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Financial Soundness of Old Private Sector Banks (OPBs) in India and

Benchmarking the Kerala Based OPBs: A 'CAMEL' Approach

Article · September 2010

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American Journal of Scientific Research
ISSN 1450-223X Issue 11(2010), pp.132-149
© EuroJournals Publishing, Inc. 2010
http://www.eurojournals.com/ajsr.htm

Financial Soundness of Old Private Sector Banks (OPBs) in

India and Benchmarking the Kerala Based OPBs:
A ‘CAMEL’ Approach

Manoj P K
Faculty (Techno-Management), Dept. of Applied Economics
Cochin University Science and Technology Kochi, Kerala – 682 022 (INDIA)
E-mail: manoj_p_k2004@yahoo.co.in

Abstract

Kerala state in the union of India has got an enviable track record of private sector
banking in the entire country, even from the late nineteenth century. However, in the more
recent history relating to the late twentieth century, there has been gradual decline in the
number of private banks in Kerala because of bank failures, mergers and acquisitions. As
against 8 such private banks as of 1985, the number has halved to just 4 in 2007, and this
number may fall down further as some of these existing banks have already become
takeover targets of stronger banks in the country. The intense competition in the banking
industry in the ongoing era of financial sector deregulation initiated in the early 1990s, has
put added pressure on the very survival of the old private sector banks (OPBs) in India.
This competitive scenario in the reforms era has given another dimension to the declining
prominence of Kerala-based OPBs (or, KOPBs, in short) in Indian private banking. In fact,
since 2004 itself that two KOPBs have succumbed to such competitive pressures. As
financial soundness has become vital for banks in India for their survival and growth in the
ongoing regime, this paper seeks to make a comparative analysis of the financial soundness
of OPBs in India, and to benchmark the KOPBs with the ‘Best in Class’ at the national
level as well as with the national average. The most popular rating model, ‘CAMEL’ has
been used for this study.

Keyterms: Profitability, Operational Efficiency, Priority Sector Advances, NIM.

1. Introduction
Kerala has got an enviable history of banking. This southernmost state in India had a very conducive
climate for banking development since historical times. Of the five banking firms in the whole of India
in the nineteenth century, one was in Kerala viz. Nedungadi Bank established in 1899, in Calicut
(Kozhikode). Private banking used to occupy a very significant place in the financial system of Kerala.
The two prominent categories of indigenous bankers in Kerala were Private money-lenders and Hundi1
merchants. The activities of these indigenous bankers were mostly concentrated in regions like
Thrissur and Thiruvalla. One significant feature of Kerala’s financial system is the prominence of a

1
Hundi: A traditional financial product prevalent in Kerala, It was popular among merchants.
Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 133

large number of ‘Chit’ (‘Kuri’)2 companies since historic times. This traditional mode of financing
represents the earliest form of crude banking, and even at present these companies exist in Kerala in a
significant manner. The emergence of organized forms of banking activities in the state was because of
the growing demand for money and credit for productive activities which could not be met by the
traditional financing means.
The Nedungadi Bank started by Appu Nedungadi in 1899, but registered only in 1910 is the
first bank in Kerala. The first registered bank in Kerala was the Travancore Permanent Funds.
Travancore Bank Ltd. based at Thiruvalla, however, was the earliest bank established in the
Travancore Cochin area. Afterwards many enterprising people came forward to establish banking
firms. By the time the new Companies Regulation of 1917 was passed six banks were in existence, and
after the passing of the above Regulation many banks were registered under it. Total number of banks
functioning in the Travancore state increased from just 5 in 1917-’18 to as high as 274 by 1932-’33
which was the highest ever in the history of the state. The number of banks in 1929-’30 was as high as
258. This constituted nearly one-fifth of the total number of banks existing in the whole of the
erstwhile British India. Table I shows the number of banks working in the erstwhile Travancore and
Cochin states during the period 1916-’17 to 1954-’55.
Kerala had got an excellent banking infrastructure right from historical times, and regarding the
banking network in Kerala, the observation by The Travancore–Cochin Banking Inquiry Commission
in 1955 was as follows: “The average number of people per banking office at present work out to
15,891 which is incidentally the smallest figure as compared to any other state in India, while for India
as a whole the corresponding figure is 87,765. The Travancore – Cochin state thus stands foremost in
regard to the number of banking offices with PEPSU as the second, having one banking office for an
average of 45,970 persons. This will be more pronounced if it is seen in juxtaposition to the similar
figures in respect of the foreign countries as for example in the UK, the average number of people per
banking office works out to 4600, in the US 7600 and in Japan 15900 which almost approximates to
the figure in respect of the Travancore–Cochin state.” Another peculiarity of Kerala banking was that
banks were not concentrated in the cities and larger towns alone. Rather, they were spread out into the
rural interiors of the state also. The business profile of the Kerala-based banks, particularly during the
early days was not limited to the traditional banking activities of credit and deposits. The ‘Chit’(‘Kuri’)
business constituted a considerable share of their business portfolio. As many as 166 banks were
undertaking this business during the 1930s. Another peculiarity of Kerala-based private banks of early
days was their small size while number was very large, compared with national figures. In the
Travancore–Cochin state, the total paid up capital of commercial banks in 1928-’29 was about Rs.42.5
lakhs averaging Rs.0.22 lakhs per bank which in turn was, roughly one-eighth of a commercial bank in
British India in the corresponding period. Looking into the above state of affairs, Bank Award
Commission (1955) pointed out that Travancore-Cochin state was definitely “over-banked” and the
position of most of the banks was “illiquid”.

2. Bank Failures, Mergers and Consolidations: Current Status of KOPBs

There were 482 banks failures in India during the period 1939-’45. Of this, 185 were in Travancore–
Cochin area in Kerala; 132 being in Travancore area and the rest 53 in Cochin area. Private banking in
Kerala had witnessed several devastating changes in 1960s also. This was mainly as a consequence of
the fall of The Palai Central Bank which was one of the most prominent private banks in Kerala at that
time. This made survival of small banks very difficult. Accordingly, some of the small banks were

2
Chit (or, Kuri): The Chit (or, Kuri) business is run by a person or an institution, called the foreman of the Chit. A Chit
(Kuri) is a contract between the foreman and subscribers (say, 50 members) using which money is pooled in by the
subscribers, who would accordingly receive large sums at low interest rates whenever their turn comes (like, through
bidding or otherwise).
134 Manoj P K

merged with stronger ones like Federal Bank, South Indian Bank and State Bank group3 banks. In
1985, Cochin Bank was merged with State Bank of India. In 1988, Parur Central Bank was acquired by
Bank of India. In 2002, Nedungadi Bank was taken over by Punjab National Bank. Further, in August
2007, Lord Krishna Bank was acquired by Centurion Bank of Punjab Ltd. As a result of the above sorts
of liquidations, amalgamations, mergers etc., the total number of KOPBs has finally shrunk to 4 by
2007, and the latest position of KOPBs (as of March 2010) is shown in Table II.

3. Previous Research and Research Gap

Amandeep (1983) has studied the various factors which affect the profitability of commercial banks in
India with the help of multiple regression analysis. Tools like, trend analysis, ratio analysis are also
used along with multiple regression analysis. Angadi and Devraj (1983) have studied the factors
determining the profitability and productivity of public sector banks (PSBs) in India and have observed
that though PSBs have discharged their social responsibilities, their limitations in respect of effective
mobilization of funds at lower costs, attracting retail banking business, augmenting earnings from other
sources, effective cash and portfolio management etc. have resulted in their lower productivity and
profitability. Chakrabarthy, (1986) has made an empirical study of the relative performance of different
groups of banks (public, private and foreign) based on three basic parameters viz.(i) profit, (ii)
earnings, and (iii) expenses. The author has computed Herfindahl's index to measure the inequality in
the sharing of profits, earnings and expenses by each group of banks. The author has suggested that
scheduled commercial banks should take up some exercise to evaluate the relative performance of each
of their offices for more effective profit planning. Arora, S. and Kaur, S (2008) have studied the
internal determinants of diversification moves by banks taking two dependent variables, (i) net interest
margin, (ii) non-interest margin. It has been noted that the explanatory variables viz. (i) risk, (ii)
technological change, (iii) cost of production, and (iv) regulatory cost have got significant influence on
the variations in the structure of income of the banks. In view of the foregoing, it may be noted that
studies on financial soundness of private sector banks in India in the context of the ongoing reforms
era4 are very scarce, and those focusing on Kerala-based banks are virtually nil. Hence the present
study seeks to fill this research gap by making a study of the financial soundness of Old Private sector
Banks (OPBs)5 in India with a focus on the Kerala-based OPBs (or, KOPBs).

4. Analytical Significance and Relevance of the Study

Financial soundness and operational efficiency are of cardinal significance for financial intermediaries
like commercial banks for their survival and growth. This fact has become all the more important in the
ongoing regime of financial sector deregulation in India, initiated in 1991. In spite of the enviable
history of private banking in the state of Kerala from historical times, there has been a constantly
dwindling trend in Kerala-based OPBs during the last few decades and since 2004 itself two banks
have vanished, thus making the total number of KOPBs just 4 as against 8 in 1985. In view of the

3 State Bank Group: This includes State Bank of India– the largest commercial bank in India (public sector) and its 7
associate (subsidiary) banks. Thus, there are 8 banks in this group.
4
Reforms era: This refers to the ongoing era of financial sector deregulation in India that has commenced in 1991, wherein
there has been far reaching changes in the financial sector.
5 Old Private sector Banks (OPBs): These are private sector banks which have been operating in India even before the
commencement of the financial sector reforms in 1991. Their technological base, mandatory social obligations (like,
priority sector lending) etc. are similar to that of public sector banks (ie. Government owned) in India. For this study all
the 15 OPBs operating during the study period (FY 2000-2009) are chosen, viz. Catholic Syrian Bank (CSB),
Dhanalakshmi Bank (DB), Federal Bank (FB), South Indian Bank (SIB), Bank of Rajasthan (BOR), City Union Bank
(CUB), Jammu & Kashmir Bank (JKB), Karnataka Bank (KKB), Karur Vysya Bank (KVB), Lakshmi Vilas Bank
(LVB), Nainital Bank (NTB), Ratnakar Bank (RKB), SBI Commercial & International Bank (SBC), Tamilnadu
Mercantile Bank (TMB) and ING Vysya Bank (IVB).
Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 135

absence of research studies relating to performance of OPBs in general and KOPBs in particular in the
ongoing reforms era this study assumes high significance.

5. Research Questions
(i) How do the KOPBs compare with the OPBs in general?
(ii) How do the KOPBs compare among themselves?
(iii) What ought to be the suitable strategies for enhanced competitiveness and operational efficiency
of KOPBs given their relative position at the national level?

6. Objectives of the Study

(i) To make a comparative analysis of the financial soundness of Old Private sector Banks (OPBs)
in India for the ten years’ period (FY 2000 to 2009) using ‘CAMEL’ model;
(ii) To benchmark the relative position of Kerala-based OPBs (KOPBs) in respect of financial
soundness with other OPBs in India;
(iii) To draw broad conclusions regarding the relative financial position of individual KOPBs and
accordingly to suggest appropriate strategies for their enhanced competitiveness.

7. Hypotheses of the Study

(i) The financial soundness of KOPBs measured in terms of CAMEL scores is significantly lower
than that of the ‘Best in the Class’ score among the OPBs.
(ii) The financial soundness of KOPBs is significantly lower than the average of OPBs.

8. Research Method:‘CAMEL’ Model for Measuring Financial Soundness of

Banks
The ‘CAMELS’ approach was developed by bank regulators in the US as a means of measurement of
the financial condition of a financial institution. Accordingly, the ‘Uniform Financial Institutions
Rating System’ was established by the Federal Financial Institutions Examination Council in the US.
Here, the acronym ‘CAMELS’ stands for, Capital Adequacy (C), Asset Quality (A), Management (M),
Earnings (E), Liquidity (L) and Sensitivity to Market Risk (losses arising from changes in market
prices) (S). In India too initiatives in the direction of assessment of financial stability of banks have
been in place since the early 1990s. In 1994 the Reserve Bank of India (RBI) has established the Board
of Financial Supervision (BFS). In 1995, RBI had set up a working group under the chairmanship of S.
Padmanabhan, and this Committee recommended the ‘CAMELS’ model (discussed below) on the lines
of the international model.
(i) Capital Adequacy: Capital adequacy is measured by the ratio of capital to risk-weighted assets
(CRAR). A sound capital base strengthens confidence of depositors
(ii) Asset Quality: One of the indicators for asset quality is the ratio of non-performing loans
to total loans (GNPA). The gross non-performing loans to gross advances
ratio is more indicative of the quality of credit decisions made by bankers.
Higher GNPA is indicative of poor credit decision-making.
(iii) Management: The ratio of non-interest expenditures to total assets (MGNT) can be one of
the measures to assess the working of the management. . This variable,
which includes a variety of expenses, such as payroll, workers
compensation and training investment, reflects the management policy
stance.
136 Manoj P K

(iv) Earnings: It can be measured as the the return on asset ratio.

(v) Liquidity: Cash maintained by the banks and balances with central bank, to total asset
ratio (LQD) is an indicator of bank's liquidity. In general, banks with a
larger volume of liquid assets are perceived safe, since these assets would
allow banks to meet unexpected withdrawals.
(vi) Systems and Control: The internal controls, other systems and procedures of banks are
considered.

8.1. Research Method: Sampling and Analytical Tools

Along with‘CAMEL’ model as above, tools like‘t’ test are used. The study is of ‘Census’ nature and
no sample is taken. All OPBs operating during the study period are studied (End Note 5).

9. Performance of OPBs in India: A ‘CAMEL’ Approach

Comparing the international ‘CAMELS’ model with the one prescribed by the RBI, it may be noted
that the parameter ‘S’ as per the international model stands for sensitivity to market risk (and it seeks to
capture the losses incurred by banks as a result of the changes in market prices) whereas the
‘CAMELS’ prescribed by the RBI uses ‘S’ to mean ‘Systems and Control’ which in turn is used in the
broader sense to account for the internal controls as well as systems and procedures. Thus, the RBI’s
approach is to consider the ‘Operational Risk’ under its ‘S’ whereas the US model seeks to consider
the ‘Market Risk’. In respect of all the other parameters (C,A,M,E, and L) there is uniformity between
the two definitions in hand, viz. that of RBI and the US agency. Now, what should be the most
appropriate model while assessing the performance of OPBs in India, with special reference to
KOPBs?. A little consideration would suggest that the parameter ‘S’ as such is not relevant in this case
because of the following:
(i) None of the OPBs in India has got substantial international exposures that attracts high level of
market risk, their operations being primarily in India. Moreover, market risk as such is being
given only very less priority in India, the consideration of the same in the risk management
system being initiated only since 31.03.2006. Only the credit risk, the most important type of
risk for any bank, is accorded priority in India. Thus, the ‘Sensitivity to market risk’ definition
of ‘S’ (international version) is not relevant here.
(ii) The ‘Systems and Control’ definition for ‘S’ by the RBI is also not relevant because
‘Operational Risk’ is the latest entrant in the arena of risk management the world over. It was
not included at all in the first Basel Accord (Basel-I). Mechanisms for capturing this risk is still
in process in India, and as such this risk is not very relevant for OPBs (and so also most PSBs)
because they operate on relatively low-end technology platforms.
Accordingly, for this study ‘CAMEL’ model is used, not ‘CAMELS’. The different ratios
chosen for capturing the various parameters of the ‘CAMEL’ model are shown in Table III.

9.1. Capital Adequacy

The capital adequacy reflects the overall financial position of the bank. It also indicates the ability of
the bank’s management in meeting the need for additional capital. Higher capital adequacy ensures
better resilience to systemic shocks and hence enhanced financial stability. The international banking
regulators, BCBS (Basel Committee for Banking Supervision) have stipulated a minimum Capital
Adequacy Ratio (CAR) of 8 percent. In India, the minimum CAR is stipulated as 9 percent by the
Reserve Bank of India. As discussed in detail in Chapter IV, two ratios are chosen to assess the capital
adequacy parameter under ‘CAMEL’ framework, viz. (i) Capital Adequacy Ratio, and (ii) Capital
Adequacy Ratio–Tier I.
Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 137

Table IV shows the CAR of all OPBs in India over the ten years’ period under study (FY 2000
to FY 2009). It is noted that the highest average CAR has been that of SBC (SBI Commercial and
International Bank Ltd) which is having an average CAR of 22.94 percent, and is followed by Ratnakar
Bank with an average CAR of 21.45 per cent. Among the KPOBs, the best is Federal Bank with
seventh highest position. The worst performer (fifteenth position) is a KPOB viz. Catholic Syrian Bank
(CSB). Table IV shows the CAR of all OPBs in India over the ten years’ period under study (FY 2000
to FY 2009). It is noted that the highest average CAR has been that of SBC (SBI Commercial and
International Bank Ltd) which is having an average CAR of 22.94 percent, and is followed by Ratnakar
Bank with an average CAR of 21.45 per cent. Among the KPOBs, the best is Federal Bank (FB) with
seventh highest position. The worst performer (fifteenth position) is a KPOB viz. Catholic Syrian Bank
(CSB). Table V shows the CAR (Tier I) of all OPBs in India over the ten years’ period under study
(FY 2000 to FY 2009). It is noted that as in the case of CAR, for CAR (Tier I) also the highest average
CAR goes to SBC (SBI Commercial and International Bank Ltd) with 22.21 percent, and is followed
by Ratnakar Bank with a ratio of 20.04 per cent. However, the position of Federal Bank (FB) – the best
performer among the KPOBs, has fallen to ninth position from the earlier seventh position. The worst
performer (fifteenth position) is again Catholic Syrian Bank (CSB), a KPOB.

9.2. Asset Quality

Asset quality is the parameter that primarily looks into the share of non-performing assets (NPAs) in
the total advances of banks. The lower the share of NPAs, the better the quality. Other relevant
considerations in this regard are (i) the ratio of priority sector advances to total advances – this measure
being in tune with the governmental policies of directed credit, and (ii) the ratio of secured advances to
total advances – the measure that captures the risk involved in credit dispensation.
Table VI shows the ratios of priority sector advances as a percentage of total advances. The
highest position goes to Nainital Bank (54.01 percent) and is followed by Tamilnadu Mercantile Bank
(43.84 percent). Among the KPOBs, FB is again the best with seventh position (34.03 percent). The
lowest ratio is that of SBC (15.99 percent). From Table VII, it is noted that Nainital Bank (NTB) which
has got the highest share of secured advances as a percentage of total advances (96.17 percent) has
obtained the first position in this regard. The last position goes to ING Vysya Bank (IVB) with an
average share of 83.49 percent. Among the KPOBs, Catholic Syrian Bank (CSB) has got the highest
score (third) with an average ratio of 94.65 percent. Table VIII shows the ratios of net non-performing
advances (NPAs) to total advances in respect of the 15 OPBs in India. It is noted that Nainital Bank
(NB) comes first with the lowest average net NPA of just 0.08 percent and secondly comes Jammu &
Kashmir Bank (JKB) with 1.65 percent. The worst position is that of SBI Commercial and
International Bank (SBC) with 11.06 percent. Among KOPBs, Federal Bank (FB) is the best and is at
the seventh position with 4.23 percent.

9.3. Management
Management is the parameter that seeks to assess the efficiency of the management as per the
‘CAMEL’ framework. Four parameters are used here to assess this efficiency.
Table IX shows the values of Business per Employee (Rs. Crore) in respect of the 15 OPBs
under study. It is noted that SBC comes first with the highest value 6.58 Crores. It is followed at a
distance by JKB (3.92 Crores), and thirdly comes FB – a KOPB with an average value of 3.89 Crore.
The worst performer is Nainital Bank (1.97 Crores). Table X shows Profit per Employee (Rs. Lakhs)
of all the 15 OPBs under study. It is noted that Karur Vysya Bank (KVB) comes first with an average
profit per employee of Rs. 4.40 lakhs and is distantly followed by Jammu & Kashmir Bank (JKB) with
3.85 lakhs. Among KOPBs, FB is at the top with an average value of 2.8 lakhs and is in the sixth
position among all OPBs. The worst performer is a KPOB viz. Catholic Syrian Bank (CSB) with an
average value of just Rs. 0.93 lakhs. Table XI shows the Return on Equity (ROE) of the 15 OPBs
138 Manoj P K

under study. It is noted that City Union Bank (CUM) with an average ROE of 22.04 percent comes
first and is closely followed by Karur Vysya Bank (KVB) with 21.94 percent. The worst performer, (ie.
fifteenth rank) is ING Vysya Bank with 7.37 percent. Among the KPOBs, Catholic Syrian Bank (CSB)
comes first (sixth position among OPBs, with an average ratio of 18.49 percent) and is followed by
Federal Bank (FB) with 17.58 percent which ranks seventh amomg all OPBs under study. Table XII
shows the Return on Advances ratios of the 15 OPBs under study. It is observed that City Union Bank
(CUB) with an ratio of 12.10 percent and is closely followed by Ratnakar Bank (RKB) with an average
ratio of 12.08 percent. The worst performer (viz. fifteenth position) in this regard is that of SBI
Commercial and International Bank (SBC) with an average ratio of 8.87 percent. Among the KPOBs
Catholic Syrian Bank (CSB) with an average ratio of 11.47 percent and is closely followed by all the
other three KPOBs viz. Federal Bank (FB), South Indian Bank (SIB) and Dhanalakshmi Bank (DB) in
that order.

9.4. Earnings
Earnings of banks has got special significance in the emerging scenario as the same is growingly being
determined by their non-core activities like investments, treasury operations, corporate advisory
services and so on.
Table XIII shows the ratio of Interest Income to Total Assets of the 15 OPBs under study.
Tamilnadu Marcantile Bank (TMB) with an average ratio of 10.28 percent comes first while SBI
Commercial and International Bank (SBC) with an average ratio of 7.55 percent comes in the last
position (fifteenth). Among the KPOBs, Federal bank (FB) comes at the top with 9.32 percent average
score. It has the fourth position among all OPBs. Table XIV shows the Net Interest Margin to Total
Assets of all the 15 OPBs under study. It is noted that Nainital Bank (NTB) with an average score 4.14
percent comes first. NTB is followed rather distantly by Tamilnadu Mercantile Bank (TMB) with an
average score of 3.82 percent. The last position (fifteenth) SBI Commercial and International Bank
(SBC) with an average score of 1.96 percent. Among the KPOBs Federal Bank (FB) comes first with
3.05 percent average score and is ranked sixth among all the OPBs. Table XV shows the ratios of Non-
Interest Income to Total Assets of the 15 OPBs under study. It is observed that SBI Commercial and
International Bank (SBC) with an average ratio of 1.93 percent comes in the first position, while
Nainital Bank (NTB) with an average ratio of 0.71 percent comes last (fifteenth position). Among the
KPOBs Catholic Syrian Bank (CSB) with an average ratio of 1.80 percent comes first (fifth position
among the OPBs under study) and is closely followed by Dhanalakshmi Bank (DB) with an average
ratio of 1.77 percent which ranks sixth among all OPBs under study.
Table XVI shows the ratios of Intermediation Cost to Total Assets of the 15 OPBs under study.
It is noted that SBI Commercial and International Bank (SBC) with the lowest average ratio of 1.41
percent comes in the first position, while Catholic Syrian Bank, a KPOB, with the highest average cost
of 2.86 percent comes in the last (fifteenth) position. Among KPOBs, Federal Bank (FB) comes first
with an average score of 1.94 percent comes first and is ranked fifth among the 15 OPBs under study.
Table XVII shows the Burden to Total Assets ratios of the 15 OPBs under study. It is noted that SBI
Commercial and International Bank (SBC) with the least average ratio of -0.52 percent (negative figure
implies more non-interest income than interest costs) comes first while Nainital Bank (NTB) with an
average score of 1.89 percent comes last (fifteenth position). Among the KPOBs Federal Bank (FB)
comes first with an average ratio of 0.30 percent and is ranked fourth among all the 15 OPBs under
study. Table XVIII shows the ratios of Operating Profit to Total Assets of the 15 OPBs under study. It
is noted that Tamilnadu Mercantile Bank (TMB) with the highest average ratio of 3.07 percent comes
first, while Bank of Rajasthan with the lowest average ratio of 1.42 percent comes last (fifteenth
position). Among the KPOBs Federal Bank (FB) comes first with an average ratio of 2.75 percent and
is ranked fourth among the 15 OPBs. Table XIX shows the Return on Assets (ROA) of the 15 OPBs
under study. It is noted that Karur Vysya Bank (KVB) with the highest average ratio of 1.85 percent
comes first while SBI Commercial and International Bank (SBC) with the lowest average ratio of 0.16
Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 139

percent comes last (fifteenth position). Among the KPOBs, FB comes first with an average ratio of
0.97 percent and is ranked seventh among the OPBs.

9.5. Liquidity
Liquidity is one of the vital parameters that assess the operational performance of banks as it indicates
their ability to pay their short-term liabilities, like those towards deposit holders.
Table XX shows the Cash Deposit ratio of the 15 OPBs under study. It is noticed that Ratnakar
Bank (RKB) with the highest average ratio of 10.80 percent comes first, while SBI Commercial and
International Bank (SBC) with the lowest average ratio of 5.52 percent comes last (fifteenth position).
Among the KPOBs Dhanalakshmi Bank (DB) with a ratio of 7.78 percent is the first and is ranked
third among the OPBs. Table XXI shows the Credit Deposit ratio of the 15 OPBs under study. It is
noted that Karur Vysya Bank (KVB) with the highest average ratio of 67.5 percent comes first, while
Nainital Bank (NTB) with the lowest average ratio of 37.8 percent comes last (fifteenth position).
Among the KPOBs, Federal Bank (FB) with 63.3 percent comes first and is ranked fourth among the
15 OPBs under study.

9.6. Performance Analysis of OPBs Using ‘CAMEL’ Approach: Group Rankings

In this section, an attempt is made to find the rankings of the 15 individual OPBs based on their
average performance under the five different parameters. Thus, rankings under, (i) Capital Adequacy,
(ii) Asset Quality, (iii) Management, (iv) Earnings, and (v) Liquidity are found by averaging the scores
under the respective parameters under each of the five groups as above.
Table XXII shows the group rakings of the OPBs under the Capital Adequacy group. It is noted
that SBI Commercial and International Bank (SBC) comes first in this regard while Catholic Syrian
Bank (CSB) comes last. Table XXIII shows the group rakings of the OPBs under the Asset Quality
group. It is observed that Nainital Bank (NTP) ranks first in this group while SBI Commercial and
International Bank (SBC) ranks last (fifteenth). Table XXIV shows the group rankings of the OPBs
under the group ‘Management’. It is observed that City Union Bank (CUB) ranks first in this group
while ING Vysya Bank (IVB) ranks last (fifteenth). Table XXV shows the group rankings of the OPBs
under the group ‘Earnings’. It is observed that Karur Vysya Bank (KVB) and City Union Bank (CUB)
together share the top position, while Bank of Rajasthan (BOR) is in the last rank. Table XXVI shows
the group rakings of the OPBs under the Capital Adequacy group. It is noted that three banks viz. City
Union Bank (CUB), Lakshmi Vilas Bank (LVB) and Dhanalakshmi Bank (DB) together share the first
position while Nainital Bank (NTB) comes in the last position.

9.7. Performance Analysis of OPBs Using ‘CAMEL’ Approach: Overall Rankings

In this section, all the group rankings as arrived at in the foregoing paragraphs have been assimilated
and are averaged to get the final scores and hence the final rankings (viz. ‘CAMEL’ rankings).
Accordingly, Table XXVII shows the computation of overall rankings from the individual group
rankings viz. (i) Capital Adequacy, (ii) Asset Quality, (iii) Management, (iv) Earnings, and (v)
Liquidity are found by averaging the scores under the respective parameters under each of the five
groups as above.
From Table XXVII it is observed that among the 15 OPBs in India under study, Tamilnadu
Mercantile Bank (TMB) comes first in respect of ‘CAMEL’ rating showing its superiority in
operational excellence and risk management. Secondly comes another Tamil Nadu based OPB viz.
Karur Vysya Bank (KVB) and it closely follows TMB. The worst performer in this regard is Bank of
Rajasthan (BOR) and the second worst is a KPOB viz. Catholic Syrian Bank (CSB). Among the
KPOBs, Federal Bank (FB) is the best and is ranked fifth among all the OPBs under study. All the
other three KPOBs are lagging far behind FB, their relative positions among all OPBs under study
140 Manoj P K

being eleventh for South Indian Bank (SIB), twelfth for Dhanalakshmi Bank (DB) and lastly fourteenth
for Catholic Syrian Bank (CSB). (Table XXVII).

10. Benchmarking the Kerala-based Old Private Sector Banks (KOPBs)

In this section, an attempt is made benchmark the OPBs in India so as to get a better picture regarding
their relative groupings among themselves, apart from simply their absolute rankings as arrived at in
Table XXVII. At the same time, the relative status of the KPOBs in these groupings is also looked into.
The OPBs classified into four categories, based on their respective ‘CAMEL’ scores and also the cut-
off scores as per the values of Mean and SD (Table XXVIII). According to this procedure, the OPBs
are classified into four groups (Table XXIX). It may be noted that none of the KPOBs are in the
‘Excellent’ category group.
It may be noted that the best among the KPOBs viz. Federal Bank (FB) itself is in the ‘Good’
category and not in the ‘Excellent’ category. However, it is ranked first in the ‘Good’ category. The
second best KPOB viz. South Indian Bank is falling in the ‘Fair’ category only and that too at the
lowest position. Both the remaining banks viz. Dhanalakshmi Bank (DB) and Catholic Syrian Bank
(CSB) are falling in the ‘Poor’ category. While DB is in the first (best) in the ‘Poor’ category, CSB is
the second worst.

11. Testing of Hypotheses

11.1. Hypothesis–1
The financial soundness of KOPBs measured in terms of CAMEL scores is significantly lower than that
of the ‘Best in the Class’ score among the OPBs.
The first hypothesis as mentioned above is sought to be tested here. The ‘Best in the Class’ here
refers to Tamilnadu Mercantile Bank (TMB), the OPB with the best CAMEL ranking (viz. 4.879). The
score of TMB and those of the four KOPBs are compared using the t-Test6 procedure to test the
hypothesis given above. (Table XXX). From Table XXX it is noted that the calculated values of t in
respect of all the four KOPBs are higher than the critical (table) value (at 5% LOS). Hence, the
financial soundness of all KPOBs is significantly lower than that of the Benchmark (‘Best in the Class’
viz. TMB). In other words, the financial stability of TMB is significantly superior to that of all the four
KOPBs. Thus, the first hypothesis stands accepted.

11.2. Hypothesis–2
The financial soundness of KOPBs is significantly lower than the average of OPBs.
The second hypothesis as mentioned above is sought to be tested here. The average score refers
to the average of all 15 OPBs under study (viz. 8.013). The average score of OPBs as above and
individual scores of the four KOPBs are compared using the t-Test7 procedure to test the hypothesis
given above (Table XXXI). From Table XXXI it is noted that the calculated values of t in respect of all
the KOPBs except FB (viz. CSB, DB and SIB) are higher than the critical (table) value (at 5% LOS).
Hence, the financial soundness of these three KPOBs (viz. CSB, DB, and SIB) is significantly lower
than the average of all the 15 OPBs. Or, in other words, the financial soundness of FB alone is
comparable to (or, not significantly different from) the average of OPBs. Thus, FB is only an
exception. Thus, the second hypothesis stands accepted.

6
t = (x - µ) / [S/(n-1)^(1/2)] where S is the SD, x is the sample mean, µ is the population mean and n is the number of
observations. The value so calculated is compared with the critical (table) value. Here, the µ is taken as the
Benchmark (‘Best in the Class’) value, ie. 4.879 (TMB).
7
‘t’ as above. But, µ value is taken as the average value for all OPBs (Benchmark) viz. 8.013
Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 141

12. Concluding Remarks and Strategies for Enhanced Competitiveness of KOPBs

In view of the foregoing discussions, it is quite clear that all the KOPBs are lagging behind the ‘Best in
Class’ (viz. Best OPB) in financial soundness. Besides, only one KOPB (viz. FB) has got financial
soundness that is comparable with even the national average. This indicates that the other three KOPBs
have to struggle hard for their survival and growth. This is especially true for CSB and DB, as the
position is SIB is better off than the former two. The strategies for KOPBs in general, and individually
for each of them are given in Table XXXII. It is worth pointing out here that the OPB in India with the
lowest financial soundness as revealed by this study (viz. BOR or Bank of Rajasthan) has since been
taken over by a stronger bank (viz. ICICI) in 2010, thus underscoring the need and relevance of the
study, and also the utmost urgency with which remedial measures are adopted by the respective players
to enhance their competitiveness.
Table I: Number of Banks functioning in Travancore and Cochin States

Number of Banks at the end of the

Travancore State Cochin State
year
1916-’17 6 NA
1920-’21 43 NA
1928-’29 195 64
1929-’30 258 NA
1932-’33 274 NA
1936-’37 241 155
1954-’55 85 68
Source: Menon, K Ramunni (1956) ‘Report of the Travancore-Cochin Banking Inquiry Commission’, Para 65; Travancore-
Cochin Banking Enquiry Commission (1955).

Table II: Kerala-Based Old Private sector Banks (KOPBs)(as of FY March 2010).

S.No. Name of the Bank (Short form in Brackets) Year of Promotion Class of Bank
01. The Catholic Syrian Bank Ltd. (CSB) 1918 A
02. The Dhanalaksmi Bank Ltd. (DB) 1927 B
03. The Federal Bank Ltd. (FB) 1931 A
04. The South Indian Bank Ltd. (SIB) 1929 A
Source: Compiled from, Banking Year Book 2010, Indian Banks Association, Mumbai, India.

Table III: ‘CAMEL’ Model for OPBs – The Ratios Used.

Parameters in ‘CAMEL’ Ratios chosen

(i) Capital Adequacy Ratio
Capital Adequacy (C)
(ii) Capital Adequacy Tier I
(i) Priority Sector Advances to Total Advances
Asset Quality (A) (ii) Secured Advances to Total Assets
(iii) Net NPA to Net Advances
(i) Business per Employee
(ii) Profit per Employee
Management (M)
(iii) Return on Equity
(iv) Return on Advances
(i) Interest Income to Total Assets
(ii) Net Interest Margin to Total Assets
(iii) Non-Interest Income to Assets
Earnings (E) (iv) Intermediation Cost to Total Assets
(v) Burden to Total Assets
(vi) Operating Profit to Total Assets
(vii) Return on Assets
(i) Cash Deposit Ratio
Liquidity (L)
(ii) Credit Deposit Ratio
Source: Compiled by the author
142 Manoj P K
Table IV: Capital Adequacy Ratio (CAR) of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 5.94 10.02 11.33 10.41 5.73 13.33 18.82 11.04 15.16 10.45 15.11 11.56 24.32 18.02 12.24
2001 6.08 9.69 10.29 11.17 10.57 13.59 17.44 11.37 15.56 10.21 15.81 10.00 19.85 17.59 12.05
2002 9.57 11.22 11.23 11.20 12.07 13.97 15.46 12.96 16.90 11.54 14.88 13.60 22.10 18.02 11.57
2003 9.66 10.45 11.23 10.75 11.29 13.95 16.48 13.44 17.01 11.35 20.93 14.05 21.19 18.54 9.81
2004 11.23 13.56 11.48 11.32 11.18 13.36 16.88 13.03 17.11 13.79 18.54 16.65 30.43 21.07 11.05
2005 11.35 10.16 11.27 9.89 12.75 12.18 15.15 14.16 16.07 11.32 14.85 12.03 23.56 19.74 9.09
2006 11.26 9.75 13.75 13.02 10.60 12.33 13.52 11.78 14.79 10.79 13.88 10.77 22.29 18.33 10.67
2007 9.58 9.77 13.43 11.08 11.32 12.58 13.24 11.03 14.51 12.43 12.89 34.34 20.93 16.77 10.56
2008 11.21 9.21 22.46 13.80 11.87 12.48 12.80 12.17 12.58 12.73 12.32 49.15 23.48 15.35 10.20
2009 12.29 15.38 20.22 14.76 11.50 12.69 14.48 13.48 14.92 10.29 13.10 42.30 21.24 16.10 11.65
Av. 9.82 10.92 13.67 11.74 10.89 13.05 15.43 12.45 15.46 11.49 15.23 21.45 22.94 17.95 10.89
Rank 15 12 7 10 13.5 8 5 9 4 11 6 2 1 3 13.5
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table V: Capital Adequacy Ratio - Tier I of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 3.89 7.66 7.72 8.07 5.10 13.05 15.51 10.64 14.48 8.10 14.32 10.60 24.12 15.99 8.20
2001 4.47 7.33 7.72 8.36 8.91 13.26 14.33 11.06 15.12 8.52 13.72 9.42 19.48 15.81 8.44
2002 5.97 9.36 9.36 7.68 10.01 12.81 12.41 11.10 15.62 8.44 12.92 11.93 21.11 16.88 7.97
2003 6.32 8.63 6.65 7.28 8.92 11.87 12.48 11.23 14.89 8.39 19.31 11.76 20.18 16.83 6.63
2004 6.95 8.63 6.26 5.80 8.35 10.73 12.98 10.45 15.10 8.49 14.28 13.54 28.76 17.36 6.14
2005 7.49 6.12 6.42 5.68 7.84 10.05 12.48 12.15 14.36 5.67 11.30 10.06 23.01 16.22 5.20
2006 7.03 6.21 9.72 8.38 6.90 10.77 13.09 11.38 13.29 6.94 10.97 9.71 20.91 17.60 7.14
2007 5.70 6.29 8.94 8.84 6.62 10.87 12.60 10.46 14.04 9.93 10.10 33.39 20.32 16.12 6.38
2008 7.23 6.56 19.09 12.08 6.10 11.15 12.14 10.36 12.11 10.53 11.00 48.29 22.74 14.70 6.82
2009 8.81 13.75 18.42 13.22 6.19 11.48 13.80 10.60 14.40 8.81 11.85 41.69 21.49 15.38 6.89
Av. 6.39 8.05 10.03 8.54 7.49 11.60 13.18 10.94 14.34 8.38 12.98 20.04 22.21 16.29 6.98
Rank 15 12 9 10 13 7 5 8 4 11 6 2 1 3 14
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table VI: Priority Sector Advances to Total Advances of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 28.89 30.86 35.43 31.97 29.25 33.91 23.09 37.37 38.85 42.55 52.63 30.20 11.80 44.00 37.46
2001 25.46 29.49 32.24 29.74 27.68 33.88 24.76 33.71 38.63 40.14 55.43 28.15 11.29 42.12 32.76
2002 25.50 28.91 31.92 28.43 28.65 33.69 20.50 34.96 36.29 38.12 52.64 26.61 4.29 39.68 35.10
2003 20.81 25.05 31.40 27.79 22.33 38.92 18.80 38.49 33.26 34.64 56.69 23.92 9.40 40.81 34.93
2004 26.89 27.19 31.32 30.75 32.14 38.49 21.17 40.92 37.50 37.55 56.49 22.42 12.03 45.14 30.61
2005 31.44 29.93 32.15 31.87 27.71 39.86 21.79 33.31 39.03 41.01 55.79 31.25 3.93 47.38 31.17
2006 34.08 35.57 34.30 35.59 23.87 40.82 19.53 35.58 42.79 36.53 50.29 32.52 9.30 46.06 30.31
2007 34.00 38.48 37.26 37.04 26.67 40.14 19.24 32.02 37.94 38.06 50.33 34.20 14.64 46.76 35.07
2008 39.30 43.23 36.51 34.24 28.35 34.12 25.81 36.59 33.71 39.28 54.31 41.03 40.25 44.51 34.74
2009 38.34 32.86 37.80 34.00 22.58 32.33 35.10 37.02 36.32 31.07 55.55 29.58 43.01 41.97 36.74
Av. 30.47 32.16 34.03 32.14 26.92 36.62 22.98 36.00 37.43 37.89 54.01 29.99 15.99 43.84 33.89
Rank 11 9 7 10 13 5 14 6 4 3 1 12 15 2 8
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table VII: Ratio of Secured Advances to Total Advances of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 94.03 91.30 96.82 89.38 92.91 96.09 93.87 97.01 92.45 90.44 99.19 89.40 83.81 97.70 75.95
2001 93.86 87.59 92.40 89.95 94.57 95.94 92.76 96.42 93.53 94.04 99.68 91.23 85.01 95.80 70.52
2002 94.53 85.89 94.00 87.31 91.46 95.27 92.54 89.95 92.22 86.63 98.76 90.84 86.07 95.90 84.22
2003 95.72 85.28 92.00 82.81 88.47 94.87 90.30 91.62 92.22 89.93 99.45 86.10 88.95 95.11 87.17
2004 95.94 87.16 88.87 85.96 93.17 96.75 92.01 91.08 85.67 90.71 96.22 81.84 99.52 95.19 90.42
2005 96.65 88.52 90.21 89.82 90.97 93.52 88.44 84.69 83.46 91.75 93.62 82.40 82.17 89.08 91.29
2006 96.96 92.27 86.71 88.31 88.56 95.28 87.84 88.30 87.77 91.05 92.90 83.95 92.42 93.93 87.38
2007 97.29 92.92 92.09 90.53 84.13 97.53 86.01 92.57 90.96 93.66 94.59 88.39 97.81 92.73 85.99
Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 143

2008 94.04 91.03 88.95 85.94 85.29 97.13 86.61 91.38 86.36 91.63 93.69 88.64 61.32 94.93 79.76
2009 87.48 86.27 82.88 88.32 86.45 96.65 90.65 90.88 92.85 90.95 93.60 91.32 76.07 93.41 82.25
Av. 94.65 88.82 90.49 87.83 89.60 95.90 90.10 91.39 89.75 91.08 96.17 87.41 85.32 94.38 83.49
Rank 3 11 7 12 10 2 8 5 9 6 1 13 14 4 15
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.
Table VIII: Net Non-Performing Advances to Total Advances of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 12.41 11.08 8.56 8.67 9.65 7.26 3.22 5.73 3.77 5.38 0.82 8.70 13.97 5.77 9.11
2001 9.99 11.34 10.08 15.85 12.00 8.20 2.45 6.93 4.73 6.47 0.00 7.58 22.56 5.99 4.77
2002 9.92 11.66 11.66 6.64 8.86 8.22 1.88 5.90 6.33 9.13 0.00 8.60 23.43 6.66 4.59
2003 7.90 9.25 4.95 5.98 6.80 8.21 1.58 7.36 4.20 7.15 0.00 7.42 20.88 8.70 3.55
2004 4.65 6.68 2.89 4.55 2.99 6.37 1.48 4.98 2.32 5.40 0.00 5.58 18.31 5.00 2.60
2005 3.80 3.92 2.21 3.81 2.50 3.37 1.41 2.29 1.66 4.98 0.00 5.54 7.65 2.95 2.13
2006 2.78 2.82 0.95 1.86 0.99 1.95 0.92 1.18 0.81 1.89 0.00 2.61 3.82 2.17 0.95
2007 1.98 1.75 0.44 0.98 0.24 1.09 1.13 1.22 0.23 1.58 0.00 1.92 0.00 0.98 1.05
2008 1.61 0.88 0.23 0.33 0.42 0.98 1.07 0.98 0.18 1.55 0.00 0.99 0.00 0.38 0.70
2009 2.39 0.88 0.30 1.13 0.73 1.08 1.38 0.98 0.25 1.24 0.00 0.68 0.00 0.34 1.23
Av. 5.74 6.03 4.23 4.98 4.52 4.67 1.65 3.76 2.45 4.48 0.08 4.96 11.06 3.89 3.07
Rank 13 14 7 12 9 10 2 5 3 8 1 11 15 6 4
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table IX: Business per Employee (Rs. Crore) of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 1.07 1.54 1.61 1.29 1.11 1.56 1.75 1.78 1.69 1.58 0.79 1.15 7.25 1.80 1.86
2001 1.25 1.84 1.90 1.71 1.24 1.67 2.12 2.10 1.92 1.92 0.93 1.46 7.06 2.15 2.00
2002 1.41 1.99 1.99 2.18 1.36 2.04 2.64 2.47 2.19 2.12 1.04 1.63 7.39 2.45 1.98
2003 1.65 2.22 2.70 2.65 1.65 2.30 2.87 2.75 2.88 2.28 1.15 1.80 3.22 2.71 2.42
2004 1.82 2.49 3.27 3.06 2.00 2.87 3.45 3.20 3.30 2.76 1.25 1.98 5.71 2.92 3.24
2005 2.20 2.93 3.66 3.52 2.31 3.26 4.35 3.81 3.87 2.96 1.62 2.21 5.27 3.17 3.95
2006 2.47 3.12 4.31 4.22 2.91 3.40 5.16 4.78 4.39 3.71 2.25 2.51 6.26 3.58 4.26
2007 2.78 3.61 5.44 4.62 4.01 3.50 5.85 5.24 4.89 4.30 2.79 2.54 6.48 4.51 4.86
2008 3.17 4.09 6.55 6.00 5.19 4.99 5.96 5.89 6.04 4.53 3.66 3.10 7.55 5.42 5.47
2009 3.74 5.86 7.50 6.45 5.33 5.65 5.00 6.49 6.38 5.10 4.25 3.73 9.60 6.79 6.06
Av. 2.16 2.97 3.89 3.57 2.71 3.12 3.92 3.85 3.76 3.13 1.97 2.21 6.58 3.55 3.61
Rank 14 11 3 7 12 10 2 4 5 9 15 13 1 8 6
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table X: Ratio of Profit per Employee (Rs. Lakhs) of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 0.21 0.82 0.72 0.64 0.28 1.48 1.91 1.43 2.60 1.37 0.69 0.64 9.63 1.89 0.76
2001 0.37 0.52 0.97 1.11 0.75 1.58 2.58 1.11 2.52 1.38 0.79 0.75 -36.20 2.29 0.63
2002 1.23 0.78 0.78 1.68 0.94 2.10 4.00 2.20 3.79 1.56 0.89 1.27 2.87 2.48 1.22
2003 1.57 1.15 1.69 2.04 1.63 2.37 5.00 2.55 4.41 1.72 1.17 1.81 -7.71 2.88 1.69
2004 1.96 1.32 2.14 2.39 1.67 4.09 6.00 3.10 5.65 2.11 1.91 1.58 17.12 3.69 1.15
2005 0.37 -1.65 1.39 0.24 0.86 3.23 2.00 3.35 3.75 0.17 2.00 -1.73 -9.73 3.60 -0.73
2006 0.22 0.72 3.54 1.37 0.38 3.51 3.00 4.05 4.65 1.20 2.00 0.11 5.70 4.41 0.17
2007 0.68 1.18 4.43 2.69 2.83 3.84 4.00 3.97 4.87 0.91 3.00 0.54 7.79 4.76 1.66
2008 1.34 2.02 5.43 3.59 2.93 4.69 5.00 5.00 5.82 1.22 4.00 3.00 13.82 5.31 2.68
2009 1.39 4.10 6.90 4.31 2.89 4.98 5.00 5.00 5.98 2.07 6.00 5.00 13.17 6.43 3.03
Av. 0.93 1.10 2.80 2.01 1.52 3.19 3.85 3.18 4.40 1.37 2.25 1.30 1.65 3.77 1.23
Rank 15 14 6 8 10 4 2 5 1 11 7 12 9 3 13
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.
144 Manoj P K
Table XI: Ratio of Return on Equity of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 12.24 16.08 13.55 14.78 5.45 20.60 25.13 20.31 31.25 0.68 22.85 17.63 9.89 19.69 8.62
2001 17.84 8.91 15.70 20.47 14.82 19.17 27.30 13.72 24.44 20.22 21.49 15.75 -39.35 20.03 6.20
2002 42.96 10.57 18.98 25.31 19.56 21.82 31.75 23.02 28.60 19.68 20.22 22.29 3.71 18.19 10.7
2003 36.89 12.90 21.47 24.29 26.37 21.74 31.00 21.48 25.28 19.17 17.16 25.84 -10.10 17.50 12.4
2004 33.83 13.74 23.14 23.56 22.46 31.03 28.66 20.78 25.35 19.61 19.62 17.87 20.10 18.47 8.12
2005 5.28 -17.41 13.13 2.05 10.30 20.88 7.06 17.56 14.30 1.46 15.83 -19.14 -10.73 15.90 -4.8
2006 2.89 7.66 22.82 9.29 4.28 21.40 10.21 16.85 16.58 8.63 12.90 1.19 6.31 16.65 0.97
2007 8.57 11.46 21.27 15.26 27.29 22.03 14.42 15.07 16.54 5.12 14.95 2.38 7.71 14.94 8.38
2008 13.68 17.81 13.56 16.09 16.62 21.82 16.79 18.47 18.49 6.21 20.07 6.51 11.89 15.67 11.9
2009 10.72 19.26 12.13 15.80 11.86 19.90 16.72 18.10 18.57 11.54 22.45 9.19 9.22 16.24 11.7
Av. 18.49 10.10 17.58 16.69 15.90 22.04 20.90 18.54 21.94 11.23 18.75 9.95 0.86 17.33 7.37
Rank 6 12 7 9 10 1 3 5 2 11 4 13 14 8 15
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XII: Ratio of Return on Advances of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 14.24 13.56 12.80 14.31 12.71 14.87 11.77 13.41 14.33 13.34 13.47 14.93 11.17 13.47 11.4
2001 13.25 12.25 12.63 13.51 12.23 13.76 10.52 13.13 13.14 12.85 12.96 14.28 9.46 12.63 11.1
2002 12.60 11.47 12.67 12.63 11.50 12.60 11.43 12.46 10.75 11.28 12.01 13.85 10.53 12.39 10.3
2003 11.57 10.81 11.57 10.89 10.14 11.63 10.53 10.93 10.44 10.58 11.49 13.06 7.72 11.65 9.77
2004 10.24 10.32 10.26 9.17 8.48 11.46 9.50 9.73 9.80 9.50 11.43 11.74 11.73 11.45 8.83
2005 9.97 9.69 9.35 9.15 8.76 10.42 8.42 8.38 8.93 8.58 10.78 10.26 5.00 10.46 8.08
2006 9.66 9.62 8.91 9.36 6.92 10.72 8.48 8.73 8.91 8.22 10.00 10.16 7.03 10.05 8.54
2007 10.20 10.30 9.62 9.72 9.09 10.49 8.58 9.38 9.86 9.51 10.25 10.64 6.93 10.79 8.64
2008 11.23 11.15 10.81 10.46 9.61 12.19 10.44 11.01 10.43 10.14 11.61 10.76 8.16 10.79 9.74
2009 11.76 11.03 12.42 11.40 12.06 12.87 11.53 12.28 11.50 11.38 12.63 11.17 10.99 12.47 11.1
Av. 11.47 11.02 11.11 11.06 10.15 12.10 10.12 10.94 10.81 10.54 11.66 12.08 8.87 11.61 9.75
Rank 5 8 6 7 12 1 13 9 10 11 3 2 15 4 14
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XIII: Ratio of Interest Income to Total Assets of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 11.31 10.97 11.25 11.69 10.25 11.89 9.79 10.89 12.18 10.62 10.50 11.06 10.16 11.29 9.60
2001 11.02 10.77 11.19 11.19 10.44 11.01 9.25 10.53 11.55 10.20 10.43 11.06 9.49 11.14 9.31
2002 10.41 10.11 10.99 10.46 9.90 10.48 9.87 10.29 10.32 9.94 10.16 10.03 8.43 10.89 8.84
2003 9.45 9.48 9.95 9.24 8.65 9.61 9.06 9.53 9.13 8.96 9.42 9.12 7.56 10.48 8.11
2004 8.74 8.40 8.73 8.06 6.90 9.49 8.01 8.55 9.75 8.15 8.64 8.38 7.33 10.96 7.45
2005 8.42 7.55 7.46 7.57 5.93 8.69 6.79 7.27 7.88 7.57 7.72 7.78 5.35 9.58 6.92
2006 7.93 7.64 7.67 7.50 5.68 8.56 6.71 7.41 7.71 7.18 7.77 7.60 7.20 9.36 7.60
2007 8.26 7.83 7.95 7.98 6.91 8.43 6.89 8.06 8.64 7.99 8.13 7.48 5.75 9.67 7.77
2008 8.55 8.35 8.73 8.40 7.52 9.38 7.93 8.78 8.62 8.20 8.96 8.19 6.55 9.54 7.50
2009 8.56 8.44 9.29 9.00 8.38 9.69 8.48 9.09 9.14 8.86 9.30 8.66 7.75 9.87 7.80
Av. 9.27 8.95 9.32 9.11 8.06 9.72 8.28 9.04 9.49 8.77 9.10 8.94 7.55 10.28 8.09
Rank 5 9 4 6 14 2 12 8 3 11 7 10 15 1 13
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XIV: Ratio of Net Interest Margin to Total Assets of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 2.52 2.87 2.30 2.95 2.40 3.16 3.17 2.15 3.99 2.86 4.22 3.15 2.14 3.20 1.34
2001 2.86 2.42 2.89 3.09 3.14 3.19 3.07 2.45 3.89 2.70 4.09 3.34 1.14 3.58 1.82
2002 2.49 2.37 2.91 2.64 2.83 2.70 3.20 1.95 3.52 2.26 4.12 3.09 0.81 3.61 1.75
2003 2.44 2.67 3.04 2.48 3.31 2.73 3.34 1.82 3.00 2.26 3.97 2.80 1.95 3.76 1.94
2004 2.99 3.05 3.09 2.37 2.60 3.31 3.26 2.15 4.47 2.38 4.08 2.86 2.50 4.40 1.97
2005 3.34 2.87 3.15 2.74 2.42 3.31 2.61 2.74 3.42 2.71 3.89 3.18 1.93 4.32 2.49
2006 3.19 3.02 3.20 3.06 2.35 3.67 2.61 2.66 3.35 2.35 4.37 3.25 3.43 4.20 2.99
2007 3.27 3.07 3.20 3.00 2.90 3.53 2.79 2.69 3.46 2.42 4.47 3.49 1.96 4.49 3.01
2008 2.91 2.65 3.01 2.45 2.25 3.14 2.64 2.58 2.66 2.01 4.02 4.19 1.17 3.29 2.22
Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 145

2009 2.55 2.51 3.69 2.79 2.33 2.92 2.84 2.24 2.59 2.07 4.12 3.98 2.58 3.37 2.26
Av. 2.86 2.75 3.05 2.76 2.65 3.17 2.95 2.34 3.44 2.40 4.14 3.33 1.96 3.82 2.18
Rank 8 10 6 9 11 5 7 13 3 12 1 4 15 2 14
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XV: Ratio of Non-Interest Income to Total Assets of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 1.68 1.66 1.69 1.86 1.37 2.24 1.16 1.36 1.68 2.85 0.59 1.83 2.53 1.81 2.26
2001 1.70 1.58 1.52 1.50 1.33 1.72 0.69 1.44 1.35 2.39 0.45 1.65 1.46 1.52 1.30
2002 3.06 3.28 2.32 2.35 2.13 2.37 1.88 3.34 2.24 3.15 0.55 4.18 2.38 1.57 2.69
2003 3.41 3.51 2.10 2.57 2.31 2.22 1.82 2.81 2.35 2.79 0.67 2.72 1.94 1.32 3.21
2004 2.91 2.56 2.18 2.79 2.43 2.28 1.59 2.72 1.12 2.48 1.61 1.53 3.80 1.38 2.93
2005 1.06 0.58 1.33 1.09 0.72 1.00 0.42 1.91 1.51 0.97 0.99 0.59 1.92 1.27 0.86
2006 0.87 0.80 1.16 0.71 0.54 1.04 0.44 1.21 1.43 0.78 1.08 0.69 2.08 1.33 0.87
2007 0.71 0.94 1.25 0.84 1.13 1.14 0.58 1.12 1.19 0.85 0.30 0.44 0.65 1.26 1.08
2008 1.07 1.12 1.37 0.93 0.91 1.42 0.80 1.34 1.43 1.34 0.40 0.67 2.07 1.64 1.87
2009 1.53 1.64 1.45 0.88 0.75 1.49 0.70 1.67 1.68 1.44 0.46 0.98 0.44 1.37 1.91
Av. 1.80 1.77 1.64 1.55 1.36 1.69 1.01 1.89 1.60 1.90 0.71 1.53 1.93 1.45 1.90
Rank 5 6 8 10 13 7 14 4 9 2.5 15 11 1 12 2.5
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XVI: Ratio of Intermediation Cost to Total Assets of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 3.18 2.31 2.26 2.80 3.30 2.08 1.76 1.99 2.50 3.07 2.94 3.34 1.23 2.38 2.14
2001 2.85 2.96 2.13 2.38 3.11 1.97 1.42 1.70 2.47 2.65 2.74 3.09 1.35 2.07 1.91
2002 2.76 2.83 2.02 2.05 3.17 1.86 1.71 1.81 2.30 2.58 2.72 3.33 1.25 2.15 2.48
2003 2.80 3.00 1.99 2.00 2.90 1.64 1.65 1.65 1.84 2.40 3.02 2.68 1.37 2.06 2.99
2004 2.88 2.66 2.07 2.29 2.49 1.54 1.54 1.55 2.36 2.26 3.14 2.60 1.48 2.32 2.79
2005 2.61 2.73 1.97 2.00 2.21 1.87 1.41 1.71 2.28 2.29 2.66 2.64 1.59 2.33 2.66
2006 3.26 2.98 1.95 2.23 2.68 1.84 1.36 1.49 2.07 2.24 3.09 2.53 1.52 2.21 3.23
2007 2.73 2.79 1.78 1.79 2.28 1.90 1.35 1.52 1.92 1.90 2.24 3.03 1.57 2.24 2.81
2008 2.68 2.58 1.63 1.61 1.93 1.73 1.31 1.72 1.69 1.89 1.71 2.27 1.38 2.11 2.72
2009 2.87 2.34 1.60 1.75 1.91 1.68 1.34 1.64 1.63 2.04 1.73 2.09 1.37 2.06 2.69
Av. 2.86 2.72 1.94 2.09 2.60 1.81 1.49 1.68 2.11 2.33 2.60 2.76 1.41 2.19 2.64
Rank 15 13 5 6 10.5 4 2 3 7 9 10.5 14 1 8 12
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XVII: Ratio of Burden to Total Assets of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 1.50 0.65 0.57 0.95 1.93 -0.16 0.60 0.63 0.81 0.21 2.36 1.51 -1.30 0.57 -0.12
2001 1.15 1.38 0.61 0.88 1.78 0.25 0.72 0.26 1.12 0.26 2.29 1.44 -0.11 0.55 0.62
2002 -0.30 -0.45 -0.31 -0.30 1.05 -0.52 -0.17 -1.53 0.06 -0.57 2.17 -0.85 -1.13 0.58 -0.21
2003 -0.61 -0.51 -0.11 -0.57 0.59 -0.57 -0.17 -1.16 -0.50 -0.39 2.35 -0.04 -0.58 0.74 -0.22
2004 -0.03 0.11 -0.11 -0.49 0.06 -0.74 -0.04 -1.17 1.24 -0.22 1.53 1.08 -2.32 0.93 -0.14
2005 1.55 2.15 0.64 0.90 1.49 0.87 0.99 -0.21 0.77 1.32 1.68 2.05 -0.33 1.06 1.80
2006 2.39 2.18 0.79 1.51 2.14 0.80 0.92 0.27 0.64 1.46 2.02 1.84 -0.55 0.88 2.36
2007 2.02 1.85 0.52 0.95 1.15 0.76 0.77 0.41 0.73 1.05 1.94 2.59 0.92 0.98 1.73
2008 1.61 1.46 0.26 0.69 1.02 0.31 0.52 0.38 0.26 0.55 1.31 1.60 -0.69 0.47 0.85
2009 1.34 0.70 0.16 0.88 1.16 0.19 0.64 -0.03 -0.05 0.60 1.27 1.11 0.93 0.69 0.78
Av. 1.06 0.95 0.30 0.54 1.24 0.12 0.48 -0.21 0.51 0.43 1.89 1.23 -0.52 0.75 0.74
Rank 12 11 4 8 14 3 6 2 7 5 15 13 1 10 9
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.
146 Manoj P K
Table XVIII: Ratio of Operating Profit to Total Assets of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 1.02 2.02 1.73 2.00 0.47 3.32 2.57 1.52 3.18 1.42 1.86 1.63 3.44 2.63 1.46
2001 1.71 1.04 2.28 2.21 1.36 2.95 2.34 2.19 2.77 2.44 1.80 1.90 1.25 3.03 1.20
2002 2.80 2.82 3.22 2.94 1.78 3.21 3.36 3.47 3.46 2.83 1.95 3.94 1.94 3.03 1.96
2003 3.05 3.18 3.15 3.05 2.72 3.31 3.52 2.98 3.50 2.65 1.62 2.84 2.53 3.02 2.17
2004 3.02 2.94 3.20 2.87 2.54 4.05 3.31 3.32 3.23 2.59 2.54 1.79 4.82 3.46 2.11
2005 1.80 0.73 2.51 1.84 0.94 2.44 1.62 2.95 2.66 1.39 2.22 1.13 2.26 3.25 0.69
2006 0.80 0.84 2.41 1.54 0.21 2.86 1.69 2.39 2.71 0.89 2.35 1.41 3.98 3.32 0.63
2007 1.24 1.23 2.68 2.06 1.75 2.77 2.02 2.29 2.73 1.37 2.53 0.90 1.03 3.51 1.27
2008 1.31 1.19 2.76 1.76 1.23 2.83 2.12 2.20 2.40 1.46 2.71 2.58 1.86 2.81 1.37
2009 1.21 1.82 3.53 1.91 1.17 2.73 2.20 2.28 2.64 1.47 2.85 2.88 1.65 2.68 1.48
Av. 1.80 1.78 2.75 2.22 1.42 3.05 2.48 2.56 2.93 1.85 2.24 2.10 2.48 3.07 1.43
Rank 12 13 4 9 15 2 6.5 5 3 11 8 10 6.5 1 14
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XIX: Return on Assets of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 0.25 0.71 0.62 0.58 0.30 1.28 1.13 1.10 1.90 1.30 0.95 0.83 1.84 1.32 0.55
2001 0.38 0.40 0.69 0.89 0.74 1.21 1.32 0.73 1.70 1.02 0.93 0.77 -6.50 1.37 0.37
2002 1.07 0.53 0.53 1.07 0.84 1.33 1.77 1.26 2.42 1.06 0.92 1.16 0.46 1.29 0.64
2003 1.17 0.71 0.86 1.25 1.12 1.33 2.01 1.29 2.25 1.07 1.14 1.42 -1.45 1.35 0.74
2004 1.31 0.71 0.90 1.00 0.82 1.86 1.92 1.34 2.43 1.19 1.58 1.12 3.67 1.59 0.45
2005 0.24 -0.83 0.62 0.09 0.38 1.33 0.47 1.27 1.45 0.08 1.25 -1.17 -2.10 1.52 -0.25
2006 0.13 0.33 1.28 0.53 0.19 1.46 0.67 1.28 1.65 0.53 1.06 0.07 1.09 1.67 0.05
2007 0.37 0.52 1.38 0.76 1.16 1.57 0.96 1.15 1.53 0.33 1.26 0.31 1.13 1.57 0.52
2008 0.64 0.76 1.34 1.01 0.91 1.60 1.09 1.37 1.63 0.41 1.51 1.31 1.93 1.58 0.74
2009 0.57 1.21 1.48 1.09 0.74 1.50 1.09 1.25 1.49 0.71 1.68 1.96 1.52 1.51 0.70
Av. 0.61 0.51 0.97 0.83 0.72 1.45 1.24 1.20 1.85 0.77 1.23 0.78 0.16 1.48 0.45
Rank 12 13 7 8 11 3 4 6 1 10 5 9 15 2 14
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.
Table XX: Cash Deposit Ratio of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 7.44 9.44 6.04 7.51 11.00 10.01 14.88 10.21 9.13 10.00 10.52 9.97 5.60 12.72 8.24
2001 5.82 7.10 3.42 6.32 11.98 10.01 9.74 6.48 6.61 8.92 9.35 8.97 4.19 10.36 8.15
2002 6.47 6.10 5.18 5.08 8.91 7.28 7.87 4.88 5.02 6.42 6.47 9.87 5.99 8.52 6.79
2003 6.09 6.97 5.56 5.78 7.15 6.63 4.91 5.27 4.50 5.99 7.13 7.66 5.81 6.63 5.56
2004 4.33 6.66 5.39 4.89 4.40 7.13 8.22 4.13 5.53 6.99 6.88 13.61 5.88 5.08 5.97
2005 9.05 8.72 4.54 5.10 4.32 5.20 7.74 6.35 5.72 7.40 5.49 12.01 5.35 6.30 5.30
2006 7.45 6.95 6.79 5.70 5.68 6.08 3.99 4.04 6.21 4.61 5.62 13.11 5.43 5.41 6.31
2007 9.92 8.12 5.71 5.72 5.55 6.74 7.36 5.89 6.37 5.70 5.45 13.90 5.50 6.11 6.13
2008 9.53 9.81 9.09 6.42 8.74 10.83 11.26 8.71 8.76 6.86 7.14 11.76 5.63 8.85 11.06
2009 5.85 7.95 6.88 5.51 4.63 7.25 6.98 6.71 6.38 8.04 5.54 7.14 5.80 7.46 7.20
Av. 7.19 7.78 5.86 5.80 7.24 7.72 8.30 6.27 6.42 7.09 6.96 10.80 5.52 7.74 7.07
Rank 7 3 13 14 6 5 2 12 11 8 10 1 15 4 9
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XXI: Credit Deposit Ratio of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
2000 43.2 55.4 62.4 52.0 53.3 57.4 37.3 47.4 58.5 58.6 22.3 42.8 71.6 47.1 53.0
2001 45.5 58.9 63.3 52.9 52.8 54.4 42.6 46.6 62.4 65.0 22.5 46.1 57.3 49.7 53.0
2002 37.9 55.4 58.5 54.6 49.4 51.2 49.8 48.8 58.9 63.2 21.5 44.8 43.6 47.5 54.8
2003 41.9 58.8 56.8 52.7 41.9 52.4 54.6 47.0 65.3 63.7 25.8 48.6 35.6 48.0 61.1
2004 48.9 52.8 57.1 50.7 32.8 54.3 49.8 49.6 68.1 61.9 31.0 48.4 32.3 48.0 67.3
2005 56.9 60.3 58.1 63.2 35.7 65.0 53.2 58.0 69.2 66.3 38.9 54.1 69.6 54.4 72.2
2006 62.8 63.0 65.6 66.5 45.7 72.5 61.7 58.8 73.3 68.1 53.6 56.2 67.1 60.1 76.7
2007 63.4 59.6 69.0 64.7 52.7 70.8 67.8 68.1 75.4 72.0 53.7 60.5 67.5 67.2 77.7
2008 62.3 58.3 73.0 69.0 53.7 70.6 66.0 63.7 75.1 68.7 55.6 53.2 68.7 69.5 71.6
Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 147

2009 58.2 64.3 69.5 65.5 51.2 68.8 63.4 58.1 68.9 71.3 52.9 61.3 52.9 68.7 67.3
Av. 52.1 58.7 63.3 59.2 46.9 61.8 54.6 54.6 67.5 65.9 37.8 51.6 56.6 56.0 65.5
Rank 12 7 4 6 14 5 10 11 1 2 15 13 8 9 3
Source: Compiled from, Statistical Tables Relating to Banks in India, (for FY 2000 to 2009), Reserve Bank of India,
Central Office, Mumbai.

Table XXII: Group Rankings of OPBs – Capital Adequacy (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
CAR 15 12 7 10 13.5 8 5 9 4 11 6 2 1 3 13.5
CAR Tier–I 15 12 9 10 13 7 5 8 4 11 6 2 1 3 14
Av. 15 12 8 10 13.25 7.5 5 8.5 4 11 6 2 1 3 13.75
Rank 15 12 8 10 13 7 5 9 4 11 6 2 1 3 14
Source: Computed from Tables IV and V given above.

Table XXIII: Group Rankings of OPBs – Asset Quality (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
Prior 11 9 7 10 13 5 14 6 4 3 1 12 15 2 8
Secu. 3 11 7 12 10 2 8 5 9 6 1 13 14 4 15
NPA 13 14 7 12 9 10 2 5 3 8 1 11 15 6 4
Av. 9 11.33 7 11.33 10.67 5.67 8 5.3 5.33 5.67 1 12 14.67 4 9
Rank 9.5 12.5 7 12.5 11 5.5 8 3.5 3.5 5.5 1 14 15 2 9.5
Source: Computed from Tables VI to VIII given above.

Table XXIV: Group Rankings of OPBs – Management (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
Busi/E 14 11 3 7 12 10 2 4 5 9 15 13 1 8 6
Prof/E 15 14 6 8 10 4 2 5 1 11 7 12 9 3 13
ROE 6 12 7 9 10 1 3 5 2 11 4 13 14 8 15
ROAd. 5 8 6 7 12 1 13 9 10 11 3 2 15 4 14
Av. 10 11.25 5.5 7.75 11 4 5 5.75 4.5 10.5 7.25 10 9.75 5.75 12
Rank 11.5 14 4 8 13 1 3 5.5 2 10 7 11.5 9 5.5 15
Source: Computed from Tables IX to XII given above.

Table XXV: Group Rankings of OPBs – Earnings (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
NII 5 9 4 6 14 9 12 8 3 11 7 10 15 1 13
NIM 8 10 6 9 11 5 7 13 3 12 1 4 15 2 14
NOM 5 6 8 10 13 7 14 4 9 2.5 15 11 1 12 2.5
Intdn. 15 13 5 6 10.5 4 2 3 7 9 10.5 14 1 8 12
Burdn 12 11 4 8 14 3 6 2 7 5 15 13 1 10 9
Op_Pr 12 13 4 9 15 2 6.5 5 3 11 8 10 6.5 1 14
ROA 12 13 7 8 11 3 4 6 1 10 5 9 15 2 14
Av. 9.86 10.71 5.43 8.00 12.64 4.71 7.36 5.86 4.71 8.64 8.79 10.1 7.79 5.14 11.2
Rank 11 13 4 8 15 1.5 6 5 1.5 9 10 12 7 3 14
Source: Computed from Tables XIII to XIX given above.

Table XXVI: Group Rankings of OPBs – Liquidity (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
Cs_D 7 3 13 14 6 5 2 12 11 8 10 1 15 4 9
Cr_D 12 7 4 6 14 5 10 11 1 2 15 13 8 9 3
Av. 9.50 5.00 8.50 10.0 10.0 5.00 6.00 11.5 6.00 5.00 12.5 7.00 11.5 6.50 6.00
Rank 10 2 9 11.5 11.5 2 5 13.5 5 2 15 8 13.5 7 5
Source: Computed from Tables XX and XXI given above.
148 Manoj P K
Table XXVII: Overall Rankings (‘CAMEL’ Rankings) of OPBs (FY 2000-2009).

Year CSB DB FB SIB BOR CUB JKB KKB KVB LVB NTB RKB SBC TMB IVB
Cap 15 12 8 10 13.25 7.5 5 8.5 4 11 6 2 1 3 13.75
Asst 9 11.33 7 11.33 10.67 5.67 8 5.33 5.33 5.67 1 12 14.67 4 9
Mgmt 10 11.25 5.5 7.75 11 4 5 5.75 4.5 10.5 7.25 10 9.75 5.75 12
Erngs 9.86 10.71 5.43 8 12.64 4.71 7.36 5.86 4.71 8.64 8.79 10.1 7.79 5.14 11.21
Lqdty 9.5 5 8.5 10 10 5 6 11.5 6 5 12.5 7 11.5 6.5 6
Av. 10.67 10.06 6.89 9.42 11.51 5.38 6.27 7.39 4.91 8.16 7.11 8.23 8.94 4.88 10.39
Rank 14 12 5 11 15 3 4 7 2 8 6 9 10 1 13
Source: Computed from Tables XXII to XXVI given above.

Table XXVIII: Classification of OPBs based on ‘CAMEL’ Ratings – the Criteria.

Category Criterion (based on the range of ‘CAMEL’ Scores) Mean= 8.01, SD=2.14
Excellent Upto (Mean – 0.6745 SD) (First 25%) Upto 6.57
Good From (Mean – 0.6745 SD) upto Mean (25 -50%) From 6.57 Upto 8.01
Fair Above Mean, upto (Mean + 0.6745 SD) (50-75%) From 8.01 Upto 9.45
Poor Above (Mean + 0.6745 SD) (Above 75%) Above 9.45

Table XXIX: The Four Groups of OPBs (based on ‘CAMEL’ Ratings)

Excellent (Upto 6.57) Good (From 6.57 to 8.01) Fair (From 8.01 to 9.45) Poor (Above 9.45)
TMB (4.88) (1) FB (6.89) (1) LVB (8.16) (1) DB (10.06)
KVB (4.91) (2) NTB (7.11) (2) RKB (8.23) (2) IVB (10.39)
CUB (5.38) (3) KKB (7.39) (3) SBC (8.94) (3) CSB (10.67)
JKB (6.27) (4) SIB (9.42) (4) BOR (11.51)

Table XXX: Financial Soundness of KOPBs Vs. Best in the Class (TMB)

Name of the Bank t – value (Calculated) t- value (Critical) (Table)

Catholic Syrian Bank (CSB) 14.9
Dhanalakshmi Bank (DB) 9.07 2.145
Federal Bank (FB) 3.51 (at 5 % LOS and 14 DOF)
South Indian Bank (SIB) 7.94

Table XXXI: Financial Soundness of KOPBs Vs. Average of OPBs

Name of the Bank t – value (Calculated) t- value (Critical) (Table)

Catholic Syrian Bank (CSB) 4.652
Dhanalakshmi Bank (DB) 3.581 2.145
Federal Bank (FB) 1.974 (at 5 % LOS and 14 DOF)
South Indian Bank (SIB) 2.456
 Financial Soundness of Old Private Sector Banks (OPBs) in India and Benchmarking
the Kerala Based OPBs: A ‘CAMEL’ Approach 149

Table XXXII: Broad Strategies for Enhanced Competitiveness of KOPBs: An Overview

Federal Bank South Indian Bank Dhanalakshmi Bank Catholic Syrian Bank
1. Liquidity Management 1. Liquidity Management 1. Earnings (Profitability) 1. Needs improvement in
is poor – needs is poor – needs needs improvement all aspects, especially
improvement improvement Earnings (Profitability)
& Productivity
2. Asset quality (NPA 2. Asset quality (NPA 2. Productivity is very 2. CAR needs
Level) is poor –needs Level) is poor –needs poor – needs improvement.
improvement. improvement. improvement
KOPBs in general: They lag behind the ‘Best in Class’ (viz. TMB) significantly. Besides, none of the KOPBs are in
‘Excellent’ category. Thus, all have to improve their performance. Moreover, two out of the four KOPBs are in ‘Poor’
category (Table XXIX). Of these two ‘Poor’ banks, one banks (CSB) is at present (2010) the lowest performer among all
OPBs as BOR has already succumbed to the pressures of competition and has since been taken over by ICICI in 2010.
CAR of all KOPBs needs improvement, and so also Priority sector advances. NPA management of all KOPBs needs
fine-tuning and NPAs have to be brought down.

References
[1] Amandeep, (1983), Profits and Profitability in Commercial Banks, Deep and Deep Publications
Pvt. Ltd., Rajouri Gardens, New Delhi – 110 027.
[2] Angadi and Devraj, (1983), “Profitability and Productivity of Banks in India”, Economic and
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