CHAPTER-5-SUMMARY, FINDINGS AND SUGGESTION

CHAPTER -5

SUMMARY, FINDINGS AND SUGGESTION

5.1. INTRODUCTION

5.2. SUMMARY OF FINDINGS

5.2.1 RATIO COVERED UNDER STUDY WITH AVERAGE VALUE

5.2.2 RATIO COVERED UNDER STUDY WITH T-CAL

5.2.3 RATIO COVERED UNDER STUDY WITH HYPOTHESIS

TESTING

5.3 FINDINGS

5.4 SUGGESTIONS

5.5 LIMITATAIONS

5.6 CONCLUSION

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5.1 INTRODUCTION

In this chapter researcher has attempted to take out generalization and also
summarized findings of the study with financial and statistical conclusion try to
suggest for the improvement of banks under the study based on the study. Here 17
ratios are covered in reference with CAMEL model parameter for five public sector
and five private sector banks. The average value of each ratio for the period of six
years is considered as the base for hypothesis testing with t-test statistical analysis
with comparative and analytical approach
5.2 SUMMARY
Here the summary of collected, computed and compiled data with statistical
value and conclusion are presented in the respective table.
TABLE 5.2.1 RATIO COVERED UNDER STUDY WITH AVERAGE
VALUE
No. Ratio Public Private
banks banks
1. Capital risk adequacy ratio 12.86 16.76
2. Debt equity ratio 0.9820 1.5440
3. Total advance to total asset ratio 0.06120 0.5572
4. Government securities to total investments ratio 0.5033 0.6794
5. Gross NPA ratio 2.6660 1.8687
6. Net NPA ratio 1.2298 0.6960
7. Total Advances to Total Deposit ratio 0.072 0.8300
8. Business per employee 92.008 93.150
9. Dividend pay-out ratio 0.5660 1.0540
10. Return on asset ratio 0.9430 1.5260
11. Interest income to total income ratio 0.8780 0.8280
12. Other income to total income ratio 0.1220 0.1800
13. Liquid Asset to Total Deposit ratio 0.0940 0.0740
14. Government securities to total asset ratio 0.1300 0.2140
15. Approved securities to total asset ratio 0.00034 0.0000
16. Liquid asset to demand deposit ratio 1.47 0.7720
17. Liquid asset to total deposit ratio 0.1140 0.1118

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TABLE 5.2.2

SUMMARY OF RATIO COVERED UNDER STUDY WITH T-CAL

No. Ratio t-calculated t-table at

5% d.f 8
1. Capital risk adequacy ratio 4.8205 2.31
2. Debt equity ratio 1.7885 2.31
3. Total advance to total asset ratio 74.8770 2.31
4. Government securities to total investments ratio 0.8675 2.31
5. Gross NPA ratio 0.6238 2.31
6. Net NPA ratio 1.5044 2.31
7. Total Advances to Total Deposit ratio 13.7162 2.31
8. Business per employee 0.0541 2.31
9. Dividend pay-out ratio 2.4047 2.31
10. Return on asset ratio 4.3406 2.31
11. Interest income to total income ratio 2.1969 2.31
12. Other income to total income ratio 3.3826 2.31
13. Liquid Asset to Total Deposit ratio 16784 2.31
14. Government securities to total asset ratio 1.5482 2.31
15. Approved securities to total asset ratio 3.3024 2.31
16. Liquid asset to demand deposit ratio 2.4324 2.31
17. Liquid asset to total deposit ratio 0.1332 2.31

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TABLE 5.2.3
SUMMARY OF HYPOTHESIS TESTING

No. Hypothesis T-Test Conclusion

Value
1. Null Hypothesis (Ho):- 4.8205 t-cal is more than tabular
There is no significant difference value 2.31. Null hypothesis
among Capital Risk Adequacy rejected and it can be
Ratio of selected public and concluded that there is
private sector banks. significant difference
Alternative Hypothesis (Ha):- among Capital Risk
There is significant difference Adequacy Ratio of selected
among Capital Risk Adequacy public and private sector
Ratio of selected public and banks.
private sector banks.
2. Null Hypothesis (Ho):- 1.7885 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Debt Equity Ratio of accepted and it can be
selected public and private sector concluded that there is no
banks. significant difference
Alternative Hypothesis (Ha):- among Debt Equity Ratio of
There is significant difference selected public and private
among Debt Equity Ratio of sector banks.
selected public and private sector
banks.
3. Null Hypothesis (Ho):- 74.8770 T-cal is more than tabular
There is no significant difference value 2.31. Null hypothesis
among Total Advance to Total rejected and cab be
Asset Ratio of selected public and concluded that there is
private sector banks. significant difference
Alternative Hypothesis (Ha):- among Debt Equity Ratio of
There is significant difference selected public and private
among Total Advance to Total sector banks.
Asset Ratio of selected public and
private sector banks.

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No. Hypothesis T-Test Conclusion

Value
4. Null Hypothesis (Ho):- 0.8675 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Government Securities to accepted and can be
Total Investment Ratio of concluded that there is no
selected public and private sector significant difference
banks. among Government
Alternative Hypothesis (Ha):- Securities to Total
There is significant difference Investment Ratio of selected
among Government Securities to public and private sector
Total Investment Ratio of banks.
selected public and private sector
banks.
5. Null Hypothesis (Ho):- 0.6238 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Gross NPA Ratio of accepted and can be
selected public and private sector concluded that there is no
banks. significant difference
Alternative Hypothesis (Ha):- among Gross NPA Ratio of
There is significant difference selected public and private
among Gross NPA Ratio of sector banks.
selected public and private sector
banks.
6. Null Hypothesis (Ho):- 1.5044 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Net NPA Ratio of selected accepted and can be
public and private sector banks. concluded that there is no
Alternative Hypothesis (Ha):- significant difference
There is significant difference among Net NPA ratio of
among Net NPA Ratio of selected selected public and private
public and private sector banks. sector banks.

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No. Hypothesis T-Test Conclusion

Value

7. Null Hypothesis (Ho):- 13.7162 T-cal is more than tabular

There is no significant difference value 2.31. Null hypothesis
among Total Advances to Total rejected and can be
Deposits Ratio of selected public concluded that there is
and private sector banks. significant difference
Alternative Hypothesis (Ha):- among Total Advances to
There is significant difference Total Deposits Ratio of
among Total Advances to Total selected public and private
Deposits Ratio of selected public sector banks.
and private sector banks.
8. Null Hypothesis (Ho):- 0.0541 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Business Per Employee accepted and can be
Ratio of selected public and concluded that there is no
private sector banks. significant difference
Alternative Hypothesis (Ha):- among Business Per
There is significant difference Employee Ratio of selected
among Business Per Employee public and private sector
Ratio of selected public and banks
private sector banks.
9. Null Hypothesis (Ho):- 2.4047 T-cal is more than tabular
There is no significant difference value 2.31. Null hypothesis
among Dividend Pay-out Ratio of rejected and can be
selected public and private sector concluded that there is
banks. significant difference
Alternative Hypothesis (Ha):- among Dividend Pay-out
There is significant difference Ratio of selected public and
among Dividend Pay-out Ratio of private sector banks
selected public and private sector
banks.

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No. Hypothesis T-Test Conclusion

Value
10. Null Hypothesis (Ho):- 4.3406 T-cal is more than tabular
There is no significant difference value 2.31. Null hypothesis
among Return on Assets Ratio of rejected and can be
selected public and private sector concluded that there is
banks. significant difference
Alternative Hypothesis (Ha):- among Return on Assets
There is significant difference Ratio of selected and
among Return on Assets Ratio of private sector banks.
selected public and private sector
banks.
11. Null Hypothesis (Ho):- 2.1969 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Interest Income to Total accepted and can be
Income Ratio of selected public concluded that there is no
and private sector banks. significant difference
Alternative Hypothesis (Ha):- among Interest Income to
There is significant difference Total Income Ratio of
among Interest Income to Total selected public and private
Income Ratio of selected public sector banks
and private sector banks.
12. Null Hypothesis (Ho):- 3.3826 T-cal is more than tabular
There is no significant difference value 2.31. Null hypothesis
among Other Income to Total rejected and can be
Income Ratio of selected public concluded that there is
and private sector banks. significant difference
Alternative Hypothesis (Ha):- among Other Income to
There is significant difference Total Income Ratio of
among Other Income to Total selected public and private
Income Ratio of selected public sector banks.
and private sector banks.

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No. Hypothesis T-Test Conclusion

Value
13. Null Hypothesis (Ho):- 1.6784 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Liquid Assets to Total accepted and can be
Assets Ratio of selected public concluded that there is no
and private sector banks. significant difference
Alternative Hypothesis (Ha):- among Liquid Assets to
There is significant difference Total Assets Ratio of
among Liquid Assets to Total selected public and private
Assets Ratio of selected public sector banks
and private sector banks.
14. Null Hypothesis (Ho):- 1.5482 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Government Securities to accepted and can be
Total Assets Ratio of selected concluded that There is no
public and private sector banks. significant difference
Alternative Hypothesis (Ha):- among Government
There is significant difference Securities to Total Assets
among Government Securities to Ratio of selected public and
Total Assets Ratio of selected private sector banks.
public and private sector banks.
15. Null Hypothesis (Ho):- 3.3024 T-cal is more than tabular
There is no significant difference value 2.31. Null hypothesis
among Approved Securities to rejected and can be
Total Assets Ratio of selected concluded that there is
public and private sector banks. significant difference
Alternative Hypothesis (Ha):- among Approved Securities
There is significant difference to Total Assets Ratio of
among Approved Securities to selected public and private
Total Assets Ratio of selected sector banks.
public and private sector banks.

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No. Hypothesis T-Test Conclusion

Value
16. Null Hypothesis (Ho):- 2.4324 T-cal is more than tabular
There is no significant difference value 2.31. Null hypothesis
among Liquid Assets to Demand rejected and can be
Deposits Ratio of selected public concluded that there is
and private sector banks. significant difference
Alternative Hypothesis (Ha):- among Liquid Assets to
There is significant difference Demand Deposits Ratio of
among Liquid Assets to Demand selected public and private
Deposits Ratio of selected public sector banks.
and private sector banks.
17. Null Hypothesis (Ho):- 0.1332 T-cal is less than tabular
There is no significant difference value 2.31. Null hypothesis
among Liquid Assets to Total accepted and can be
Deposits Ratio of selected public concluded that there is no
and private sector banks. significant difference
Alternative Hypothesis (Ha):- among Liquid Assets to
There is significant difference Total Deposits Ratio of
among Liquid Assets to Total selected public and private
Deposits Ratio of selected public sector banks
and private sector banks.

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5.3 FINDINGS

Based on data interpretation and available statistical information as presented in

summarised table here researcher has made an attempt to make out findings related
to study period.

As prescribed by RBI capital risk adequacy ratio is to be maintained at 9%

level ,here during the study period both type of banks have kept CRAR at
higher point than prescribed one so in this way they can be considered secured
against bankruptcy
Debt equity ratio of private banks is higher than pubic banks during the study
but it has also declining trend in the both sector.
Total advances to total asset ratio states the effective utilization of asset for
profitable advances .here private sector banks ahead showing higher potential
of profitability while public banks are found behind them in increasing
advances.
Government securities are an important portion of total investment. This ratio
as shown slightly decline or has not shown noticeable change in the study
period
Nonperforming asset is an illustrative tool for asset quality of any bank. Gross
NPA ratio of public banks has decreased over the study period which indicates
that they have made advances effectively as well as efficiently recovered
them. On the other hand private bank has shown fluctuating trend of GNPA
during study.
Net NPA ratio of Public banks is found nearly double than of private banks
during study period it might be due to their insufficient steps to recover
advances.
Business per employee ratio reflects management soundness and optimum
utilization of human work force which is found better in private banks .it is
also the indicator of job evaluation which is required for success.
The share of profit as indicated by Dividend payout ratio is found higher in
private banks than public banks reflecting their favor in investors and
providing attracting return they might increase market share also.

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In Private banks return on asset ratio is found higher against public banks and
on this ground their DPR also better but it has shown downward trend during
the study period’
In bank interest income and other income (fee based income) are most
common but as interest is primer and it is found in higher proportion while
other income is having higher proportion in public banks.
Liquidity position is the last but not least aspect of CAMEL model .here liquid
asset ratio is found lower down over the study period not only in public banks
but also in private banks.
As government securities are highly liquid and safe asset this portion is better
in private banks in the same context the ratio of approved securities is seems
to be null or negligible in both type of banks.
Liquidity position against the deposit portion does not show any alarming
signs here it is with higher rate in public banks than of private banks.

5.4 SUGGESTIONS

Based on findings and other available information the following suggestion

might be helpful to the respective of the study period.

During the study period public banks are lagging behind in CRAR in
comparison to private banks so they should keep an eye on their capital
structure to improve it.
Private Banks should be careful in issue of debt capital as it creates lesser
security to stakeholders so they should keep watch in the involvement of debt
capital.
Private Banks needs to be aware about the danger of NPA and be conscious in
increasing their advances only in search of higher profitability.
The NPA might affect the reputation and performance of banks, here it is
suggested to type of banks to be watchful to avoid risk NPA which may leads
to heavy loss.
Net NPA of public banks found at alarming level and so they must not delay
in making up effective policies and efficient remedies to perform as per the
expectation of depositors.

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Public banks should try to frame attractive deposit scheme and then to have
better conversion ratio into profitable advances.
Public banks are suggested to have adequate and efficient work force to
provide satisfactory services which could bring more business and would be
reflected in increased business per employee ratio.
To catch up with private banks, public banks should try to offer attractive and
handsome return to the investors.
As interest income is the most important and chief income of earning in banks
so private banks should also focus in this aspect also.
Maintaining liquidity is considered as ability to have trust, so both type of
banks should give due concern to improve their liquidity position as it has
declined in the study period.
Government securities as well as approved securities are safe, secure and
highly liquid so both type banks are suggested to have sufficient volume of
these kinds of securities for healthy liquid status.

5.5 LIMITATAIONS

As for any research work some there are always some constrains like time
duration, availability of resources, tools and techniques, chances of human error and
so on.

The Indian banking sector has been kept on changing in accordance

globalization since only six years as taken here for study might not be
sufficient and adequate for measuring and evaluating the financial
performance of the banks under study.
As there are various types of banks classified as per holding, service
objectives, economical sector but here public sector and private sector are
taken for study which could not be applicable for the whole sector and still
the chance of research for other types of banks also.
This study is in the light of optional information (Secondary data)
collected from websites of RBI, respective banks, past researches and,
publication so there is a possibility that the auxiliary may have variance
and lack of assurance.

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Here CAMEL model and 17 ratios are considered for the comparative
financial analysis, the number of ratios may be more or less and other
model also can be used with alternative research objectives.
Sensitivity Analysis is the addition in the latest model CAMELS which is
not covered in this research study.
This study is mostly based on average value of collected data for
comparison and hypothesis is tested with T-test, some other statistical
tools and techniques can be used and may be different than these
discoveries.
SPSS programming application is used here and arbitrary checked
physically to affirm the outcome, other programming /application can be
used with different way of assessment of available data and calculations.

5.6 CONCLUSION

As any kind of research is helpful for respective industry, this research report
is prepared on descriptive method and findings and suggestions are made out based
on study which may have been useful to banks covered under study. Moreover it can
be handy for prospective researchers to be used as guidance.

As the Indian banking sector is facing tough monetary situation in recent time
it only can be said “Banks should try to perform in such a way that a nation can
bank upon them”

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