English Assessing Banking Sector Performance: A Comparative Camel Study between Public and Private Banks

Abstract

Purpose: To assess and determine the top-performing Indian public and private banks while examining any discernible disparities in their financial performance. Methodology: 12 public and 20 private banks were evaluated for financial performance from 2019 to 2023, using composite ranking and independent sample t-tests. Findings: All banks met the mandatory minimum requirement of a 9% Capital Adequacy Ratio, as revealed by the study results. The Bandhan Bank was the best performer in “Capital Adequacy” and “Earning Ability”, HDFC in “Asset Quality” and “Management Quality”, and Bank of India and IDBI Bank in “Liquidity Adequacy” parameters. Kotak Mahindra Bank secured the top position in the overall ranking, followed by IndusInd Bank and HDFC Bank. Punjab & Sind Bank, Bank of Maharashtra, and UCO Bank occupied the bottom positions. Nevertheless, most of these banks lied in a similar rank region over the last five years except Bandhan Bank, RBL Bank, and DCB Bank, who had achieved substantial success. The test results indicated a significant difference in rank performance between public and private banks in the CAMEL model, except for ratios involving liquid assets to total deposits and total assets. Lastly, looking at the trend, the study found that private banks dominated the banking industry and grew faster than public banks. Moreover, public banks were not efficiently managing advances and assets, resulting in higher NPA. Practical implication: The result of this study will be significant to regulators, government, investors, customers, and management in making decisions based on market risk.