AN APPRAISAL OF FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN INDIA

AN APPRAISAL OF FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN INDIA

Ankur gupta ,Rishabh mittal

¹School of Finance And Commerce

GALGOTIA’S UNIVERSITY

Abstract –

There are 88 scheduled commercial banks (SCBs) in India, including 26 public sector banks, 22 private banks (which are not owned by the government but are listed and traded on stock markets), and 31 foreign banks. They have almost 53,000 branches and 17,000 ATMs between them. According to the ICRA rating agency, public sector banks account for nearly 75% of total banking assets, while foreign and private banks account for 18.2% and 6.5 percent, respectively. The goal of this research is to use the CAMEL model to evaluate the efficiency of banking institutions.

CAMEL Appraisal: A CAMEL rating is a supervisor's assessment of an India ’s banking bank's overall condition. The abbreviation "CAMEL" stands for "Bank Capital, Capital Adequacy, Management, Earning, and Liquidity." In 1997, the institution's sensitivity to market volatility was introduced as a sixth component. Auditors obtain confidential information, such as loan quality, during the on bank exam to analyze a bank's financial position and verify its compliance with current regulatory standards. The CAMEL model is a ratio-based methodology for analysing performance of banks. The many ratios that make up this model are described below.

C refers for Capital Adequacy, which means that financial managers must maintain enough capital to cover hazardous assets. Furthermore, it implies that the organisation will continue to uphold its responsibilities, in addition to absorbing unforeseen shocks. The capital to risk-weighted total asset ratio is the most extensively used metric of capital adequacy (CRAR). A minimum of 8% CRAR is required worldwide, according to the Basle criteria defined by the Bank for International, but India, being more conservative, has maintained it at a minimum of 9%.

A indicates for Asset Quality: The soundness of banking firms is determined by asset quality. The deterioration of asset value is a major source of banking concerns since losses are eventually written off against capital, exposing the institution's earning potential. With this in mind, asset quality is measured in terms of the number and intensity of non-performing assets, as well as the efficiency of provisions, recoveries, and asset distribution. Non-performing loans to loans, loan failure to total loans and advances, and recovered to loan default ratios are the major indications of this.