Performance Analysis of Bankex Banks through Camel Model

Abstract

Banks are barometer of every economy. Indian banks are well known for their closed and cautious operations. A sea change is experienced in operations of Indian banking sector due to varied reasons like tough competition from private banks, expectation of 24x7 banking services, financial inclusion and corporate as new entrant in banking sector Indian banks have been always appraised for their accuracy and firm foot-holding in the odd times, when other global banks were feeling the hiccups of financial turmoil such as subprime mortgage and recession. The report card of banks is evaluated on its operational efficiency and risk management practices adopted by banks. Fundamental ratio based analysis is a popular tool to appraise the performance of the banks. CAMEL model provides the roadmap of key ratios that can be utilized for evaluating the performance of the banks. Using, the renowned CAMEL Model, the paper comments on the performance of 14 major banks, which constitute the 'Bankex'indices. Descriptive research has been adopted to evaluate the 14 banks (7 public and private each) on CAMEL Model for a cross sectional data of 14 years period (2000-2013) over 22 variables (ratios). All the secondary data have been gathered from ACE Analyzer database and Money control website. Based on the composite ranking as per CAMEL analysis it was found that ICICI, IndusInd, Kotak Mahindra, Yes Bank and IDBI come in the cadre of top five banks. Bottom five banks list constituted of SBI, PNB, UBI, BOI and Axis. The major limitation of the study was that more banks could have been taken for study. Time horizon could have been expanded.