scholarly journals Management of NPA via Capital Adequacy Norms

2014 ◽  
Vol 3 (1) ◽  
pp. 62-74
Author(s):  
Ramesh Das ◽  
Arun Kumar Patra ◽  
Utpal Das
Keyword(s):  
Banking Sector ◽  
Capital Adequacy ◽  
Foreign Banks ◽  
Committee Report ◽  
Reform Agenda ◽  
Significance Levels ◽  
Back Ground ◽  
Banking Business ◽  
Bank Group ◽  
Asset Quality

The reform agenda in the financial as well as banking sector in the Indian economy was not only in the target of achieving profitable banking business but also to reduce the magnitude of banking funds locked in the bad debt account so that, among others, the real delivery of credit (the credit-deposit ratio) rises in overall fronts. The Narasimham Committee Report in respect of reducing magnitude of non- performing assets has been framed in line with the Basel Norm regarding the asset quality of the banks where capital adequacy ratio has been fixed for different banks to achieve within different time periods. The present study, under such a back ground, has been structured to examine the profile of all Scheduled Commercial Banks in all ranges of CRAR over time in aggregate and bank group specific and to measure degree of correlation of NPA-Deposit ratio with CRAR trends and Credit-Deposit Ratio in all ranges of CRAR and their significance levels for the time period 1995-96 to 2009-2010. It has been observed that there has been variation across banks in following the guidelines of the reform committee. SBI group and foreign banks have been performing well in this respect. There has been rising trend of the proportions of banks in the above 10 per cent range of CRAR. The NPA/D ratio and C-D ratio have been observed to be positively and negatively correlated respectively for the first three ranges of CRAR and reverse in the above 10 per cent range. The correlation between the NPA/D ratio and C-D ratio is negative and significant.

scholarly journals Management of NPA via Capital Adequacy Norms: Its Effect Upon The Profile of Indian Banks and Credit Deposit Ratio

2016 ◽  
Vol 3 (1) ◽  
pp. 62
Author(s):  
Ramesh Chandra Das ◽  
Arun Kumar Patra ◽  
Utpal Das
Keyword(s):  
Banking Sector ◽  
Capital Adequacy ◽  
Foreign Banks ◽  
Committee Report ◽  
Reform Agenda ◽  
Significance Levels ◽  
Back Ground ◽  
Indian Banks ◽  
Bank Group ◽  
Asset Quality

<div><p>The reform agenda in the financial as well as banking sector in the Indian economy was not only in the target of achieving profitable banking business but also to reduce the magnitude of banking funds locked in the bad debt account so that, among others, the real delivery of credit (the credit-deposit ratio) rises in overall fronts. The Narasimham Committee Report in respect of reducing magnitude of non- performing assets has been framed in line with the Basel Norm regarding the asset quality of the banks where capital adequacy ratio has been fixed for different banks to achieve within different time periods. The present study, under such a back ground, has been structured to examine the profile of all Scheduled Commercial Banks in all ranges of CRAR over time in aggregate and bank group specific and to measure degree of correlation of NPA-Deposit ratio with CRAR trends and Credit-Deposit Ratio in all ranges of CRAR and their significance levels for the time period 1995-96 to 2009-2010. It has been observed that there has been variation across banks in following the guidelines of the reform committee. SBI group and foreign banks have been performing well in this respect. There has been rising trend of the proportions of banks in the above 10 per cent range of CRAR. The NPA/D ratio and C-D ratio have been observed to be positively and negatively correlated respectively for the first three ranges of CRAR and reverse in the above 10 per cent range. The correlation between the NPA/D ratio and C-D ratio is negative and significant.</p></div>

STUDY OF CAMEL RATING SYSTEM IN BANKING SUPERVISION- A CASE STUDY OF NEPAL BANGLADESH BANK LTD

2018 ◽  
Vol 1 (3) ◽  
pp. 74-96
Author(s):  
Dr. S.U. Gawde ◽  
Prof.. Alekha Chandra Panda ◽  
Prof. Devyani Ingale
Keyword(s):  
Banking Sector ◽  
Capital Adequacy ◽  
Rating System ◽  
Financial Risks ◽  
Economic Activities ◽  
Effective Measure ◽  
Critical Elements ◽  
Financial Soundness ◽  
The Usa ◽  
Asset Quality

The banking sector  plays in important role in the country’s economy, acting as an intermediary to all industries. As the banking sector has a major impact on the economy as a whole. Performance evaluation of the banking sector is an effective measure and indicator to check the soundness of economic activities of an economy. Many methods are employed to analyse banking performance. One of the popular methods is the CAMELS framework, developed in the early 1970’s by federal regulators in the USA. The CAMELS rating system is based upon an evaluation of six critical elements of a financial institution’s operations: Capital adequacy, Asset quality, Management soundness, Earnings and profitability, Liquidity, and Sensitivity to market risk. Under this bank is required to enhance capital adequacy, strengthen asset quality, improve management, increase earnings, maintain liquidity, and reduce sensitivity to various financial risks. In the present study an attempt was made to evaluate the performance & financial soundness of NEPAL BANGLADESH BANK LTD using CAMEL approach. Quantitative parameters are computed and updated on a quarterly basis while in respect of the qualitative parameters the ratings / marks given at the time of previous on-site examination

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.

scholarly journals Cross-border banking and foreign branch regulation in Europe

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lucia Gibilaro ◽  
Gianluca Mattarocci
Keyword(s):  
Banking Sector ◽  
Foreign Bank ◽  
Capital Adequacy ◽  
Foreign Banks ◽  
European Economic Area ◽  
The European Union ◽  
Content Type ◽  
Cross Border ◽  
European Banking

Purpose This paper aims to examine the relevance of cross-border activity in the European banking sector, evaluating the role of differences in regulation to explain the level of interest in entering foreign markets. Design/methodology/approach The sample considers all banks in the European Union (EU 28) existing at year-end 2017, and information about the ultimate owners’ nationality to classify local and foreign banks is collected. The analysis provides a mapping of regulatory restrictions for foreign banks and evaluates how they impact the role of foreign players in the deposit and lending markets. Findings Results show that the lower are the capital adequacy requirements, the higher are the amounts of loans and deposits offered by non-European Economic Area banks and, additionally, the higher the probability of having a foreign bank operating in the country. Originality/value This paper provides new evidence on regulatory arbitrage opportunities in the EU and outlines differences among EU countries not previously studied.

scholarly journals Performance evaluation using the CAMELS model: A comparative study of local commercial banks in Qatar and Kuwait

2021 ◽  
Vol 16 (3) ◽  
pp. 152-165
Author(s):  
Rawan Abuzarqa ◽  
◽  
Tibor Tarnóczi ◽  
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Financial Analysis ◽  
Banking System ◽  
Capital Adequacy ◽  
Accounting Data ◽  
Study Approach ◽  
Analysis Process ◽  
Two Factors ◽  
Asset Quality

Nowadays, the banking system is undergoing significant changes. Digitalization that appears in Industry 4.0 also pioneers in the banking system, so we can also talk about Bank 4.0 as a new development direction. In this shift in the digital age, it becomes even more critical to examine the performance of banks. The case study approach was based on an attempt to diagnose the performance of a sample of local commercial banks in Qatar and Kuwait based on their financial statements for the period 2013–2017, and approve the existing accounting data as sources for the financial analysis process, by using essential financial analysis tools such as financial ratios. The output of the analysis was used to measure performance. All this is applicable when using the CAMELS rating model to evaluate the financial performance of the banking sector. The results show statistically significant differences between countries for four factors (Asset quality, Management efficiency, Earnings quality and Sensitivity) and none for the remaining two (Capital adequacy and Liquidity management) because the significant level is higher than 5%. However, the two factors with no significant differences are vital to the prudent operation of banks, mainly that Qatari banks perform better than Kuwaiti banks.

scholarly journals Determinants Of Liquidity Risk In Banking Sector On The Indonesia Stock Exchange

2019 ◽  
Vol 23 (3) ◽  
pp. 461
Author(s):  
Susy Muchtar, Gianvha Sena Rustimulya
Keyword(s):  
Banking Sector ◽  
Stock Exchange ◽  
Liquidity Risk ◽  
Capital Adequacy ◽  
Economic Cycle ◽  
Capital Adequacy Ratio ◽  
Bank Managers ◽  
Negative Effect ◽  
Independent Variable ◽  
Asset Quality

This research aims to determine the factors that impact liquidity risk. The sample used in this research is a banking sector that is listed on the Indonesia Stock Exchange (IDX) in the period 2008-2017. Independent variable in this research bank size, deposits, profitability, cost of funds, asset quality, capital adequacy ratio, economic cycle, and inflation and the dependent variable is liquidity risk. The amount of the sample of the research amounted to 25 banking sector, by using purposive sampling. The result of this research indicates that bank size, profitability, cost of funds, and asset quality have a negative effect on liquidity risk, while deposits, capital adequacy ratio, economic cycle, and inflation have no impact on liquidity risk. The results of this study are expected to be used as a reference for bank managers and investors in looking at the factors that affect the liquidity risk in the banking industry.

scholarly journals Financial Sustainability Assessment of the Largest Systemically Important Credit Institutions in the Context of the Global Instability

2021 ◽  
Vol 12 (2) ◽  
pp. 10
Author(s):  
Oksana V. Savchina ◽  
Ekaterina A. Sidorina ◽  
Olga V. Savchina ◽  
Petr S. Shcherbachenko
Keyword(s):  
National Economy ◽  
Financial Stability ◽  
Banking Sector ◽  
Sustainability Assessment ◽  
Banking System ◽  
Capital Adequacy ◽  
Business Strategies ◽  
Financial Sustainability ◽  
Management Efficiency ◽  
Asset Quality

The national banking system is the driver for the national economy that unites various types of credit organizations that operate within a single monetary mechanism. The banking system is a part of the economic “organism”, whose condition determines the stable development of society. The problems that currently exist in the banking sector reflect instability of the entire economic situation in the country. The reasons are a reduction in budget support for organizations and the inability of some of them to adapt to changing external conditions. In crisis conditions, it is of particular interest to assess the financial sustainability of the activity of the largest systemically important banks in the country, which are the “circulatory system” of the national economy. This article assesses the financial stability of PJSC “Sberbank of Russia” based on an analysis of the main groups of its performance indicators for 2007-2019: capital adequacy, asset quality, management efficiency, profitability and liquidity. According to the research results, it is revealed that during the period under review, the activity of Sberbank is stable with respect to such indicators as capital adequacy, profitability, management efficiency and liquidity. Bank activity is unstable relative to asset quality indicators. The high value of the asset quality ratio characterizes the increased degree of riskiness of operations conducted. The ratio of overdue debt is above the norm, which adversely affects the financial stability of the bank. The most important achievement of Sberbank of Russia in 2019 - the launch of a new digital platform of the bank. The use of artificial intelligence technologies has already become an important driver of Sberbank business. Due to the pandemic of COVID-19, the Russian banking sector may face a number of problems. By 2021-2022, the growth is expected only by those banks that will build an effective risk management system and will be able to adapt their business strategies to the new economic realities and tougher requirements of the regulator.

scholarly journals What Determines Banks’ Profitability? Evidence from Emerging Markets—the Case of the UAE Banking Sector

2017 ◽  
Vol 6 (1) ◽  
pp. 77 ◽  
Author(s):  
Anupam Mehta ◽  
Ganga Bhavani
Keyword(s):  
Panel Data ◽  
Banking Sector ◽  
Primary Objective ◽  
Commercial Banking ◽  
The Body ◽  
Capital Adequacy ◽  
Internal Variables ◽  
Return On Equity ◽  
Domestic Banks ◽  
Asset Quality

The primary objective of this study is to examine the variables that impact the profitability of UAE banks. The current study provides evidence of important bank-specific, macroeconomic, and industry-specific variables that have affected UAE banks’ profitability by analyzing balanced panel data for 2006 to 2013. Both Islamic and non-Islamic, domestic commercial banks are considered for the purposes of this study. This paper puts into relief the determinants of the profitability of the domestic commercial banking sector of the UAE. The sample comprises 19 UAE domestic banks. The paper examines internal variables (company-level indicators), which include size, liquidity, and capital adequacy, as well as external variables, which include macroeconomic and industry-specific variables. Panel data regression analysis is used for the analysis. Based on the empirical analysis, the cost efficiency, nontraditional revenue sources, and high asset quality are the most significant bank-specific variables, and bank managers can use them to make future policy decisions. The GDP, a macroeconomic variable, is found to be relevant to the return on assets and return on equity. The model generated in the study can explain a greater than 75% change in the total variance of various measures of profitability. This paper adds to the body of knowledge by empirically highlighting the most recent and extensive panel data for the entire domestic banking sector of the UAE, undoubtedly one of the most important banking sectors in the Middle East. The paper uses a range of independent variables for the internal, macroeconomic, and industry-specific variables.

scholarly journals Comparative Performance Evaluation of Selected Commercial Banks in India using CAMELS Rating Model

2018 ◽  
Vol 2 (1) ◽  
pp. 24 ◽  
Author(s):  
Elizabeth M. Samuel
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Global Market ◽  
Capital Adequacy ◽  
Annual Reports ◽  
Comparative Performance ◽  
Earning Capacity ◽  
Management Efficiency ◽  
Asset Quality ◽  
Rating Model

Sound financial health of a bank is the guarantee not only to its depositors but is equally significant for the shareholders, employees and whole economy as well. As sequel to this maxim, efforts have been made from time to time to measure the financial position of each bank and manage it efficiently and effectively.Indian banking sector widely includes commercial, nationalized, co-operative, private and international banks in its fold. In the present study an attempt is made to evaluate the financial performance of three major commercial banks (IOB, Canara Bank and Syndicate Bank) using CAMELS Rating Model. CAMELS rating model is basically an approach widely used to measure the performance of banking unit inside and outside India. This model measures the performance of banks from all important parameters like Capital adequacy, Asset quality, Management efficiency, Earning quality, Liquidity and sensitivity to market. The study is based on secondary data drawn from the annual reports. For the purpose of evaluation the data’s of five years (2011-2016) before demonetization are analyzed by calculating the 17 ratios related to CAMELS rating model. It is found out that according to Basel Norm the overall state of capital adequacy of all the three banks are satisfactory. As far as loan portfolio is concern, the overall state of asset quality and management efficiency are satisfactory, whereas the earning capacity of the banks is not and the liquidity is also not satisfactory. The high level of NPAs and sluggishness in the domestic growth, slow recovery in the global economy and the continuing uncertainty in the global market leading to lower exports and imports are one of the main reasons for the low earning capacity of banks along with these reasons RBI’s new rules to make higher provisioning for substandard assets also affected the earning capacity of all the three banks. Based on the evaluations all the three commercial banks should improve its earning capacity and the liquidity position to perform efficiently and effectively.

scholarly journals Pengaruh Risk Profile, Good Corporate Governance, Earning, Capital terhadap Value of Firm di Bursa Efek Indonesia

2020 ◽  
Vol 9 (2) ◽  
pp. 137
Author(s):  
Rhevinalda Bima Prakarsa ◽  
Winwin Yadiati ◽  
N. R. Handiani Suciati
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Banking Sector ◽  
Stock Exchange ◽  
Risk Profile ◽  
Capital Adequacy ◽  
Estimation Model ◽  
Self Assessment ◽  
Good Corporate Governance ◽  
Asset Quality

<em>The purpose of the company is to increase the firm value. But in the last six years, firm value of the banking sector has fluctuated and even tends to decrease. The level of banking health can be expected to increase the firm value. The level of banking health can be measured using Risk Profile (RP), Good Corporate Governance (GCG), Earning, Capital (RGEC) method which is the latest formula after Capital, Asset Quality, Management, Earning, Liquidity (CAMEL). The purpose of this study was to determine effect of the banking health on the firm value. The research method uses partial panel data regression through the determination of estimation model and classical assumption test in advance using 33 banks listed on Indonesia Stock Exchange (IDX). The results showed that there was significant and positive effect between Return on Asset (ROA) and Capital Adequacy Ratio (CAR) on firm value. Beside, there was positive but not significant effect between GCG and risk profile on firm value. The results showed that capital is a factor of business developer and company earnings can show as a signal of quality prospects. The application of GCG is not a significant influence because the results of self-assessment are not in accordance with fraud that occurs. Banks must be able to manage their risk, so that the risk can be an encouragement for them to produce high values.</em>

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