Analysis of Financial Performance of Public Sector Banks in India: CAMEL

2020 ◽  
pp. 097674792096686
Author(s):  
Yudhvir Singh ◽  
Ram Milan
Keyword(s):  
Public Sector ◽  
Banking Sector ◽  
Positive Impact ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Factors Affecting ◽  
Public Sector Banks ◽  
The Government ◽  
And Performance ◽  
Asset Quality

Public sector banks have been merged by the government in the last few years. This is the rationale behind conducting this study. The purpose of this article is to determine the factors affecting the performance of public sector banks in India and the interrelationship between bank-specific determinants and performance of public sector banks. In this article, we shall analyse the financial data of all the public sector commercial banks for a period spread across 11 years (2009–2019); Capital adequacy, Assets quality, Management efficiency, Earning, and Liquidity (CAMEL) has been used as a performance determinant; system generalised method of moments (GMM) analysis has been used to find the effect of determinants on the performance measurement of public sector banks; and CCA (canonical correlation analysis) has been used to find the interrelationship between the bank-specific determinants and the performance of public sector banks. The finding has important implications in terms of performance in the banking sector. Certain limitations of this study are: It is based on secondary data. The study only covers the financial aspects and not the non-financial aspects. It is found that the asset quality is negatively related with performance of public sector banks. Liquidity and inflation are inversely related to performance of public sector banks in India. Capital adequacy is positively related with banks’ performance, but inversely related with banks’ interest margin. GDP growth has a significant positive impact on banks’ performance, but inversely related with banks’ interest income. Inflation rate is inversely related with banks’ performance. Banking sector reforms are insignificantly related with banks’ performance.

Merger of Public Sector Banks in India Under the Rule of Reason

2017 ◽  
Vol 16 (3) ◽  
pp. 259-273 ◽  
Author(s):  
Rani S. Ladha
Keyword(s):  
Public Sector ◽  
Rural Areas ◽  
Banking Sector ◽  
Performance Metrics ◽  
Banking Industry ◽  
Jel Classification ◽  
Public Sector Banks ◽  
Rule Of Reason ◽  
The Government ◽  
And Performance

This article models the idea of rule of reason of the antitrust literature and applies the model to analyse the possible consolidation of the Indian banking industry through merger and acquisition activities. It offers a strategic perspective for public sector banks whereby the banks either meet societal goals or become savvy international players through mergers. India being an emerging economy, the banking industry faces two critical initiatives: (i) proactive servicing of the rural areas and priority sectors and (ii) a serious presence in the international markets to compete with larger global banks. The model developed in this article suggests ways to evaluate and examine mergers in the banking sector in India to support both these initiatives. It proposes that the government could use the threat of merger to induce reluctant public sector banks to meet the critical domestic agenda and performance metrics. Those that meet the societal goals may continue to have the benefit of the status quo. Those that do not are required to merge to form an entity that can internationally compete in raising equity and deposits and providing loans and services. JEL Classification: G34, G38, K21

Investing Productively: The Banking Sector

New India ◽  
2020 ◽  
pp. 145-178
Author(s):  
Arvind Panagariya
Keyword(s):  
Public Sector ◽  
Detailed Analysis ◽  
Banking Sector ◽  
Public Sector Banks ◽  
Formal Economy ◽  
Reserve Bank ◽  
Private Banks ◽  
The Government ◽  
Public Money ◽  
Indian Banks

Banks collect savings by households via deposits and channel them to the most productive investors in the form of credit. What happens to bank credit has a determining impact on growth, especially in the formal economy. A key feature of Indian banks has been repeated episodes of accumulation of non-performing assets followed by their recapitalization by the government using public money. These episodes have been concentrated in public sector banks (PSBs), which continue to account for two-thirds of banking assets. This chapter offers a detailed analysis of these episodes and argues that it is time for the government to give serious thought to privatization of PSBs. PSBs are subject to regulation by both the government and the Reserve Bank of India (RBI), but RBI has limited powers over them. On average, private banks outdo PSBs along nearly all dimensions in terms of efficiency.

The Factors Influencing the Non-Performing Assets in the Indian Banking Sector: An Economic Analysis

2018 ◽  
Vol 9 (10) ◽  
pp. 21080-21086
Author(s):  
Bhaarathi .N ◽  
M. Thilagavathi
Keyword(s):  
Public Sector ◽  
Economic Analysis ◽  
Banking Sector ◽  
Secondary Data ◽  
Test Statistics ◽  
Hausman Test ◽  
The Public ◽  
Public Sector Banks ◽  
Factors Influencing ◽  
Asset Data

Non-Performing Assets are a burning topic of concern for the public sector banks, as managing and controlling NPA is very important. The current paper with the help of secondary data, from RBI website, tried to analyse the 8 years, (2010-2018) net non-performing asset data of 26 public sector banks, by using Hausman test statistics, and with the help of Stata software. The main objective of the study is to find out the factors influencing the Non-Performing Assets in the Indian Banking Sector. This paper also focuses on the reason behind the NPA and its impact on banking operations.

Decoding the Paradox of Dividend Policy: An Empirical Study on Indian Banking Sector

2018 ◽  
Vol 4 (2) ◽  
pp. 113-128
Author(s):  
B. Chandra Mohan Patnaik ◽  
Chandrabhanu Das
Keyword(s):  
Public Sector ◽  
Dividend Policy ◽  
Banking Sector ◽  
Banking Industry ◽  
Liquidity Constraints ◽  
Managerial Efficiency ◽  
Public Sector Banks ◽  
Dividend Payments ◽  
The Government ◽  
High Level

The dividend policy has often been treated as the most complicated and intriguing aspects in corporate finance. Profitability was always cited as the main source of confidence for dividend payments. Numerous articles written on the dividend policy explored several of its other determinants. The most popular Lintner’s Dividend Model has been assessed and applied by researchers in different sectors including the banking sector in India. The results from the banking sector also confirmed to a greater extent the accuracy of Lintner’s Dividend Model. Although Lintner’s Dividend Model had its firm footing in the Indian banking industry, the model has not much explored about liquidity constraints, ownership and managerial efficiency. The above-mentioned predictors are important in the present scenario where many public sector banks paid dividends while having high nonperforming assets. Recently the government has announced a dividend cut for 16 public sector banks due to high level of stressed assets. Hence, profitability and stressed assets are the paradoxical aspects in the dividend policy for the banking industry. Findings from this study have evidence of substantial influence of liquidity constraints, ownership and managerial efficiency and their influence on the dividend policy.

scholarly journals A Study of Priority Sector Lending with special reference to Selected Public Sector Banks in Shimoga District

2020 ◽  
Vol 8 (1) ◽  
pp. 51-55
Author(s):  
S Manjushree ◽  
K V Giridhar
Keyword(s):  
Public Sector ◽  
Special Reference ◽  
Financial Institution ◽  
Secondary Data ◽  
Statistical Tool ◽  
Public Sector Banks ◽  
Irrigated Area ◽  
The People ◽  
Efficient Planning ◽  
The Government

A financial institution has a major role to play in the development of any district as they provide financial assistance to the people who take up income-generating activity. The district is predominantly agriculture having 58% land id irrigated area and 42% rain-fed area. Efficient planning facilitates optimal and needs-based use of available resources for meeting the development needs of the region in an equitable and scientific manner. Priority sector lending is a scheme guided by the Government. As per RBI directive, commercial banks advised granting 40% of their total advances to borrowers in the priority sectors. Priority means to give preference and privilege. This paper provides a platform to understand priority sector lending by public sector banks with special reference to shivamogga district. The District credit plan of shivamogga district during the year 2019-2020 provides the information of outlay. An outlay of Rs.3395 crores has been provided for agriculture out a total priority outlay of RS.6262 crores. The study has used both primary and secondary data. The collected data are embodied by using tables, and analysis was done by using percentage analysis and a statistical tool like X2 test is also used.

scholarly journals Camel Research of Selected Private and Public Sector Banks in India

2019 ◽  
Vol 8 (12) ◽  
pp. 1237-1248
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Capital Adequacy ◽  
Public Sector Banks ◽  
The People ◽  
Start Up ◽  
Private And Public ◽  
Financial Growth ◽  
Earning Quality ◽  
Asset Quality

Banks are the mainstay of any country’s economic development. The money is stored in the bank, wherein the people are risk free of keeping money at home, and whenever required can take their money. The banks also help for any business growth or any start up business. And to meet all this peoples’ requirement and even gain profits, banks sees their financial growth and analyze as what to be done to meet the requirements. Even the people should know, whether the bank in which they have gone on their money is stable and can give back their money back when needed or when the bank fails to shut down due to unavailability of assets or loss which cannot be reclaimed. This report examines the execution of certain private and public sector banks. Five banks from private sector viz. ICICI, HDFC, Axis, YES, Kotak Mahindra and five banks from public sector viz. SBI, PNB, BOB, UBI and Canara bank were chosen for this analysis. The data were collected for a period from 2012-2013 to 2016-2017 (5 years). CAMEL analysis (Capital adequacy, Asset quality, Management efficiency, Earning quality, and Liquidity) was applied towards assessing the performance. Based on CAMEL rating, HDFC & AXIS Bank are considered as performing above average; whereas PNB & Canara Bank is seen as below average. Thus, it could be concluded that in all the parameters of the CAMEL Model and its sub-parameters, the performance of the private sector is found to be better than the public sector. .

Challenges of Disinvestment in Public Sector Banks in India

2016 ◽  
pp. 150-159
Author(s):  
Sushil J. Lalwani ◽  
Shweta Lalwani
Keyword(s):  
Public Sector ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Public Sector Banks ◽  
Opposition Party ◽  
Congress Party ◽  
Privatization Process ◽  
The Government ◽  
Near Future

Both Disinvestment and Privatization process in Public Sector Banks initiated by the then NDA Government came to an end soon after UPA Government took over. The Atal Bihari Vajpayee government had proposed to reduce government holding in state-run banks to 33% but the amendment could not be passed in Parliament as Congress, which was the main Opposition party, blocked the move. Later on Congress party with other partners came to power and even The Ministry of Disinvestment was closed .The recommendations of Disinvestment Commission could not be implemented. For last one decade disinvestment process came to a grinding halt, however, now again there are possibilities that Public Sector Banks may initiate the process again. Privatization process may seem to be a remote possibility at present, however, Disinvestment is on agenda of present government. The Government is now set to reduce shareholding to less than 52% while maintaining ownership but selling additional shares which will infuse more capital to fulfil capital adequacy norms as per Basel III. There are a number of challenges to this process and it is necessary to expedite the process. It is assumed that disinvestment process will make public sector banks more accountable and also efficiency may improve, ultimately pave way for privatization in near future.

scholarly journals The Effect of Capital Adequacy on Returns of Assets of Commercial Banks in Kosovo

2019 ◽  
Vol 8 (2) ◽  
pp. 201
Author(s):  
Halit Shabani ◽  
Fisnik Morina ◽  
Valdrin Misiri
Keyword(s):  
Commercial Banks ◽  
Fixed Effects ◽  
Banking Sector ◽  
Negative Impact ◽  
Positive Impact ◽  
Financial Institution ◽  
Banking System ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Capital Adequacy Ratio

The purpose of this study is to analyze the effects of capital adequacy on the return of assets to the banking sector in Kosovo. The capital adequacy ratio measures the ability of a financial institution to meet its liabilities by comparing its capital with its assets. As the banking system is one of the strongest points of our country's economy, it is understood that the capital adequacy ratio is used by banks to determine the adequacy of their capital holdings while taking their risk exposures into account.This study will provide empirical evidence of the relationship between capital adequacy and return on commercial bank assets in Kosovo during 2008-2017. It will be using secondary data obtained from audited reports of domestic banks and reports from the Central Bank of Kosovo. To measure the empirical results during this research, these econometric methods have been used: the linear regression model, the model of the fixed effects, and the random model and the GMM model. Based on the results we can conclude that capital adequacy has a positive impact on asset returns and has a significant relationship. In addition, other factors have had a positive and negative impact on the return of commercial banks' assets in Kosovo. Keywords: capital adequacy, return on assets, loans, deposits, interest rates.JEL Classification: G21, G31, G32

Indian corporations are unlikely to set up banks

2020 ◽  
Keyword(s):  
Public Sector ◽  
Central Bank ◽  
Banking System ◽  
Capital Adequacy ◽  
Content Type ◽  
Public Sector Banks ◽  
The Government ◽  
Set Up ◽  
Bad Debt

Significance The government and central bank are looking for ways to strengthen the country’s banking system, which is beset by low capital adequacy ratios (CARs) and rising non-performing assets (NPAs). India’s leading conglomerates are asset rich, and their profitability is growing. Impacts The RBI will come under pressure to increase regulation of private as well as public sector banks. Many state-owned banks will merge in a bid to reduce their bad debt. Small NBFCs will face a challenge to sustain liquidity.

Analysis of the Factors Affecting Bank Profitability: Evidence of Tanzania Commercial Banks

2021 ◽  
Vol 39 (8) ◽  
Author(s):  
Lisa Estrada Ngweshemi ◽  
Aliya Zhakanova Isiksal
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Management Control ◽  
Capital Adequacy ◽  
Internal Variables ◽  
Factors Affecting ◽  
External Data ◽  
Private And Public ◽  
Asset Quality ◽  
The Impact

Only a successful and consistent banking sector can play the role of financial intermediary in the economy properly. As an intermediary in the modern economy, the bank must be profitable. The general aim of this study focuses on analyzing the factors that influence the profitability of private and public commercial banks in Tanzania. By the use of annual time series internal and external data for the period 2013 to 2019, and a quantitative approach methodology using GMM technique analysis of the impact of the selected determinants was made. The results from bank-internal variables comprised of four statistically significant variables which are capital adequacy, asset quality, loan composition, and cost efficiency while the rest is insignificant. Likewise, the macro-economic determining factors (growth domestic product (GDP) and inflation rate) were found to be non-significant. The empirical results have shown that profitability is more explained by bank-specific determinants that are directly controlled by the management than the macroeconomic factor variables which are beyond the reach of management control.

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