, Government Securities to
Total Assets, Liquid Assets to Demand Deposits, Liquid Assets to Total Deposits and
Approved to Securities to Total Assets.
5.5.1 GOVERNMENT SECURITIES TO TOTAL ASSETS
The investment made in government securities is a safe way of safeguarding the
deposits of the customers. Given the risk associated with the operation of lending the
banks lend a lion's share of their resources and invest the remaining in stocks and
securities. The banks, it being a borrowed fund, attempts to reduce the risk by investing
in financial instruments which are less risky in nature and the government securities
which has zero risk. Above all, as per the guidelines of RBI it is also mandatory on the
part of the commercial banks to invest a portion of their liquid assets in government
bonds. 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 per
cent of net demand and time liabilities. This ratio measures the risk involved in the assets
held by a bank. In the subsequent paragraph it is attempted to discuss the share and the
trends in the growth government securities to total assets of public sector banks.
231
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TABLE 5.39: GOVERNMENT SECURITIES TO TOTAL ASSETS
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232
As it could be seen in Table 5.39, in the year 1998, among the public sector banks
considered for analysis, United Bank of India (36.28 per cent) has the highest share in
government securities. The order of the other banks in terms of declining share include
Bank of Maharashtra (32.34 per cent), Central Bank of India (31.25 per cent), Vijaya
Bank (30.50 per cent), State Bank of Travancore (29.68 per cent) and State Bank of
Indore (29.54 per cent). State Bank of India (17.11 per cent) recorded the least share
invested in government securities.
During the year 2007, the order has slightly changed to have Indian Bank (9.28
per cent) taking the first position in terms of investment. The other banks are in the order
of: United Bank of India (27.17 per cent), State Bank of Hyderabad (26.89 per cent),
Punjab & Sind Bank (25.69 per cent), Indian Overseas Bank (25.50 per cent) and
Syndicate Bank (25.25 per cent). Bank of India (18.17 per cent) could indicate the least
share.
In terms of average share of investment in government securities to total
investment United Bank of India (38.07 per cent) ranked the highest. This is being
followed by State Bank of Hyderabad (35.78 per cent), Bank of Maharashtra (35.19 per
cent), State Bank of Travancore (33.92 per cent), State Bank of Indore (32.88 per cent)
and Andhra Bank (31.62 per cent). Bank of India (19.32 per cent) recorded the least
average share in investment in government securities.
The instability measured in terms of coefficient of variation has recorded the least
in the case of Bank of India (7.22 per cent), followed by UCO Bank (7.89 per cent),
Union Bank of India (9.36 per cent), Canara Bank (11.99 per cent), and Indian Bank
(12.35 per cent) and United Bank of India (12.42 per cent) while it is highest in the case
of Bank of Baroda (24.48 per cent).
233
^ The growth rate recorded the highest in the case of State Bank of Saurashtra (4.10
per cent), followed by Bank of Baroda (3.74 per cent), State Bank of Patiala (3.25 per
cent), Punjab & Sind Bank (2.82 per cent), Indian Bank (2.42 per cent) and State Bank
of India (2.20 per cent) and it is the least in the case of State Bank of Bikaner and Jaipur
(0.35per cent).
However, it could also be seen in the table that the banks like State Bank of
Hyderabad (-0.07per cent), Central Bank of India (-0.21 per cent), Punjab National Bank
(-0.52 per cent), State Bank of Travancore (-0.62 per cent), Allahabad Bank (-0.73 per
cent), United Bank of India (-0.74 per cent), Union Bank of India (-1.13 per cent), Bank
of Maharashtra (-1.51 per cent), State Bank of Indore (-2.10 per cent) and Andhra Bank
(-3.21 per cent) have recorded a negative growth in investment in securities.
Thus, from the analysis it can be concluded that in terms of government securities
to total assets United Bank of India recorded the highest share, while in terms of growth
rate State Bank of Saurashtra recorded the highest.
5.5.2 ANOVA RESULTS OF GOVERNMENT SECURITIES TO TOTAL

ASSETS
terms of investment in government securities to total assets of the banks. This
hypothetical relationship is being tested with the help of ANOVA.
TABLE: 5.40
TABLE SHOWING ANOVA RESULTS OF GOVERNMENT SECURITIES TO
TOTAL ASSETS
Mean Square F Value
Between 4742.5612 26 182.4062 3.89’
Within 11396.46 243 46.89901
Total 16139.02 269
’ Indicates signi leant at 5 percent evel
234
among the banks in terms of investment in government securities to total investment”.
The calculated value is 3.89. The table value for 26 and 243 degrees of freedom and at 5
per cent level of significance is 2.01. A comparison of the calculated value with that of
the table value indicates that the calculated value is greater than the table value and hence
the null hypothesis that “there is no significant difference among the banks in terms of
investment in government securities to total assets” has been rejected.
among the banks during the study period in terms of investment in government securities
to total assets.
5.5.3 LIQUID ASSETS TO TOTAL ASSETS

The proportion of Liquid Assets to Total Assets indicates the overall liquidity
position of the bank. Liquid assets banks forms the core of any business unit and this is
more so in the case of the banking unit as the extent of ownership liquid assets
determines the banks' ability to extend short term loans and investments so as to convert
them into earnings. Hence, a judicious ownership of liquid assets becomes essential and
in the present paragraph it is attempted to discuss the trends in the ratio of liquid assets to
total assets of the public sector banks.
As it could be seen in Table 5.41, during the year 1998, Bank of Baroda (22.66
per cent) has recorded the highest share. The next highest share holding has been made
by Indian Overseas Bank (21.36 per cent). The other few banks in their order are: State
Bank of Saurashtra (20.08 per cent), State Bank of Patiala (19.34 per cent), Corporation
Bank (19.26 per cent), and Union Bank of India (18.30 per cent) and State Bank of India
(18.17 per cent). Indian Bank (9.13 per cent) has registered the least share.
235
TABLE 5.41: LIQUID ASSETS TO TOTAL ASSETS
0c
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Name o f the bank 1998 1999 1
2000
_______ 2001 2002 2003 2004 2005 2006 2007 AVG cv CGR
! -1.42
8601 LYL LYZZ
Allahabad Bank 14.53 13.23 11.23 8.94 7.48 12.23 12.35 13.04 11.12 -1.43
d
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9011
Andhra Bank 14.75 14.43 13.54 8.13 6.78 9.53 18.47 22.44 14.16 13.33 35.63 2.23
99'ZZ 6Z' IZ
Bank of Baroda 23.01 19.64 12.62 8.92 8.54 13.70 15.17 16.94 16.25 32.96 -6.76 -6.21
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Bank of India 14.63 20.11 15.86 9.46 9.13 10.08 12.02 _j 16.37
___ 17.46 13.59 28.07 -0.99 -0.89
0601 9671
Bank of Maharashtra 14.32 14.95 13.27 9.79 17.43 19.35 14.50 13.76 22.29 1.89 1.74
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Canara Bank 17.91 17.31 12.08 12.44 15.13 15.75 15.07 20.93 -2.76
(N d
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Central Bank of India 12.01 12.69 11.59 12.15 7.89 8.02 17.83 15.79 12.18 25.60
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Corporation Bank 19.26 16.34 13.61 16.17 14.18 9.25 9.73 16.03 14.49 14.71 22.02 -1.50 -1.55
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Dena Bank 15.27 12.13 9.31 12.46 8.14 7.20 6.55 13.09 15.25 14.61 11.40 0.52
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Indian Bank 9.13 8.93 8.84 6.84 4.96 8.05 1 1.11 14.74 16.18 9.68 35.65 6.74
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Indian Overseas Bank 21.36 16.98 13.49 10.23 8.74 17.29 14.81 30.51 -4.58 -4.17
Oriental Bank of Commerce 12.87 12.73 10,73 9.79 10.32 7.43 8.78 25.37 16.07 16.85 13.09 40.16 5.86 4.78
Punjab & Sind Bank ! 10.17
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11.95 14.70 13.86 13.08 11.20 10.54 17.59 15.21 12.06 13.03 0.64 0.43
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Punjab National Bank 13.73 12.61 11.51 9.56 8.77 9.37 8.62 15.77 32.66 13.99 51.54 8.29 6.28
89 01 10 11
Syndicate Bank 15.48 14.05 14.62 9.90 7.32 13.93 14.12 18.18 12.93 24.47 0.65 0.34
d
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UCO Bank 14.19 i 12.67 10.95 11.76 8.79 8.99 9.56 18.51 8.37 11.74 26.82 -0.20 -0.75
Union Bank of India 18.30 18.52 18.71 13.64 11.06 7.64 6.60 15.24 12.39 14.55 13.66 31.67 -5.26 -4.99
1
8011
d
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United Bank of India 9.21 ; 10.29 11.25 8.12 7.92 8.62 8.20 13.11 18.72 32.67 6.29
Vijaya Bank 14.48 14.07 13.24 10.14 10.25 8.40 4.65 9.42 17.05 22.01 12.37 39.65 2.51 0.53
! 14.61
8901
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State Bank of India 23.91 18.02 19.23 18.65 12.02 14.74 16.50 23.47 -5.23' -4.95’
Oi
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State Bank of Bikaner and Jaipur 16.33 16.03 18.25 17.37 12.71 9.43 9.22 16.63 23.71 15.34 28.14
1801
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State Bank of Hyderabad 9.93 7.64 10.76 9.22 6.91 13.65 15.68 11.55 30.09
i 6.26
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State Bank of Indore 11.97 ; 14.46 11.90 7.19 5.91 6.16 11.53 15.82 14.20 10.54 36.29 1.45
ICO
State Bank of Mysore 14.16 i
16.54
______ 13.36 11.89 8.88 8.43 9.99 17.21 13.12 16.60 13.02 24.67 0.52
:
OO
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State Bank of Patiala 19.34 orei 9.98 15.13 7.21 5.12 13.95 12.71 15.01 37.64 -2.68 -2.47
[ -4.92
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State Bank of Saurashtra 20.08 14.95 13.01 8.98 6.71 7.54 13.99 12.86 16.43 13.50 35.39 -4.34
! 33.51
0091
State Bank of Travancore 16.15 15.32 13.16 12.08 6.53 5.86 16.93 8.04 13.42 12.35 -4.88 -5.31
In the year 2007, the ratio of liquid assets to total assets has taken the following
order. State Bank of Bikaner and Jaipur (23.71 per cent), Vijaya Bank (22.01 per cent),
United Bank of India (18.72 per cent), Syndicate Bank (18.18 per cent) and Corporation
Bank (18.01 per cent). Allahabad Bank (13.04 per cent) and Punjab & Sind Bank (12.06
per cent) have shown the least ratio.
The average share of liquid assets to total assets for the entire study period stood
highest in the case of State Bank of India (16.50 per cent). This is being followed by the
other banks like, Bank of Baroda (16.25 per cent), State Bank of Bikaner and Jaipur
(15.34 per cent), Canara Bank (15.07 per cent), Indian Overseas Bank (14.81 per cent)
and Corporation Bank (14.71 per cent). The least is found in the case of Indian Bank
(9.68 per cent).
The average share discussed above indicates that the banks could maintain from
the highest level of 16.50 per cent of its total assets to the lowest level of 9.68 per cent.
This implies that the maintenance of liquid assets is hardly one-fourth indicating the
realization made by the banks on the higher opportunity cost of maintaining the liquid
assets.
The instability, a measure of variation or volatility stood the least in the case of
Punjab & Sind Bank (17.87 per cent), followed by Canara Bank (20.93 per cent),
Corporation Bank (22.02 per cent), Bank of Maharashtra (22.29 per cent), Allahabad
Bank (22.47 per cent) and State Bank of India (23.47 per cent). Punjab National Bank
(51.54 per cent) registered the least volatility..
The growth rate is found to be positive for a majority of the banks indicating the
increasing share of liquid assets to total assets. The order of the banks which registered
the positive growth rate includes: Punjab National Bank (8.29 per cent), Indian Bank
237
(7.64 per cent), United Bank of India (7.18 per cent), and Oriental Bank of Commerce
(5.86 per cent) and Andhra Bank (3.16 per cent). State Bank of Mysore (0.52 per cent)
recorded the least positive growth
The banks like, UCO Bank (-0.20 per cent), Bank of India (-0.99 per cent),
Allahabad Bank (-1.43 per cent), Corporation Bank (-1.50 per cent), State Bank of Patiala
(-2.68 per cent), Canara Bank (-2.85 per cent), Indian Overseas Bank (-4.58 per cent),
State Bank of Travancore (-4.88 per cent), State Bank of Saurashtra (-4.92 per cent),
State Bank of India (-5.23 per cent), Union Bank of India (-5.26 per cent) and Bank of
Baroda (-6.76 per cent) have recorded the negative growth in the share of liquid assets to
total assets.
Thus from the analysis it can be concluded that the share of liquid assets to total
assets stood by less than 20 per cent for all the banks, while the growth in the share is
positive for a majority of the banks indicating the increasing share of liquid assets to total
assets.
5.5.4 ANOVA RESULTS OF LIQUID ASSETS TO TOTAL ASSETS

terms of liquid assets to total assets. This hypothetical relationship is being tested with
the help of ANOVA.
TABLE: 5.42
TABLE SHOWING ANOVA RESULTS OF LIQUID ASSETS TO TOTAL
ASSETS
Mean Square F Value
Between 748.23143 26 28.77813 1.48
Within 4738.19 243 19.49872
Total 5486.42 269
238
among the banks in terms of liquid assets to total assets’". The calculated value is 1.48.
the calculated value is less than the table value and hence the null hypothesis that 'Ihere
is no significant difference among the banks in terms of liquid assets to total assets” has
been accepted.
among the banks during the study period in terms of liquid assets to total assets,
5.5.5 APPROVED SECURITIES TO TOTAL ASSETS
Approved securities are investment made in state-associated bodies like electricity
boards, housing boards, corporation bonds, shares of regional rural banks.
As it could be seen in Table 5.43, in the year 1998, the share of approved assets to
total assets formed the highest in the case of Punjab National Bank (7.65 per cent)
followed by Allahabad Bank (7.02 per cent), Punjab & Sind Bank (6.82 per cent), Central
Bank of India (5.24 per cent), State Bank of Patiala (5.04 per cent) and Andhra Bank
(4.85 per cent). It is least with 1.81 per cent in the case of State Bank of Saurashtra.
During the year 2007, the order has changed to have Punjab & Sind Bank (2.02
per cent) as the banks having the highest share of investment in approved assets to total
assets. This is being followed by: Indian Bank (0.96 per cent), Bank of Baroda (0.87 per
cent), Central Bank of India (0.81 per cent), Allahabad Bank (0.68 per cent) and Punjab
National Bank (0.61 per cent). State Bank of Indore (0.14 per cent) has shown the least
percentage in share of investment in approved assets.
239
TABLE 5.43: APPROVED SECURITIES TO TOTAL ASSETS
u
o
o
N
Name of the bank 1998 1999 2000 2001 2002 2003 2004 2005 2006 AVG CV LG R CGR
00
00
©
:
890
Allahabad Bank 7.02 5.99 3.86 2.78 1.95 1.54 1.13 3.09 73.65 -23.58' -23.88 ’
CMi
00
00 00
d
o ©
\o
CM
©
r^
r^
00
tq
©
Andhra Bank 4.85 3.40 2.04 1.43 0.79 0.47 94.20 -25.95 ’
161
00
©
r^
Bank of Baroda 3.88 3.29 2.96 2.60 2.25 1.64 1.39 1.14 2.19 44.80 -14.70 ’ -14.67*
!
!
i
16 1.02
©
CM
vD
Bank of India 2.76 2.23 2.03 1.42 1.21 0.87 0.72 0.56 1.47 49.27 CM■ -15.83 ’
i
00
vd
©
©
to
Os
ro
ro
Bank of Maharashtra 3.98 2.55 1.45 0.94 0.58 0.45 0.42 83.35
i
©
rs r-
SO 00
©
ro
d ro
*© V-
880
Canara Bank 4.20 3.50 2.99 2.33 1.73 1.05 0.71 0.39 74.28 -24.17'
161 180
to
Central Bank of India 5.24 4.04 3.02 2.26 1.64 1.45 1.32 1.14 2.28 61.95 -18.93'
:
! 0.30
Z9 0
i cm
Corporation Bank 3.13 2.24 1.92 1.56 1.03 0.72 0.44 0.23 1.22 79.24 -24.99'
00
d to d
CM rO SO
©
Dena Bank 2.80 1.70 1.54 1.56 1.56 1.34 1.04 0.75 0.51 1.69 61.74
cm
ro
960
Indian Bank 4.72 3.82 3.27 2.64 2.22 1.70 1.49 1.15 53.68 -17.08' -i6 .i r
-21.56' 1
r-
rq
Indian Overseas Bank 3.19 2.56 1.90 1.66 0.98 0.79 0.62 0.53 1.39 67.61 -21.56 ’
iro
t
©
©
180 090
Oriental Bank of Commerce 2.65 1.92 1.84 1.54 1.44 1.12 0.32 1.53 56.53 -18.39"
>
r- ©
Z9Z
© ©
fC
CM
‘oo *CM
Punjab & Sind Bank 6.82 5.86 5.17 4.54 4.04 3.79 3.54 2.02 4.27 33.57 -10.86'
190
7.65 6.10 4.85 3.94 3.37 2.79 2.29 1.75 0.84 3.42 66.39 -21.48' -23.20'
C4»
©
d
00
660
Syndicate Bank 3.01 2.48 1.66 1.56 1.23 0.59 0.45oo 0.28 0.20 1.25 76.00 -24.28*
UCO Bank 4.22 3.53 2.88 2.04 1.58 1.14 © 0.67 0.47 1.99 -20.92' -21.67 ’
2.53 64.28
04»
©
04
©
V-
Union Bank of India 4.23 3.39 2.60 1.92 1.46 1.20 0.79 0.59 0.48 1.96 65.46 -21.25'
3.21 1.71 1.44 -18.32' | -18.85'
United Bank of India 3.98 2.63 2.13 1.93 1.07 0.74 0.51 1.94 56.57
910 160
Vijaya Bank 2.08 1.75 1.24
on 0.95 0.74 0.52 0.36 0.22 70.55 -22.77* -24.44*
«
»
691
00
OO
OO
©
oo
tn
State Bank of India 3.98 2.91 2.26 1.50 1.20 1.13 0.72 0.59 64.21
1 <N
© d
V-
660
State Bank of Bikaner and Jaipur 4.59 3.56 2.64 2.19 1.76 1.26 0.57 0.36 0.28 1.82 78.89 -26.82*
OO
©
r-
660 £90
State Bank of Hyderabad 2.39 1.93 1.52 1.30 0.37 0.28 0.22 1.04 70.49 -22.73* -23.67 ’
rnt
vq
oo
d
V-
OO
860 890
State Bank of Indore 3.42 2.74 2.07 1.22 0.39 0.14 0.14 1.34 -26.75 ’
8VZ
d
00
C4
© od
SQ r-
State Bank of Mysore 3.87 2.63 2.33 1.40 0.94 0.78 0.56 1.98 54.92 -17.93*
!
*(N
180 912
State Bank of Patiala 5.04 4.29 3.40 2.62 1.91 1.38 1.03 0.59 0.49 75.09 -23.94*
«
r4 fNi
© ©
OO
d rn
890
State Bank of Saurashtra 1.38 0.97 0.79 0.55 0.40 0.31 0.20 0.17 0.73 73.41
! 1
ni CMt
161 1.46 1.13

C<1
OO ©
Vl *©
OO
©
to
©
©
State Bank of Travancore 3.21 2.37 0.64 0.45 0.25 1.26 77.97 -24.64'
The average level of approved securities to total assets formed the highest with
4.27 per cent in the case of Punjab & Sind Bank and this is being followed by Punjab
National Bank (3.42 per cent), Allahabad Bank (3.09 per cent), Indian Bank (2.34 per
cent), Central Bank of India (2.28 per cent) and Bank of Baroda (2.19 per cent). State
Bank of Saurashtra (0.73 per cent) has shown the least percentage.
The coefficient of variation recorded the least in the case of Punjab & Sind Bank
(33.57 per cent) followed by Bank of Baroda (44.80 per cent), Bank of India (49.27 per
cent), Indian Bank (53.68 per cent), State Bank of Mysore (54.92 per cent) and Oriental
Bank of Commerce (56.53 per cent). Andhra Bank (94.20 per cent) has recorded the
highest volatility measured in terms of coefficient of variation.
It is interesting to note that all the banks have recorded the negative growth in
terms of investment in approved securities to total assets. This means, over the study
period, the banks have reduced their investment in approved securities. Among the
banks, the least growth in the ratio of investment in approved securities to total assets
has been made by Punjab & Sind Bank (-10.86 per cent). This is being followed by the
other banks like, Bank of Baroda (-14.70 per cent), Bank of India (-16.02 per cent),
Indian Bank (-17.08 per cent), Dena Bank (-17.14 per cent), State Bank of Mysore (-
17.93 per cent) and United Bank of India (-18.32 per cent). The least could be seen again
in the case of Andhra Bank (-27.76 per cent).
Thus from the analysis it can be concluded that the investments in approved
securities of the public sector banks is very less than by 5 per cent and even this has
experienced a decline during the study period.
241
5.5.6 ANOVA RESULTS OF APPROVED SECURITIES TO TOTAL ASSETS
terms of investment in approved securities to total assets. This hypothetical relationship
is being tested with the help of ANOVA.
TABLE: 5.44
TABLE SHOWING ANOVA RESULTS OF APPROVED SECURITIES TO
TOTAL ASSETS
Mean Square F Value
Between 153.79833 26 5.91532 6.85*
Within 209.97 243 0.864074
Total 363.77 269
* Indicates significant at 5 percent level
among the banks in terms of investment in approved securities to total assets.” The
calculated value is 6.85. The table value for 26 and 243 degrees of freedom and at 5 per
cent level of significance is 2.01. A comparison of the calculated value with that of the
table value indicates that the calculated value is greater than the table value and hence the
null hypothesis that “there is no significant difference among the banks in terms of
investment in approved securities to total assets” has been rejected.
among the banks during the study period in terms of investment in approved securities to
total assets.
5.5.7 LIQUID ASSETS TO DEMAND DEPOSITS

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. Liquid assets of banks forms the core
242
of any business unit and this is more so in the case of the banking unit as the extent of
ownership liquid assets determines the banks' ability to repay on demand.
As given in Table 5.45, during the year 1997, the ratio of liquid assets to demand
deposits stood highest with 221.50 per cent in the case of Bank of Baroda (221.50 per
cent). This is being followed by the other banks in their order: Indian Overseas Bank
(185.49 per cent), Punjab & Sind Bank (175.45 per cent), Allahabad Bank (172.57 per
cent), Dena Bank (169.96 per cent), Andhra Bank (153.55 per cent) and State Bank of
Travancore (150.77 per cent). State Bank of Indore (79.03 per cent) registers the least
liquid assets to demand deposits.
In the year 2007, the order has changed to with State Bank of Bikaner and Jaipur
(327.54 per cent) taking the top position. Punjab & Sind Bank (124.39 per cent), State
Bank of India (95.75 per cent) has shown the least share.
For the entire study period, the average level of liquid assets to demand deposits
stood highest in the case of Bank of Baroda (186.62 per cent), followed by State Bank of
Travancore (177.92 per cent), Punjab & Sind Bank (16631 per cent), Andhra Bank
(165.65 per cent), Oriental Bank of Commerce (161.62 per cent) and Bank of India
(159.99 per cent). State Bank of Hyderabad (88.20 per cent) recorded the least share.
The coefficient of variation is found to be the least in the case of United Bank of
India with 18.06 per cent. The order of the banks with the increasing variation include:
Corporation Bank (20.99 per cent), Indian Overseas Bank (21.85 per cent), Punjab &
Sind Bank (22.26 per cent), Allahabad Bank (22.58 per cent) and Canara Bank (23.77
per cent).It is highest in the case of State Bank of Patiala (52.22 per cent).
243
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244
The growth in the liquid deposits to total assets has recorded the highest in the
case of State Bank of Indore (10.35 per cent) followed by State Bank of Patiala (10.35
per cent), Indian Bank (10.00 per cent), Vijaya Bank (7.40 per cent), Punjab National
Bank (6.78 per cent) and Bank of India (6.74 per cent). While, Dena Bank (-0.29 per
cent), State Bank of Saurashtra (-1.72 per cent), Indian Overseas Bank (-2.02 per cent),
Bank of Baroda (-2.30 per cent), Corporation Bank (-2.68 per cent), Punjab & Sind Bank
(-5.47 per cent) and State Bank of India (-5.87 per cent) have shown a negative growth
rate.
Thus from the analysis it can be concluded that a the ratio of liquid assts to total
demand deposits is the highest in the case of Bank of Baroda, while in terms of growth
the highest has recorded in the case of State Bank of Indore.
5.5.8 ANOVA RESULTS OF LIQUID ASSETS TO DEMAND DEPOSITS

terms of liquid assets to demand deposits. This hypothetical relationship is being tested
TABLE: 5.46
TABLE SHOWING ANOVA RESULTS OF LIQUID ASSETS TO DEMAND
DEPOSITS
Sources of Sum of 1 Degrees of
Mean Square F Value
Variance Squares | Freedom
Between 141297.85 26 5434.533 0.02
Within 60691166.94 243 249757.9
60832464.79 |
Total 269
among the banks in terms of liquid assets to demand deposits. The calculated value is
245
hypothesis that “there is no significant difference among the banks in terms of liquid
assets to demand deposits” has been accepted.
among the banks during the study period in terms of liquid assets to demand deposits.
5.5.9 LIQUID ASSETS TO TOTAL DEPOSITS
The ratio of liquid assets to total assets indicates the share of liquid assets
holdings of the banks. Given that the liquid assets of the banks forms the total assets, a
higher share of liquid assets holding to total deposits indicates the higher opportunity cost
on the part of the banks. Hence, an understanding of the trends in the share of liquid
assets to total deposits becomes essential.
As it could be seen in Table 5.47, in the year 1998 the highest share of liquid
assets to total deposits of 26.55 per cent has been recorded by Bank of Baroda. This is
being followed by the banks like, State Bank of Saurashtra (26.16 per cent), State Bank
of India (24.90 per cent), State Bank of Patiala (24.10 per cent), Indian Overseas Bank
(23.68 per cent) and Corporation Bank (23.10 per cent). United Bank of India (11.01 per
cent) could show the least share.
The order of the banks in terms of the share of liquid assets to total deposits in the
year 2007 has changed slightly to have: State Bank of Bikaner and Jaipur (27.94 per
cent), Corporation Bank (22.22 per cent), Vijaya Bank (22.14 per cent), Bank of India
(20.25 per cent) and State Bank of Mysore (20.24 per cent) with the least value being
registered by Punjab & Sind Bank (13.71 percent).
246
TABLE 5.47: LIQUID ASSETS TO TOTAL DEPOSITS
O
OO
Allahabad Bank 16.26 14.86 12.27 12.32 9.76 7.89 8.25 13.55 14.65 12.39 23.25 -1.35 -1.34
i 14.84
Tf
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r-
2.97
zvz
Andhra Bank 17.20 15.98 12.33 9.20 7.94 11.22 19.36 15.88 14.95
KI
cr.
OO
Bank of Baroda 26.55 26.94 24.32 23.04 14.48 10.27 9.96 14.22 17.35 19.23 18.64 34.27 -6.74
9801
Bank of India 17.23 24.41 18.63 12.43 11.06 12.05 14.19 17.83 20.25 15.89 28.36 -1.61 -1.33
'Tj-
oo
6601
Bank of Maharashtra 16.70 16.67 12.37 11.44 21.23 20.08 15.04 15.69 15.51 21.92 1.47 1.37
roi
89 01
o
Canara Bank 20.29 19.50 15.72 22.30 19.52 13.93 13.54 17.22 17.64 17.03 20.98 -2.92
-0.61 |
d
00
SO
OO
OO
OO
Central Bank of India 13.84 14.67 13.19 13.56 9.09 19.97 11.50 16.37 24.63 -0.09
8111
OO
SO
0\'£Z
Corporation Bank 19.43 15.98 19.23 12.23 19.32 16.62 22.22 17.70 21.80 -1.39
in -
o<
m
Os
OO
Dena Bank 18.52 15.27 15.31 9.98 8.80 7.91 17.14 16.59 13.63 27.33 -0.67
|
9111 88 01 17.85
Indian Bank 11.52 8.39 6.24 10.54 10.33 12.77 17.20 11.69 30.47 6.16 5.55
d
<N
SO
Indian Overseas Bank 23.68 23.09 19.28 14.90 11.40 9.80 12.64 19.97 j 12.80 o 16.68 29.90 -3.86
!
60 01 6.32
Oriental Bank of Commerce 14.57 14.23 11.92 10.73 11.69 8.47 28.67 18.86 19.47 14.87 40.58 5.26
sd
OO
OO
16.43 15.62 14.73 12.34 11.56 11.19 ! 18.04 17.12 13.71 14.49 0.05
no-
Punjab & Sind Bank
Punjab National Bank 1801
sd
£001
OO
15.53 14.32 13.12 9.98 10.65 19.28 i 39.63 19.34 16.27 54.91 8.96
1011
247
O
o
Syndicate Bank 17.93 15.45 16.79 12.02 8.22 15.44 12.07 15.19 20.01 14.41 24.61 -0.19
1001
UCO Bank i 18.24 16.18 14.05 14.92 10.27 10.67 18.66 9.49 14.98 13.75 25.07 -2.92 -3.06
Union Bank of India 20.44 20.56 21.04 15.24 12.33 8.71 7.61 16.25 14.28 16.51 15.30 30.96 -5.14 -4.85
|
!
1011 OZ'Zl 4.21
United Bank of India 13.07 9.44 9.19 9.95 9.32 14.15 13.89 18.35 12.06 24.17 3.67
O
O
Vijaya Bank 16.64 16.11 14.61 11.45 11.27 9.42 5.32 10.79 17.86 22.14 13.56 35.75 -0.42
s
o
6
O
O
O
OO
Cs
(N
*sO
sd
r-
vn
(N
State Bank of India 24.90 31.48 23.95 15.26 13.67 14.90 18.03 20.81 28.12 -7.34'
1 -1.66
State Bank of Bikaner and Jaipur 21.33 21.19 25.08 23.33 16.95 12.85 11.94 13.92 18.56 27.94 19.31 27.98 -2.23
OO
6ZZI
State Bank of Hyderabad 21.82 13.42 9.44 13.68 11.69 15.19 , 15.34 17.69 13.93 27.81 -0.58 -0.18
190
m
OO
State Bank of Indore 14.55 17.80 14.66 8.82 7.50 7.61 12.63 19.03 17.44 12.79 35.69 1.02
!
69*91 PZ0Z
17.41
0P0Z r- 1901
o
OO
State Bank of Mysore 14.71 12.41 18.02 12.45 15.37 24.09 -1.21 -1.35
State Bank of Patiala 24.10 16.07 12.07 18.72 8.96 8.18 6.12 14.94 j 13.75 15.59 13.85 38.58 -5.12 -4.38
91*93
State Bank of Saurashtra 27.31 19.50 16.75 11.06 8.06 9.07 15.91 14.82 18.49 16.71 38.97 -7.27 -6.21
! 19.56
C+)
o
o
CN
OO
OO
State Bank of Travancore 18.71 16.47 14.80 7.13 20.07 9.86 16.27 15.11 33.69 -5.27 -5.62
The average level of liquid assets to total deposits stood highest with 2.
cent in the case of State Bank of India followed by State Bank of Bikaner and Jaipur
(19.31 per cent), Bank of Baroda (18.64 per cent), Corporation Bank (17.70 per cent) and
Canara Bank (17.03 per cent). Indian Bank (11.69 per cent) registered the least share.
The coefficient of variation worked out indicates that Punjab & Sind Bank (16.18
per cent) has recorded the lowest volatility in the share of liquid assets to total deposits
while it is highest in the case of Punjab National Bank (54.91 per cent).
In terms of linear growth rate, the order of the banks goes as: Punjab National
Bank (8.96 per cent), Oriental Bank of Commerce (6.32 per cent), Indian Bank (6.16 per
cent), United Bank of India (4.21 per cent) and Andhra Bank (2.97 per cent).
Central Bank of India (-0.09 per cent), Dena Bank (-0.53 per cent), State Bank of
Hyderabad (-0.58 per cent), State Bank of Mysore (-1.21 per cent), Corporation Bank (-
1.31 per cent), Allahabad Bank (-1.35 per cent),Bank of India (-1.61 per cent), State Bank
of Bikaner and Jaipur (-1.66 per cent), UCO Bank (-2.92 per cent), Canara Bank (-3.01
per cent), Indian Overseas Bank (-4.26 per cent). State Bank of Patiala (-5.12 per cent),
Union Bank of India (-5.14 per cent), State Bank of Travancore (-5.27 per cent), State
Bank of Saurashtra (-7.27 per cent), State Bank of India (-7.34 per cent), Bank of Baroda
(-7.38 per cent).
From the above analysis it could also be inferred that a majority of the banks have
recorded the negative growth rate indicating the declining share of liquid assets to total
assets. This implies that the banks could utilize at the increasing rate the share of liquid
assets to total deposits.
Thus from the analysis it can be concluded that in the case of Liquid assets to Total
Deposits , SB I has recorded the highest share , while in terms of growth rate Central
Bank of India has recorded the least decline.
248
5.5.10 ANOVA RESULTS OF LIQUID ASSETS TO TOTAL DEPOSITS
terms of liquid assets to total deposits. This hypothetical relationship is being tested with
the help of ANOVA.
TABLE: 5.48
TABLE SHOWING ANOVA RESULTS OF LIQUID ASSETS TO TOTAL
DEPOSITS
Mean Square F Value
Between 1261.72 26 48.52783 1.86
Within 6352.57 243 26.14226
Total 7614.29 269
among the banks in terms of liquid assets to total deposits". The calculated value is 1.86.
the calculated value is less than the table value and hence the null hypothesis that 'ihere
is no significant difference among the banks in terms of liquid assets to total deposits”
has been accepted.
among the banks during the study period in terms of liquid assets to total deposits.
5.6.0 COMPOSITE RANK INDEX OF CAMEL MODEL
The earlier discussion provided a detailed idea on the bank wise performance of
the public sector banks during the study period measured in terms of certain crucial
financial indicators identified. It could be understood from the analysis that each public
249
sector bank is strong in terms of certain financial indicators while theory is weak in
certain other financial indicators. Hence, the overall performance of the banks has
become inconclusive. To overcome this problem and to understand the relative strengths
of the banks in terms of five broad indicators chosen, the method of composite rank index
has been used. This method is useful in identifying the order of the banks, on the basis of
ranking, in terms of the indicators and the statistical measures chosen to analysis them.
In the present project, the performance of the banks was in terms of the average value of
the variable, the volatility in the growth and the growth of the variable. While the
volatility is measured in terms of coefficient of variation, the growth performance was
measured in terms of linear and compound growth rates.
5.6.1 COMPOSITE RANK INDEX FOR CAPITAL ADEQUACY
As it could be seen in Table 5.49, in the case of capital adequacy, Corporation
bank has recorded the first place. The second best performance was made by Punjab
National Bank. The order of the other banks in terms of the declining performance can
be given as Andhra Bank, Canara Bank, Bank of Baroda, SB of Patiala, SB of Indore,
Indian Overseas Bank, Oriental Bank of Commerce, Union Bank of India, Allahabad
Bank, SB of Bikaner & Jaipur, SB of Mysore, Syndicate Bank, United Bank of India,
Bank of Maharashtra, Vijaya Bank, Bank of India, UCO Bank, Indian Bank, SB of
Hyderabad, Punjab & Sind Bank, SBI, Central Bank of India, SB of Saurashtra, SB of
Travancore, and Dena Bank.
250
5.6.2 COMPOSITE RANK INDEX FOR ASSET QUALITY
In the case of asset quality maintenances, Indian Bank recorded the highest. This
is being followed by Vijaya Bank, SB of Hyderabad, SB of Patiala, SB of Saurashtra,
Canara Bank, SB of Indore, SB of Travancore, Andhra Bank, United Bank of India,
Indian Overseas Bank, Punjab National Bank, Allahabad Bank, SB of Bikaner & Jaipur,
Syndicate Bank, Oriental Bank of Commerce, UCO Bank, SB of Mysore, Bank of India,
Bank of Maharashtra, Union Bank of India, SBI, Central Bank of India, Corporation
Bank, Bank of Baroda, Punjab & Sind Bank and Dena. Bank.
5.6.3 COMPOSITE RANK INDEX FOR MANAGEMENT EFFICIENCY
In terms of management efficiency the order of the banks is: Corporation Bank,
SB of Patiala, Canara Bank, Oriental Bank of Commerce, SB of Indore, SB of
Travancore, Union Bank of India, Andhra Bank, Bank of Baroda, SB of Hyderabad,
Punjab National Bank, Bank of India. Indian Overseas Bank, SBI, Syndicate Bank, SB of
Mysore, Vijaya Bank, Allahabad Bank, SB of Bikaner & Jaipur, UCO Bank, Dena Bank,
Indian Bank, SB of Saurashtra, United Bank of India, Bank of Maharashtra, Central Bank
of India and Punjab & Sind Bank.
5.6.4 COMPOSITE RANK INDEX FOR EARNINGS QUALITY
The order of the banks in terms of earnings quality can be given as: Punjab
National Bank, SB of Bikaner & Jaipur, Corporation Bank, SB of Mysore, Indian
Overseas Bank, SBI, Oriental Bank of Commerce, SB of Indore, SB of Travancore,
Allahabad Bank, Central Bank of India, Vijaya Bank, Andhra Bank, Union Bank of
India, Syndicate Bank, Bank of Baroda, Canara Bank, SB of Patiala, Bank of India, Bank
251
of Maharashtra, SB of Saurashtra, Indian Bank, UCO Bank, Dena Bank, SB of
Hyderabad, United Bank of India and Punjab & Sind Bank.
5.6.5 COMPOSITE RANK INDEX FOR LIQUIDTY
As it could be seen in the table, in the case of composite index on liquidity,
Punjab & Sind Bank has taken up the first rank and this is being followed by the other
banks like, Indian Bank, SB of Mysore, Canara Bank, Bank of India, United Bank of
India, Bank of Maharashtra, Central Bank of India, Punjab National Bank, Bank of
Baroda, Oriental Bank of Commerce, UCO Bank, SB of Bikaner & Jaipur, Indian
Overseas Bank, SBI, Dena Bank, Allahabad Bank, Corporation Bank, Syndicate Bank,
Andhra Bank, SB of Hyderabad, Union Bank of India, Vijaya Bank, SB of Travancore,
SB of Saurashtra, SB of Patiala and SB of Indore
5.7 COMPOSITE RANK INDEX FOR CAMEL MODEL
In the case of the composite rank index on capital adequacy management
efficiency Corporation bank has recorded the first place, while in the case of asset quality
maintenance Indian Bank recorded the highest. In terms of earnings quality Punjab
National Bank could record the best performance. In the case of liquidity Punjab & Sind
Bank could register the best performance.
The overall ranking provided in Table 5.54 indicates that in terms of all these five
indicators, the performance of Canara bank could show the best performance. The order
of the other banks in terms of the overall performance, Punjab National Bank,
Corporation Bank, Oriental Bank of Commerce, SB of Mysore, Indian Overseas Bank,
SB of Bikaner & Jaipur, Andhra Bank, SB of Patiala, Bank of Baroda, Vijaya Bank,
Allahabad Bank, Indian Bank, SB of Indore, Bank of India, SB of Travancore, SBI,
252
Union Bank of India, Syndicate Bank, SB of Hyderabad, Bank of Maharashtra, Central
Bank of India, United Bank of India, UCO Bank, SB of Saurashtra, Punjab & Sind Bank
and Dena Bank.
5.8 CONCLUSION
In the present chapter it was attempted to examine the performance of the public
sector banks measured in terms of certain financial indicators. Based on the literature, the
CAMEL model was adopted. Relevant tools and techniques were used to examine the
performance. The analysis of the data has revealed that different banks performed better
in terms of different indicators, however, the overall performance was found to be the
best in the case of Canara Bank.
253
TABLE: 5.49
TABLE SHOWING COMPOSITE RANK INDEX FOR CAPITAL ADEQUACY
Advances Government Composite

Capital Debt
Securities To Rank Sum Rank
Name of Bank Adequacy Equity To
Total Total
Ratio Ratio Assets Index
Investments
Allahabad Bank 55 38 39 28 160 11
Andhra Bank 37 25 43 38 143 3
Bank of Baroda 31 44 41 32 148 5
Bank of India 47 66 28 32 173 18
Bank of Maharashtra 37 45 54 33 169 16
Canara Bank 39 40 31 34 144 4
Central Bank of India 54 46 57 36 193 24
Corporation Bank 47 25 30 36 138 1
Dena Bank 73 57 45 37 212 27
Indian Bank 54 29 59 39 181 20
Indian Overseas Bank 44 36 41 38 159 8
Oriental Bank of Commerce 54 28 37 40 159 9
Punjab & Sind Bank 48 45 51 41 185 22
Punjab National Bank 39 28 34 39 140 2
Syndicate Bank 40 52 33 43 168 14
UCO Bank 46 36 47 44 173 19
Union Bank of India 31 52 30 46 159 10
United Bank of India 36 32 55 45 168 15
Vijaya Bank 36 41 44 50 171 17
SBI 36 45 55 49 185 23
SB of Bikaner & Jaipur 27 42 49 46 164 12
SB of Hyderabad 37 39 59 49 184 21
SB of Indore 38 39 34 47 158 7
SB of Mysore 35 49 30 51 165 13
SB of Patiala 21 46 29 53 149 6
SB of Saurashtra 48 45 45 55 193 25
SB of Travancore 44 64 34 53 195 26
254
TABLE: 5.50
TABLE SHOWING COMPOSITE RANK INDEX FOR ASSET QUALITY
Gross Rank Composite

Net NPA Total
NPA to Sum Rank
Name of Bank TO Net Investment to
Gross
Advances Total Assets Total Index
Advances
Allahabad Bank 46 42 40 128 13
Andhra Bank 28 22 60 110 9
Bank of Baroda 57 52 52 161 25
Bank of India 50 64 34 148 19
Bank of Maharashtra 56 52 41 149 20
Canara Bank 12 38 47 97 6
Central Bank of India /1
HA
66 22 159 23
Corporation Bank 52 52 56 160 24
Dena Bank 65 74 28 167 27
Indian Bank 29 28 12 69 1
Indian Overseas Bank 46 43 37 126 11
Oriental Bank of Commerce 57 20 60 137 16
Punjab & Sind Bank 74 76 16 166 26
Punjab National Bank 61 19 47 127 12
Syndicate Bank 44 49 43 136 15
UCO Bank 31 55 51 137 17
Union Bank of India 55 56 44 155 21
United Bank of India 33 51 28 112 10
Vijaya Bank 24 20 28 72 2
SB1 47 64 47 158 22
SB1 of Bikaner & Jaipur 34 43 53 130 14
SB of Hyderabad 24 14 37 75 3
SB of Indore 21 16 65 102 7
SB of Mysore 46 43 48 137 18
SB of Patiala 24 14 47 85 4
SB of Saurashtra 18 30 43 91 5
SB of Travancore 29 31 48 108 8
255
TABLE: 5.51
TABLE SHOWING COMPOSITE RANK INDEX FOR MANAGEMENT
EFFICI]ENCY
Total
Profit Business Rank
Advances Profits per Composite
Name of Bank per Per Sum
to Total Employee Rank Index
Branch Employee Total
Deposits
Allahabad Bank 47 48 39 45 179 18
Andhra Bank 32 47 27 38 144 8
Bank of Baroda 37 42 29 37 145 9
Bank of India 47 25 51 35 158 12
Bank of Maharashtra 60 56 59 40 215 25
Canara Bank 29 33 31 32 125 3
Central Bank of India 59 55 58 55 227 26
Corporation Bank 28 29 29 29 115 1
Dena Bank 60 41 65 36 202 21
Indian Bank 55 51 47 51 204 22
Oriental Bank of Commerce 28 45 27 27 127 4
Punjab & Sind Bank 76 54 66 48 244 27
Punjab National Bank 34 36 38 45 153 11
Syndicate Bank 39 39 41 44 163 15
UCO Bank 49 48 53 45 195 20
Union Bank of India 40 35 34 31 140 7
United Bank of India 48 55 49 55 207 24
Vijaya Bank 44 49 42 40 175 17
SBI 28 49 40 44 161 14
SB of Bikaner & Jaipur 42 39 37 61 179 19
SB of Hyderabad 30 50 32 39 151 10
SB of Indore 34 31 32 40 137 5
SB of Mysore 41 28 42 56 167 16
SB of Patiala 27 30 32 31 120 2
SB of Saurashtra 57 39 61 49 206 23
256
TABLE: 5.52
£
z
o
u
S
oa*
cn
r™1
Uh
W
-J
◄
«
O
O
H
fE RANK INDEX FOR EARN INGS QUALITY
O perational Percentage Spread Profit Net Profit Interest Non Interest Interest Rank Composite
Profit To O f Growth To Total To To Income Income To Expenses Sum Rank
W orking In Net Assets Spread Average | To Total Total To Total Total Index
| Name of Bank I Fund Profit Assets Income Income Expenses
I
co
SO
CO
Allahabad Bank 47 36 42 43 38 40 ' 313
Andhra Bank 34 44 37 24 27 57 47 50 320
O
Tf
Bank o f Baroda 47 38 36 43 45 332
|
o ro NO Cs
Bank o f India 44 39 42 43 50 49 44 37 348

j | ! |
Os
Bank o f Maharashtra 48 26 52 55 30 39 53 352 20
ro
r*-
r-
Canara Bank 38 44 34 42 55 46 336
o Cs
-
V>
Central Bank of India 50 34 26 53 52 35 314
|
ro
Corporation Bank 29 44 37 25 25 35 37 55 287

09
|
ro
SO
Dena Bank 43 32 65 57 38 394 24
Indian Bank 54 32 55 33 65 34 383 22
P€
rf ro
V> v> ro
Vi
Vi r~-
257
r-
Oriental Bank o f Commerce 32 43 45 26 30 32 307
oo
(N r-i
*n ro
Punjab & Sind Bank 52 48 70 75 33 46 437 27
Vi
<N
fO
r-
ro
ro
Punjab National Bank 39 50 27 28 262
89
V)
- Vi
Syndicate Bank 38 39 39 40 34 330

UCO Bank 53 j 44 48 50 53 26 70 44 388 23
t}-
ro
ro
ro
Union Bank of India 46 42 38 38 44 50 322
v>
United Bank o f India 55 38 79 49 77 33 38 420 26
Vijaya Bank 42 30 27 44 44 33 65 32 317
<N
SBI 45 49 46 28 35 36 42 302
co
CO
(N SO <N
SB of Bikaner & Jaipur 33 48 23 50 22 34 272

09
Vi
Vi
SB of Hyderabad 35 72 33 79 29 404 25
•^T
co
co
OO
SB of Indore 42 50 26 32 53 36
99
TT
CO
SB o f Mysore 36 32 36 32 37 293
V)
OO
SB of Patiala 30 57 28 30 56 37 50 339
Tf
SB of Saurashtra 37 40 46 58 65 44 47 378
Os
Vi
ro
CO
TABLE: 5.53
TABLE SHOWING COMPOSITE RANK INDEX FOR LIQUIDTY
Govt Liquid Approved Liquid Liquid Comp

Rank
Securities Assets To Securities Assets To Assets To osite
Name of Bank Sum
To Total Total To Total Demand Total Rank
Assets Assets Assets Deposits Deposits Total
Index
Allahabad Bank 45 47 39 37 46 214 17
Andhra Bank 55 38 71 33 40 237 20

Bank of Baroda 55 47 10 33 50 195 10
Bank of India 39 38 25 28 41 171 5
Bank of Maharashtra 41 19 66 39 20 185 7
Canara Bank 38 27 50 26 27 168 4
Corporation Bank 52 28 71 47 22 220 18
Dena Bank 45 45 28 50 45 213 16
Indian Bank 17 51 12 33 47 160 2
Indian Overseas Bank 41 42 48 33 44 208 14
Oriental Bank of Commerce 42 43 32 35 43 195 11
Punjab & Sind Bank 38 29 3 33 26 129 1
Punjab National Bank 46 35 28 44 36 189 9
Syndicate Bank 40 36 65 45 35 221 19
UCO Bank 38 47 30 40 49 204 12
United Bank of India 30 45 25 40 37 177 6
Vijaya Bank 43 48 58 53 54 256 23
SBI 46 32 34 57 41 210 15
SB of Hyderabad 38 48 55 54 43 238 21
SB of Indore 55 57 73 51 53 289 27
SB of Mysore 37 38 20 37 31 163 3
SB of Patiala 43 64 47 53 65 272 26
SB of Saurashtra 38 55 61 53 56 263 25
SB of Travancore 40 60 66 35 56 257 24
258
TABLE: 5.54
TABLE SHOWING COMPOSITE RANK INDEX FOR CAMEL MODEL
Rank Composite
Capital Asset Management Earnings
Name of Bank Liquidity Sum Rank
Adequacy Quality Efficiency Quality
Total Index
Allahabad Bank 160 128 179 313 214 994 12
Andhra Bank 143 110 144 320 237 954 8
Bank of Baroda 148 161 145 332 195 981 10
Bank of India 173 148 158 348 171 998 15
Bank of Maharashtra 169 149 215 352 185 1070 21
Canara Bank 144 97 125 336 168 870 1
Corporation Bank 138 160 115 287 220 920 3
Dena Bank 212 167 202 394 213 1188 27
Indian Bank 181 69 204 383 160 997 13
Indian Overseas Bank 159 126 158 300 208 951 6
Oriental Bank of Commerce 159 137 127 307 195 925 4
Punjab & Sind Bank 185 166 244 437 129 1161 26
Punjab National Bank 140 127 153 262 189 871 2
Syndicate Bank 168 136 163 330 221 1018 19
UCO Bank 173 137 195 388 204 1097 24
United Bank of India 168 112 207 420 177 1084 23
Vijaya Bank 171 72 175 317 256 991 11
SBI 185 158 161 302 210 1016 17

SB of Hyderabad 184 75 151 404 238 1052 20
SB of Indore 158 102 137 311 289 997 14
SB of Mysore 165 137 167 293 163 925 5
SB of Patiala 149 85 120 339 272 965 9
SB of Saurashtra 193 91 206 378 263 1131 25
SB of Travancore 195 108 139 311 257 1010 16
259

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CHAPTER V

AN ANALYSIS OF TRENDS IN FINANCIAL PERFORMANCE OF

independence. Nationalization of commercial banks has given an impetus to the growth

Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI)

paves the way for a speedy recovery of NPAs.

In nutshell, as indicated above, the measures taken by RBI and Government of

through efficiency, autonomy in decision making and innovation introduced in the

attempted to discuss the answers to these questions by examining the financial

5.1 CAPITAL ADEQUACY

indicators of bank leverage.

5.1.1 CAPITAL ADEQUACY RATIO

should have CAR of 9 per cent.

SO „ O' in * O' * fN •n oo <r sO n oc

Source: RBI Report, Trends and Progress of Banking, Various Issues. NA

IT, m fN 00 00 in m mmm Tf o sO 00 o sD O' so fN, in o 00 __ m in

CM —_ r..n 00 sC rn fN 00 rM O' r- sC o O' 00 fN 'Cf . rn m O' O' m sO m sO

in CM •n fN *n O O (N in o -Cf m <N m rr _ r- SO o 00 _ O' fN r- oo ©

o o o m nf nr rM o m fN •d* fN in SO O O O' O' 00 m sO r- O' O'

©1 — sO O r~ so nr 00 o »n rM r- . in «n fN o pmm O' in so sO © o 00 O'

O' 00 CM o m sC sC 00 O «n O O' r- m O' o o sO in «n m r- in r-

5.1.2 ANOVA RESULTS OF CAPITAL ADEQUACY RATIO

has been rejected.

terms if capital adequacy ratio during the study period.

5.1.3 DEBT EQUITY RATIO

declining trend in the debt equity ratio is desirable.

in the case of Indian Overseas Bank (29.34 per cent).

9.76 25.86 28.01 25.01 36.80 14.11 23.49 34.66 0.48

Central Bank of India (28.68 per cent).

Travancore (3.74 Per cent)

UCO Bank (16.93 Per cent).

taken the lead.

5.1.4 ANOVA RESULTS OF DEBT EQUITY RATIO

tested with the help of Analysis of variance.

terms of debt equity ratio during the study period.

5.1.5 ADVANCES TO ASSETS

aggressiveness in lending which ultimately results in better profitability. A higher ratio is

movement of this crucial indicator.

was recorded by United Bank of India (23.43 Per cent),

the least in the case Indian Bank (51.75 Per cent).

of Banking, Various Issues

Source: RBI Report, Trends and Progress

CM o IN c- 00 m OO NO »n m nf OO 00 m nr c- 0 ON NO O' O' nr 00 NO NO NO r- O'

The coefficient of variation is determinants of volatility in the ratio indicate that

taking the highest coefficient of variation.

recorded the least growth.

Bank of India recorded the highest.

5.1.6 ANOVA RESULTS OF ADVANCES TO ASSETS

tested with the help of Analysis of variance.

Total 27647.51 269

period” has been accepted.

in terms of advances to assets ratio during the study period.

5.1.7 GOVERNMENT SECURITIES TO TOTAL INVESTMENTS

securities. An understanding of the trends in the movement of the ratio of government

securities to total investment becomes pertinent.

In the case of the ratio on the investment in government securities to total

Commerce (49.77 per cent).

Bank of Travancore (61.25 per cent).

Thus the average share of investment in government securities to total investment

averters than risk takers.

oo 00 00 VO r-~ O'. VO c- VO r- VO »n ■rt CM CM re SO we rf C- vO CM d c-

of Banking, Various Issues.

V© CM Os VO r- so CM VO CM rc oo Cs CM o C" tn •rf r- X SO VO O' Cs O ©

iTt we ef Tt Cs so so c- 1C; re re VO o Cs o 00 oo CM ’^r CM Tf CM CM re CM ©

Source: RBI Report, Trends and Progress

fOro r- r- NO n Cs CN Tf NO CO 40 40 r- r- CN CN o- CN CN Cs r- r- OO