Performance Appraisal of Indian Public Sector Banks

Abstract

The strength of economy of any country basically hinges on the strength and efficiency of financial system, which, in turn, depends upon a sound and solvent banking system. Banks needs to be more closely watched than any other type of economic unit. The regulators have recommended bank’s supervision through CAMEL rating model to assess the performance of banks, which is better than the earlier systems. The present study aims to measure the financial performance of Indian public sector banks excluding State Bank Group for the period of 2006-11. The study found that Bank of Baroda was at the first position with overall composite ranking average of 6.05 due to its better performance in the areas of liquidity and asset quality, closely followed by Andhra Bank with overall composite ranking average of 6.15 because of its strength in the spheres of management efficiency, capital adequacy and asset quality. United Bank of India hold the bottom most rank with overall composite ranking average of 14.60 due to management inefficiency, poor assets and earning quality. The study recommends that United Bank of India has to improve its management efficiency, assets and earning quality. Similarly Bank of Maharashtra should take necessary steps to improve its liquidity position and management efficiency.

Keywords: Indian Public Sector Banks, CAMEL, Performance Appraisal

JEL Classification: G21, G24, G28