Performance Analysis of Three Public Sector Banks in India Using Camel Model

Available online at http://www.ijasrd.
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International Journal of Advanced Scientific

e-ISSN: 2395-6089
Research & Development
Vol. 03, Spl. Iss. 03, Ver. I, Sep 2016, pp. 16 29
p-ISSN: 2394-8906
Performance Analysis of Three Public Sector Banks in India

using Camel Model
R. SHYAM PRASAD
Assistant Professor, B.Com (Bank Management), Ramakrishna Mission Vivekananda College,
Chennai.
R. SREENATH
Student (III Year), B.Com (Accounting & Finance), Ramakrishna Mission Vivekananda College,
Chennai.
ARTICLE INFO
ABSTRACT
Article History:
In todays scenario, the banking sector is one of the fastest

growing sector and a lot of funds are invested in Banks.
Also todays banking system is becoming more complex.
There are so many models of evaluating the performance of
the banks. This study has adopted the CAMEL Model to
evaluate the performance of the banks. CAMEL is the best
model because it measures the performance of the banks
from each parameter. After deciding the model, three banks
were chosen from the three public sectors banks, i.e. Vijaya
Bank, United Bank of India, Bank of Maharashtra. The
annual reports of the consecutive three years i.e. 2010 to
2012 of all the banks were used to calculate ratios for all
the banks and interpreted them.
Received: 22 Sep 2016;

Accepted: 22 Sep 2016;
Published online: 28 Sep 2016.
Key words:
Performance,
CAMEL Model,
Public Sector Banks.
JEC Classification:
Copyright 2016 IJASRD. This is an open access article distributed under the Creative Common Attibution
License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original
work is properly cited.
INTRODUCTION
In the recent years the financial system especially the banks have undergone
numerous changes in the form of reforms, regulations & norms. The attempt here is to
see how various ratios have been used and interpreted to reveal a banks performance
and how this particular model encompasses a wide range of parameters making it a
widely used and accepted model in todays scenario.
1.1 Need for the Study
The ultimate need for the study is to find the performance level of three public
sector bank using CAMEL Framework as a Tool.
Through this project the Company is made aware of the areas in which they are
effective and the areas in which they need to lay more emphasis.
How to cite this article: Prasad, S. R. & Sreenath, R. (2016). Performance Analysis of Three Public Sector Banks in
India using Camel Model. International Journal of Advanced Scientific Research & Development (IJASRD), 03 (03/I),
[Special Issue Sep 2016], pp. 16 29.
Performance Analysis of Three Public Sector Banks in India using Camel Model
1.2 Scope of the Study

This study was done using CAMEL Framework to the study of banking
performance of public sector bank in India.
The study covers three public sector banks only.
Financials and other data regarding the bank financials are based on the yearly
annual reports.
This study also suggests that the bank should try formulating their future course
of action.
1.4 Objective of the Study
To study CAMEL Model Analysis of three public Sector Banks in India.
To understand the financial performance of the banks.
To apply CAMELS model of ranking on selected banking institutions & analyse
the selected banks.
To analyse the banks performance through CAMEL model and give suggestion
for improvement if necessary
RESEARCH METHODOLOGY
Here, we are under going to have analytical research i.e. analysis of banks
financial statements which will make us understand the position of one bank in
comparison of another and their financial position.
2.1 Research Design
Area of Survey: The survey will be done for three banks. The study
environment will be the Banking industry.
Plan of Analysis: Here, we will be using financial statements of the banks in
order to calculate different ratios required for camel rating system as it considers
all areas of banking operations and considered to be the best available method
for evaluation bank performance and banks health.
2.2 Data Collection Method
(i) Primary Data: Primary data was collected from the banks balance sheet
and banks income statement and interview of the bank employees.
(ii) Secondary Data: Secondary data on the subject was collected from banks
prospectus, annual reports and other websites.
2.3 Limitations of Study
The study was limited to three banks only.
Time and resource constrains.
The method discussed pertains only to banks though it can be used for
performance evaluation of other financial institutions.
The study was completely done on the basis of ratios calculated from the balance
sheets.
It was not possible to get a personal interview with the top management
employees of all banks under study.
17
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Department of Banking & Insurance Management and Department of Bank Management,
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CONCEPTUAL REVIEW
3.1 Capital Adequacy
It is important for a bank to maintain depositors confidence and preventing the
bank from going bankrupt. It reflects the overall financial condition of banks and also
the ability of management to meet the need of additional capital. The following ratios
measure capital adequacy:
Capital Adequacy Ratio (CAR): The capital adequacy ratio is developed to
ensure that banks can absorb a reasonable level of losses occurred due to
operational losses and determine the capacity of the bank in meeting the losses.
As per the latest RBI norms, the banks should have a CAR of 9 per cent.
Debt-Equity Ratio (D/E): 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.
Advance to Assets Ratio (Adv/Ast): This is the ratio indicates a banks
aggressiveness in lending which ultimately results in better profitability.
Government Securities to Total Investments (G-sec/Inv): It is an important
indicator showing the risk-taking ability of the bank. It is a banks strategy to
have high profits, high risk or low profits, low risk.
3.2 Assets Quality
The quality of assets is an important parameter to gauge the strength of bank. The
prime motto behind measuring the assets quality is to ascertain the component of nonperforming assets as a percentage of the total assets. The ratios necessary to assess the
assets quality are:
Net NPAs to Total Assets (NNPAs/TA): This ratio discloses the efficiency of
bank in assessing the credit risk and, to an extent, recovering the debts.
Net NPAs to Net Advances (NNPAs/NA): It is the most standard measure of
assets quality measuring the net non-performing assets as a percentage to net
advances.
Total Investments to Total Assets (TI/TA): It indicates the extent of
deployment of assets in investment as against advances.
Percentage Change in NPAs: This measure tracks the movement in Net NPAs
over previous year. The higher the reduction in the Net NPA level, the better it
for the bank.
3.3 Management Efficiency
Management efficiency is another important element of the CAMEL Model. The
ratio in this segment involves subjective analysis to measure the efficiency and
effectiveness of management. The ratios used to evaluate management efficiency are
described as:
Total Advances to Total Deposits (TA/TD): This ratio measures the efficiency
and ability of the banks management in converting the deposits available with
the bank excluding other funds like equity capital, etc. into high earning
advances.
18
Profit per Employee (PPE): This shows the surplus earned per employee. It is
known by dividing the profit after tax earned by the bank by the total number of
employees.
Business per Employee (BPE): Business per employee shows the productivity
of human force of bank. It is used as a tool to measure the efficiency of employees
of a bank in generating business for the bank.
Return on Net Worth (RONW): It is a measure of the profitability of a bank.
Here, PAT is expressed as a percentage of Average Net Worth.
3.4 Earning Quality

The quality of earnings is a very important criterion that determines the ability of a
bank to earn consistently. It basically determines the profitability of bank and explains
its sustainability and growth in earnings in future. The following ratios explain the
quality of income generation.
Operating Profit to Average Working Funds (OP/AWF): This ratio
indicates how much a bank can earn profit from its operations for every rupee
spent in the form of working fund.
Percentage Growth in Net Profit (PAT Growth): It is the percentage change
in net profit over the previous year.
Net Profit to Average Assets (PAT/AA): This ratio measures return on assets
employed or the efficiency in utilization of assets.
3.5 Liquidity
Risk of liquidity is curse to the image of bank. Bank has to take a proper care to
hedge the liquidity risk; at the same time ensuring good percentage of funds are
invested in high return generating securities, so that it is in a position to generate profit
with provision liquidity to the depositors. The following ratios are used to measure the
liquidity:
Liquid Assets to Demand Deposits (LA/DD): This ratio measures the ability
of bank to meet the demand from depositors in a particular year. To offer higher
liquidity for them, bank has to invest these funds in highly liquid form.
Liquid Assets to Total Deposits (LA/TD): This ratio measures the liquidity
available to the total deposits of the bank.
Liquid Assets to Total Assets (LA/TA): It measures the overall liquidity
position of the bank. The liquid asset includes cash in hand, balance with
institutions and money at call and short notice. The total assets include the
revaluation of all the assets.
3.6 Research Review
In the process of continuous evaluation of the banks financial performance both
in public sector and private sector, the academicians, scholars and administrators have
made several studies on the CAMEL model but in different perspectives and in different
periods.
Cole et al (1995) have conducted a study on A CAMEL Rating's Shelf Life and
their findings suggest that, if a bank has not been examined for more than two quarters,
19

off-site monitoring systems usually provide a more accurate indication of survivability

than its CAMEL rating.
Godlewski (2003) have tested the validity of the CAMEL rating typology for
bank's default modification in emerging markets. He focused explicitly on using a logical
model applied to a database of defaulted banks in emerging markets.
Said & Saucier (2003) examined the liquidity, solvency and efficiency of Japanese
Banks using CAMEL rating methodology, for a representative sample of Japanese
banks for the period 1993- 1999, they evaluated capital adequacy, assets and
management quality, earnings ability and liquidity position.
Prasuna (2003) have analyzed the performance of Indian banks by adopting the
CAMEL Model. The performance of 65 banks was studied for the period 2003-04. The
author concluded that the competition was tough and consumers benefited from better
services quality, innovative products and better bargains.
Derviz et al. (2008) investigated the determinants of the movements in the long
term Standard & Poors and CAMEL bank ratings in the Czech Republic during the
period when the three biggestbank s, representing approximately 60% of the Czech
banking sector's total assets, were privatized (i.e., the time span 1998-2001).
Bhayani (2006) analyzed the performance of new private sector banks through
the help of the CAMEL model. Four leading private sector banks Industrial Credit &
Investment Corporation of India, Housing Development Finance Corporation, Unit
Trust of India and Industrial Development Bank of India - had been taken as a sample.
DATA ANALYSIS AND INTERPRETATION
4.1 Capital Adequacy
4.1.1 Table Indicating Summarized Capital Adequacy Ratio of Three Banks
4.1.1.1 Vijaya Bank
Ratios
2012
2011
2010
AVG
13.06
13.88
12.5
13.14667
Debt-Equity Ratio (D/E)
1.03164
0.420463
0.557833
0.669979
Advance to Assets Ratio
60.46504
59.63797
59.12914
59.74405
Government Securities to Total Investments
82.74339
72.77364
67.54132
74.35278
2012
2011
2010
AVG
12.69
13.05
12.8
12.84667
0.881803
0.574817
0.234526
0.563716
61.80085
59.4204
54.96607
58.72911
78.03588
72.82629
75.06286
75.30834
2011
2010
Capital Adequacy Ratio (CAR)
4.1.1.2 United Bank of India

Ratios
4.1.1.3 Bank of Maharashtra

Ratios
2012
AVG
12.43
13.35
12.78
12.85333
0.809872
0.774771
0.978499
0.85438
20
63.69169
61.32838
56.73669
60.58559
76.48642
82.4389
85.47411
81.46648
Interpretation:
Its clear that all banks are maintained higher CAR than the prescribed level. It
is found that Vijaya bank secured the top position with highest average CAR of 13.15
followed by Bank of Maharashtra (12.85), united bank of India (12.84). United bank of
India is at the bottom most position with lest average CAR.
In terms of Debt equity ratio United Bank of India is at the top position with
least average of 0.56 followed by Vijaya bank (0.67) and Bank of Maharashtra (0.85).
In case of advances to assets, Bank of Maharashtra is at the first position with
highest average of 60.58% followed by Vijaya bank (59.74) and United bank of India
(58.72%). United bank of India is at the bottom most position with least average of
58.72%.
Its again Bank of Maharashtra is at the top position in Government securities to
Investments with highest average of 81.46, followed by united bank of India (75.31) and
Vijaya Bank (74.35). Vijaya Bank is at the last position with the least average.
4.1.2 Table Indicating Capital Adequacy Ratio
Ratios
Vijaya Bank
UBI
BOM
13.14666667
12.84666667
12.85333333
0.669978735
0.563715527
0.854380387
59.74404929
58.72910567
60.58558675
Government Securities to Total Inv
74.35278184
75.30834265
81.46647805
4.1.3 Table Indicating Rank Position of Various Ratios

Ratios
Government Securities to Total Inv
Average
Rank
Vijaya Bank
1
2
2
3
2
2
UBI
3
1
3
2
2.25
3
BOM
2
3
1
1
1.75
1
Interpretation:
On the basis of group averages of four sub-parameters of capital adequacy Bank
of Maharashtra is at the top position with group average 1.75, followed by Vijaya Bank
(2) and United bank of India (2.25) which stood at the last position due to its poor
performance in CAR and Adv/Ast.
4.2 Asset Quality
4.2.1 Table Indicating Summarized Asset Quality Ratio of Three Banks
4.2.1.1 Vijaya Bank
Ratios
2012
2011
2010
AVG
1.031713
0.907277
0.828172
0.922387
1.706297
1.521307
1.400616
1.54274
29.91082
30.77291
30.05813
30.24729
34.68286
27.42906
98.93945
53.68379
21


Ratios
2012
2011
2010
AVG
1.054353
0.841188
1.010957
0.968833
1.70605
1.415655
1.839238
1.653648
28.48612
29.16348
33.84928
30.49962
42.00367
-2.7153
-0.05777
13.07687
2012
2011
2010
AVG
0.533497
0.809697
0.932267
0.758487
0.837624
1.320264
1.643148
1.267012
26.0305
29.42233
30.01001
28.48761
-24.1344
-6.56371
143.63
37.64396

Ratios
Interpretation:
Bank of Maharashtra is at the top position with an average NNPAs/TA of 0.75,
followed by Vijaya Bank (0.92) and United bank of India (0.97) which stood at the last
position.
In case of NNPAs/NA its again bank of Maharashtra is at the top position with
an average of 1.27 followed by Vijaya bank (1.54) and United bank of India (1.65) which
stood at last position.
In terms of TI/TA, Bank of Maharashtra is at the first position with an average
of 28.49 followed by Vijaya Bank (30.25) and United bank of India (30.50).
United bank of India is at first position with percentage change in NPAs with an
average 13.07 followed by Bank of Maharashtra (37.64) and Vijaya Bank (53.68).
4.2.2 Table Indicating Asset Quality Ratio
Ratios
Net NPAs to Total Assets (NNPAs/TA)
Net NPAs to Net Adv (NNPAs/NA)
Total Investment to Total Assets (TI/TA)
Percentage Change in NPAs YoY
Vijaya Bank
0.922387487
1.542740294
30.2472872
53.68378985
UBI
0.968832607
1.653647519
30.49962374
13.07686665
BOM
0.758486996
1.267011893
28.48761224
37.64395915

Ratios
Net NPAs to Total Assets (NNPAs/TA)
Net NPAs to Net Adv (NNPAs/NA)
Total Inv to Total Assets (TI/TA)
Percentage Change in NPAs
Average
Rank
Vijaya Bank
2
2
2
3
2.25
2
UBI
3
3
3
1
2.5
3
BOM
1
1
1
2
1.25
1
Interpretation:
On the bases of group averages of sub-parameters of assets quality, Bank of
Maharashtra is at the top position with group average 1.25, followed by Vijaya Bank
(2.25) and united bank of India stands at bottom with average of (2.5).
22
4.3 Management
4.3.1 Table Indicating Summarized Management Ratio of Three Banks
4.3.1.1 Vijaya Bank
Ratios
2012
2011
2010
AVG
Total Advances to Total Deposits (TA/TD)
69.71692
66.5116
67.04432
67.75761
Profit per Employee (PPE)
0.049078
0.045889
0.043864
0.046277
Business per Employee (BPE)
0.719381
0.558673
0.508439
0.595498
2012
2011
2010
AVG
70.74275
68.72963
62.08542
67.18593
0.040808
0.034781
0.02109
0.032226
0.560903
0.463319
0.379959
0.46806

Ratios

Ratios
2012
2011
2010
AVG
73.2533
70.13382
63.68421
69.02378
0.033963
0.01541
0.032155
0.027176
0.626266
0.528805
0.389585
0.514886
Interpretation:
It is found that Bank of Maharashtra secured the top position with highest
average TA/TD of 69.02 followed by Vijaya Bank (67.76), united bank of India (67.18).
United bank of India is at the bottom most position with lest average TA/TD.
In terms of PPE Vijaya bank is at the top position with least average of
0.046crores followed by United Bank of India (0.032crores) and Bank of Maharashtra
(0.027).
In case of Business per Employee, Vijaya bank is at the first position with
highest average of 0.59crores followed by Bank of Maharashtra (0.51crores) and United
bank of India (0.47crores).
4.3.2 Table Indicating Management Ratio
Ratios
Total Adv to Total Deposits (TA/TD)
Vijaya Bank
67.75761177
0.046277127
0.595497621
UBI
67.18593188
0.032226417
0.468060322
BOM
69.02377781
0.027175869
0.514885521

Ratios
Total Adv to Total Deposits (TA/TD)
Average
Rank
Vijaya Bank
2
1
1
1.3
1
UBI
3
2
3
2.6
3
BOM
1
3
2
2
2
Interpretation:
On the basis of group averages of three sub-parameters, Vijaya bank is at the top most
position with group average 1.33, followed by Bank of Maharashtra (2) and United Bank
23

of India (2.67) which is positioned at last due to its poor performance in all sub
parameters of management efficiency.
4.4 Earnings
4.4.1 Table Indicating Summarized Earnings Ratio of Three Banks
4.4.1.1 Vijaya Bank
Ratios
2012
2011
2010
AVG
Operating Profit to Avg Working Funds
1.284898
1.281261
1.505167
1.357109
Percentage Growth in Net Profit
10.91405
3.258491
93.26806
35.81353
Net Profit to Average Assets (PAT/AA)
0.654804
0.689633
0.765119
0.703185
Ratios
2012
2011
2010
AVG
1.116435
1.208134
0.783159
1.035909
20.74179
62.51086
74.52222
52.59162
0.658711
0.627195
0.463654
0.583187
Ratios
2012
2011
2010
AVG
0.956391
0.671134
0.793616
0.807047
139.8694
-59.6097
21.31898
33.85955
0.518012
0.24079
0.675952
0.478251
4.1.2 United Bank of India
4.1.3 Bank of Maharashtra
Interpretation:
It is found that Vijaya Bank secured the top position with highest average
operating profit to avg working funds of 1.36 followed by United Bank of India (1.04),
Bank of Maharashtra (0.81). Bank of Maharashtra is at the bottom most position with
lest average operating profit to avg working funds.
In terms of Percentage Growth in Net Profit United bank of India is at the top
position with least average of 52.59 followed by Vijaya Bank (35.81) and Bank of
Maharashtra (33.85).
In case of PAT/AA, Vijaya bank is at the first position with highest average of
0.70 followed by united bank of India (0.58) and Bank of Maharashtra (0.48).
4.4.2 Table Indicating Earnings Ratio
Ratios
Op Profit to Avg Working Funds
Net Profit to Avg Assets (PAT/AA)
Vijaya Bank
1.357108756
35.81353472
0.703185198
UBI
1.035909207
52.59162285
0.583186557
BOM
0.807046913
33.85954693
0.478251169

Ratios
Op Profit to Avg Working Funds
Net Profit to Avg Assets (PAT/AA)
Vijaya Bank
1
2
1
UBI
2
1
2
BOM
3
3
3
24
Average
Rank
1.33
1
1.66
2
3
3
Interpretation:
On the basis of group averages, Vijaya bank was at the top position with group
average (1.33) followed by United bank of India (1.67) and Bank of Maharashtra (3)
which failed in all sub-parameters and stood at last place.
4.5 Liquidity
4.5.1 Table Indicating Summarized Liquidity Ratio of Three Banks
4.5.1.1 Vijaya Bank
Ratios
Liquid Assets to Demand Deposits (LA/DD)
Liquid Assets to Total Deposits (LA/TD)
Liquid Assets to Total Assets (LA/TA)
G-Sec to Total Assets (G-Sec/TA)
Approved Securities to Total Assets (AS/TA)
2012
136.6968
7.709121
6.686072
24.74923
24.75393
2011
104.9926
7.404361
6.639158
22.39456
22.41071
2010
94.90197
8.960283
7.902442
20.30166
20.31057
AVG
112.1971
8.024588
7.075891
22.48182
22.49174
2012
74.7088
8.166018
7.133832
22.22939
22.25721
2011
85.92042
9.413268
8.138268
21.23868
21.28378
2010
95.93923
9.354312
8.28165
25.40823
25.47848
AVG
85.52282
8.977866
7.85125
22.95877
23.00649
2012
67.97539
7.506026
6.526279
19.9098
19.9098
2011
61.36904
6.057844
5.29727
24.25545
24.27015
2010
108.0711
10.57523
9.42154
25.65079
25.68706
AVG
79.1385
8.046366
7.081696
23.27201
23.289

Ratios

Ratios
Interpretation:
Vijaya bank is at first place in LA/DD with highest average of 112.20, followed by
United bank of India (85.52) and Bank of Maharashtra (79.14). In case of LA/TD, United
bank of India for first position with highest average of 8.98, followed by Bank of
Maharashtra (8.05) and Vijaya bank (8.02).
In LA/TA, United bank of India is at top with the average 7.85, followed by Bank
of Maharashtra (7.08) and Vijaya bank (7.07). Bank of Maharashtra is at the top
position in G-Sec/TA with an average 23.27, followed by United bank of India (22.96)
and Vijaya Bank (22.48). In terms of AS/TA, Bank of Maharashtra is at top position
with an average 23.29.
4.5.2 Table Indicating Liquidity Ratio
Ratios
L.Assets to Demand Deposits (LA/DD)
L.Assets to Total Deposits (LA/TD)
25
Vijaya Bank
112.1971108
8.024588375
UBI
85.52281597
8.977866284
BOM
79.13850373
8.046365944

L.Assets to Total Assets (LA/TA)
Approved Sec to Total Assets (AS/TA)
7.075890703
22.48181694
22.49173691
7.851250313
22.9587684
23.00649244
7.081696453
23.27201012
23.28900052

Ratios
L.Assets to Demand Deposits (LA/DD)
L.Assets to Total Deposits (LA/TD)
L.Assets to Total Assets (LA/TA)
Approved Sec to Total Assets (AS/TA)
Average
Rank
Vijaya Bank
1
3
3
3
3
2.6
3
UBI
2
1
1
2
2
1.6
1
BOM
3
2
2
1
1
1.8
2
Interpretation:
On the basis of group averages of Liquidity ratio, United bank of India is at the
top position with group average (1.6) followed by Bank of Maharashtra (1.8) and Vijaya
bank (2.6) which failed in all sub-parameters and stood at last place.
4.6 Overall Ranking
4.6.1 Table Indicating Overall Ranking all Three Banks
Banks
C
A
M
E
L
AVG
RANK
Vijaya Bank
2
2.25
1.3
1.3
2.6
1.93
1
UBI
2.25
2.5
2.6
1.6
1.6
2.13
3
BOM
1.75
1.25
2
3
1.8
1.96
2
Interpretation:
It is clear from the table that Vijaya bank is ranked at top position with
composite average 1.9033, followed by Bank of Maharashtra (1.96) and United Bank of
India (2.1367) which stands at the bottom most position.
RESULTS AND DISCUSSION
5.1 Summary of Findings
5.1.1 Capital Adequacy:
The capital adequacy ratio of all the three banks is above the minimum
requirements and above the industry average.
Group averages of capital adequacy indicates Bank of Maharashtra is at the top
position with group average 1.75, followed by Vijaya Bank (2) and United bank of India
(2.25) which stood at the last position due to its poor performance in CAR and Adv/Ast.
(i) Assets Quality: United bank of India and Bank of Maharashtra has shown
remarkable decrease in NPAs. But the NPA of Vijaya bank is increasing every year.
26
Group averages of sub-parameters of assets quality indicates, Bank of

Maharashtra is at the top position with group average 1.25, followed by Vijaya Bank
(2.25) and united bank of India stands at bottom with average of (2.5).
(ii) Management: Professional approach that has been adopted by the banks in
the recent past is in right direction & also it is the right decision.
Group averages of three sub-parameters of Management ratio indicates, Vijaya
bank is at the top most position with group average 1.33, followed by Bank of
Maharashtra (2) and United Bank of India (2.67) which is positioned at last due to its
poor performance in all sub parameters of management efficiency.
(iii) Earnings: Vijaya bank has shown a good earning record. But Bank of
Maharashtra has gone down in its performance. United bank of India performance has
been average.
Earnings ratio indicates, Vijaya bank was at the top position with group average
(1.33) followed by United bank of India (1.67) and Bank of Maharashtra (3) which failed
in all sub-parameters and stood at last place.
(iv) Liquidity: Banks should maintain quality securities with good liquidity to
meet contingencies. United Bank of India are fulfilling this requirement by maintaining
highest credit deposit ratio followed by Bank of Maharashtra and Vijaya bank at last.
Group averages of Liquidity ratio indicates, United bank of India is at the top
position with group average (1.6) followed by Bank of Maharashtra (1.8) and Vijaya
bank (2.6) which failed in all sub-parameters and stood at last place.
(v) Overall Ranking: From the study of camel framework of three public sector
banks the overall ranking indicates that Vijaya bank is ranked at top position with
composite average 1.9033, followed by Bank of Maharashtra (1.96) and United Bank of
India (2.1367) which stands at the bottom most position.
SUGGESTIONS
27
Vijaya Bank is excellent in Earnings ratio and management ratio but lacks in
other ratio like Capital, Assets, and Liquidity etc, so more focus should be
targeted towards these Capital, Assets Management and Liquidity to increase
the bank performance and competitive efficiency.
If we compare Vijaya Bank with Bank of Maharashtra and United bank of
Indias Liquidity ratio it is not quite good. So, Vijaya Bank should improve its
liquidity ratio. The Major focus should be shown to Liquid assets to Total
Deposits ratio, liquid assets to total assest, govt sec to total assets and approved
sec to total assets.
In Vijaya bank, debt equity ratio is continuously rising over the years which are
not good so they have to increase equity or reduce debts in their capital
structure.
Vijaya bank has to give more advances in order to earn more interest. But they
should have to also keep in mind the credit worthiness of the customers.
Vijaya Bank should create more awareness among the people through Targeting
youngsters as well as providing new schemes in order to attract more customers.
The banks should adapt themselves quickly to the changing norms.

The system is getting internationally standardized with the coming of BASELL

II accords so the Indian banks should strengthen internal processes so as to cope
with the standards.
The banks should try to maintain a 0% NPA by always lending and investing or
creating quality assets which earn returns by way of interest and profits.
The bank should focus more on managing Liquidity as it is at the last position
compared to other banks.
CONCLUSION
The current Banking Crisis, which is quite unprecedented, underlines the
importance of regulatory issues and the effects of incompetence in this area. CAMEL, as
a rating system for judging the soundness of Banks is a quite useful tool that can help in
mitigating the conditions and risks that lead to Bank failures.
The report makes an attempt to examine and compare the performance of three
different public sector banks of India i.e. Vijaya Bank, United Bank of India and Bank of
Maharashtra. The analysis is based on the CAMEL Model. The study has brought many
interesting results, some of which are mentioned as below:
All the three banks have succeeded in maintaining CRAR at a higher level than
the prescribed level, 9%. But Vijaya bank has maintained highest which is very good
sign for bank to survive and to expand in future.
In Management Quality, we have found that Business per Employee Ratio and
Profit per Employee Ratio is more in Vijaya bank followed by Bank of Maharashtra and
United bank of India. This shows the growth of the bank as well as efficiency of the
employee, which is very good in all the banks and they will help to the bank to grow in
future.
After evaluating all the ratios, calculations and ratings we have given 1st Rank
to Vijaya bank, 2nd Rank to bank of Maharashtra and 3rd Rank to United bank of
India.
REFERENCES
[1] Bhayani, S. (2006). Performance of the New Indian Private Sector Banks: A
Comparative Study. Journal of Management Research, 5 (11), pp. 53-70.
[2] Cole, Rebel A. and Gunther, Jeffery, (1995). A CAMEL Rating's Shelf Life.
Available at SSRN: http://ssrn.com/abstract=1293504.
[3] Derviz, A., & Podpiera, J. (2008). Predicting Bank CAMEL and S&P Ratings: The
Case of the Czech Republic. Emerging Markets, Finance & Trade, 44 (1), p. 117.
Retrieved April 13, 2010, from ABI/INFORM Global. (Document ID: 1454963901).
[4] Godlewski, C. (2003). Banks Default Modelisation: An Application to Banks from
Emerging Market Economies. Journal of Social Science Research Network, 4 (3),
pp. 150-155.
[5] Gupta, R. (2008). A CAMEL Model Analysis of Private Sector Banks in India.
Journal of Gyan Management, 2 (1), pp. 3-8.
28
[6] Prasuna D G (2003). Performance Snapshot 2003-04. Chartered Financial Analyst,

10 (11), pp.6-13.
[7] Said, M. & Saucier. (2003). Liquidity, solvency, and efficiency: An empirical analysis
of the Japanese banks distress. Journal of Oxford, 5 (3), pp. 354-358.
[8] Kothari, C.R., Research Methodology: Methods and Techniques, Wishwa
Publication, Delhi
[9] The ICFAI Journal of Bank Management Vol.V,NO.3,August 2006
[10] Prasad, K. V. N., Ravinder, G. & Reddy, M, D. (2011). A Camel Model Analysis of
Public & Private Sector Banks in India. Journal on Banking Financial Services &
Insurance Research, 1 (5), pp. 50 72.
Annual Reports:
[11] Vijay bank 2009-2010, 2010-2011, 2011-2012
[12] Bank of Maharasthra 2009-2010, 2010-2011, 2011-2012
[13] United bank of India 2009-2010, 2010-2011, 2011-2012
29

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International Journal of Advanced Scientific

Performance Analysis of Three Public Sector Banks in India

In todays scenario, the banking sector is one of the fastest

Received: 22 Sep 2016;

1.2 Scope of the Study

Volume 03, Special Issue 03, Version I | 28th September 2016

Emerging Innovative Strategies in Business Creating a Competitive Edge | Organized by PG

3.4 Earning Quality

Volume 03, Special Issue 03, Version I | 28th September 2016

Emerging Innovative Strategies in Business Creating a Competitive Edge | Organized by PG

off-site monitoring systems usually provide a more accurate indication of survivability

Debt-Equity Ratio (D/E)

Advance to Assets Ratio

Government Securities to Total Investments

Debt-Equity Ratio (D/E)

Advance to Assets Ratio

Government Securities to Total Investments

Capital Adequacy Ratio (CAR)

4.1.1.2 United Bank of India

4.1.1.3 Bank of Maharashtra

Capital Adequacy Ratio (CAR)

Debt-Equity Ratio (D/E)

Volume 03, Special Issue 03, Version I | 28th September 2016

Government Securities to Total Investments

Capital Adequacy Ratio (CAR)

Debt-Equity Ratio (D/E)

Advance to Assets Ratio

Government Securities to Total Inv

4.1.3 Table Indicating Rank Position of Various Ratios

Capital Adequacy Ratio (CAR)

Debt-Equity Ratio (D/E)

Advance to Assets Ratio

Government Securities to Total Investments

Volume 03, Special Issue 03, Version I | 28th September 2016

Emerging Innovative Strategies in Business Creating a Competitive Edge | Organized by PG

4.2.1.2 United Bank of India

Capital Adequacy Ratio (CAR)

Debt-Equity Ratio (D/E)

Advance to Assets Ratio

Government Securities to Total Investments

Capital Adequacy Ratio (CAR)

Debt-Equity Ratio (D/E)

Advance to Assets Ratio

Government Securities to Total Investments

4.2.1.3 Bank of Maharashtra

4.2.3 Table Indicating Rank Position of Various Ratios

Total Advances to Total Deposits (TA/TD)

Profit per Employee (PPE)

Business per Employee (BPE)

Total Advances to Total Deposits (TA/TD)

Profit per Employee (PPE)

Business per Employee (BPE)

4.3.1.2 United Bank of India

4.3.1.3 Bank of Maharashtra

Total Advances to Total Deposits (TA/TD)

Profit per Employee (PPE)

Business per Employee (BPE)

4.3.3 Table Indicating Rank Position of Various Ratios

Volume 03, Special Issue 03, Version I | 28th September 2016

Emerging Innovative Strategies in Business Creating a Competitive Edge | Organized by PG

Operating Profit to Avg Working Funds

Percentage Growth in Net Profit