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CHAPTER-5
ANALYSIS OF RESULTS AND DISCUSSION
For studying the impact of the Risk Based Supervisory measures on
the working of the Banks 6 Parameters have been chosen. They are:
I) Asset Quality-Net NPA to Total Advances Ratio
II) Net Interest Income to Total Assets Ratio
III) Net Profit to Total Assets Ratio
IV) Operating Expenses to Total Assets
V) Interest Expended to total Assets Ratio
VI) Capital Adequacy Ratio
ASSET QUALITY
One of the most important indicators for ascertaining the soundness
of a Bank’s working is the quality of Assets. In the CAMELS rating of
Banks, Asset quality is the second soundness indicator after the
Capital Adequacy. Prior to the Reform period Public Sector Banks
have suffered the most and have reported high non-performing assets
of disturbing proportions. In some Banks the ratio was as high as 25-
30%. The Regulator has given utmost priority to address this issue
and streamlined the procedures by issuing the Income Recognition
and Asset Classification Norms. The other initiatives to improve the
Asset Quality are the strict implementation of the PCA(Prompt
Corrective Action) mechanism, CDR (Corporate Debt Restructuring
Scheme etc.
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In this study we have compared the performance of the three Sectors
of Banks viz., Public Sector Banks, Private Sector Banks and Foreign
Banks.
The data relating to this parameter has been collected from secondary
sources and has been subjected to suitable statistical analysis with
the help of SPSS 19.0 version.
The data which covers the study period of 13 years viz.,1995 to 2008
has been rearranged.(Annexure 2) The period is divided into two
blocks, the first block consisting of 7 years data from 1995 to 2002
and the second from 2003 to 2008 so that it serves as two samples.
Now the sample means for all the three Sectors viz., Public, Private
and Foreign Banks have been computed for these two periods and
designated as Mean I and Mean II. This will enable Researcher to test
the Hypotheses as we are in a position to see whether there is any
significant difference in these means and also to measure the effect of
the Risk Based Supervisory measures taken by the Reserve Bank of
India, whether the impact of these measures is uniform among all the
Sectors, or are there significant differences in their performance.
OVERALL COMPARISON OF THE PERFORMANCE
OF ALL THE SCHEDULED COMMERCIAL BANKS
H0: There is no significant change in the Ratio of Net NPA to
total Advances of Scheduled Commercial Banks over the study
period.
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H1: There is a significant change in the Ratio of Net NPA to
total Advances of Scheduled Commercial Banks over the study
period.
An attempt has been made to compare the performance of all the
sample Scheduled Commercial Banks with respect to their
Performance over the study period in regard to the Ratio
of Net NPA to total Advances.
Table: 1.1
Paired Samples Statistics
Mean N
Std.
Deviation
Std. Error
Mean
Pair 1 Ist means 6.2211 49 3.9966 .5709
IInd means 2.7048 49 2.8851 .4121
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Comparison of the two means reveals that there is a significant
change among all the Scheduled Commercial Banks. The second
mean at 2.7048 is much lower when compared to the first mean of
6.2211. The correlation is observed to be positive.
The ‘t’ test suggests that the level of variations in the performance of
Scheduled Commercial Banks is significant.
As per the paired sample statistics, since there is significant change in
the working of the Scheduled Commercial Banks, the Null Hypothesis
is rejected.
SECTORWISE ANALYSIS: PUBLIC SECTOR BANKS
After the Group wise analysis, the following tables present the sector
wise performance analysis in regard to Public Sector Banks.
Table 1.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 Ist means
&IInd means
49 .179 .217
Table 1.3 :Paired Samples Test
Paired Differences
t df
Sig. (2
tailed)Mean
Std.Deviatio
n
Std.Error
Mean
95%Confide
nce Interval
of the
Difference
Lower
Uppe
r
Pair 1 Ist
means
IInd
means
3.5163 4.4899 .64141 2.226 4.806 5.48 48 .000
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HYPOTHESIS
H0: There is no significant change in the Ratio of Net
NPA to total Advances of Public Sector Banks over the
study period.
H1: There is a significant change in the Ratio of Net NPA
to total Advances of Public Sector Banks over the study
period.
Table: 2.1
Paired Samples Test
Mean N
Std.
Deviation
Std.Error
Mean
Pair 1 Ist means 8.3795 25 3.5314 .7062
IInd means 2.5838 25 3.3787 .6757
Table: 2.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 Ist means
& IInd means
25 .074 .725
Table: 2.3 : Paired Samples Statistic
Paired Differences t df Sig.
(2-
tailed
)
Mean Std.
Devia
tion
Std.
Error
Mean
95%
Confidence
Interval of the
Difference
Lower Upper
Pair 1 Ist
means
IInd
means
5.795 4.70 .9407 3.854 7.7371 6.161 24 .000
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The first mean is computed for the period 1995-96 to 2001-2002 and
the second mean is computed is computed for the period 2002-2003
to 2007-2008. The second mean at 2.5838 is significantly lower than
the first mean at 8.3795, which indicates that there is significant
difference between the two means. They show substantial
improvement in the working of the Public Sector Banks.
As per Karl Person’s Correlation test there is correlation between the
means belonging to the same Sector. The results indicate very
insignificant correlation. As per the ‘t’ test at 0.05 level of
significance, it is observed that there is significant difference between
means with respect to Public Sector Banks.
As per the Paired Samples Statistics the Public Sector Banks have
shown significant change in the Ratio of Net NPA to total Advances.
Hence the null hypothesis is rejected.
Private Sector Banks
HYPOTHESES
H0: There is no significant change in the Ratio of Net NPA to
total Advances of Private Sector Banks over the study
period.
H1: There is a significant change in the Ratio of Net NPA to
total Advances of Private Sector Banks over the study
period.
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Table: 3.1
Paired Samples Statistics
Mean NStd.
Deviation
Std.
ErrorMean
Pair 1 Ist means 4.0368 15 1.9093 .4929
IInd means 2.7538 15 1.1583 .2990
Table: 3.2 Paired Samples Correlation
N Correlation Sig.Pair 1 Ist means & IInd
means
15 .670 .006
Table: 3.3 Paired Samples Test
Paired Differences
t df
Sig.
(2-
taile
d)Mean
Std.
Deviati
on
Std.
Error
Mean
95%
Confidence
Interval of the
Difference
Lower Upper
Pair 1 Ist
means
- IInd
means
1.2829 1.4232 .36748 .49479 2.071 3.49 14 .004
The first mean is computed for the period 1995-96 to 2001-2002 and
the second mean for the period 2002-2003 to 2007-2008. The
SECOND mean at 2.7538 is significantly lower than the first mean at
4.036, which indicates that there is significant difference between the
means. This shows substantial improvement in their working. As per
the Paired Sample Statistics, there is significant difference in the
working of these Banks hence the null hypothesis is rejected.
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FOREIGN BANKS
Table: 4.1
Paired Samples Statistics
Mean N
Std.
Deviation
Std. Error
Mean
Pair 1 Ist
means
3.8663 9 4.7225 1.5741
IInd
means
2.9590 9 3.6367 1.2122
Table: 4.2 Paired Samples Correlations
N Correlation Sig.
Pair 1 Ist means& IInd means
9 .516 .155
Table 4.3 Paired Samples Test
Paired Differences
t df
Sig. (2-
tailed)Mean
Std.
Deviatio
n
Std.
Error
Mean
95% ConfidenceInterval of the
Difference
Lower Upper
Pair 1 Ist
means
- IInd
means
.9072 4.2185 1.4061 -2.3353 4.1499 .645 8 .537
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As can be seen from the above Table the second mean at 2.95904 is
marginally lower than the first mean at 3.8663.
As per Karl Person’s Correlation test, the results indicate positive
correlation. As per the ‘t’ test since the significance value is more than
0.05, it is concluded that there is no significant difference between
the averages of the first mean and the averages of the second mean
with respect to Foreign Banks. Since as per the paired sample
statistics, Foreign Banks have not shown significant change in the
ratio of NPAs to Total Advances, the Null Hypothesis is accepted.
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Table: 5
Group Statistics
bank type
N Mean
Std.
Deviation
Std. Error
MeanIst means public 25 8.3795 3.5314 .7063
private 15 4.0368 1.9093 .4929
IInd means public 25 2.5838 3.3787 .6757
private 15 2.7538 1.1583 .2991
overall
means
public 25 5.2300 2.4037 .4807
private 15 3.3434 1.3827 .3570
bank type
N Mean
Std.
Deviation
Std. Error
Mean
Ist means private 15 4.0368 1.9093 .4929
foreign 9 3.8663 4.7225 1.5743
IInd means private 15 2.7538 1.1583 .2990
foreign 9 2.9590 3.6367 1.2122
overall
means
private 15 3.3432 1.3827 .3570
foreign 9 3.3635 3.6122 1.2040
A comparison of Public Sector and Private Sector Banks has been
made. The results have shown that during the first phase Public
Sector Banks were far behind Private Sector Banks, with their 1 st
mean of 8.3795 as against the Private Sector Banks mean of 4.036.
The scenario has drastically changed during the second Phase. The
bank type
N Mean
Std.
Deviation
Std. Error
Mean
Ist means public 25 8.3795 3.5314 .7062
foreign 9 3.8663 4.7225 1.5741
IInd means public 25 2.5838 3.3787 .6757
foreign 9 2.9590 3.6367 1.212
overall means public 25 5.2300 2.4037 .4807
foreign 9 3.3635 3.6122 1.204
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performance of Private Sector Banks at 2.7538 though marginally
higher as compared to the Public Sector Banks ratio of 2.5838 is
considered a substantial reduction when compared to the previous
period.
A similar comparison of Public Sector and Foreign Banks has also
been made. The results have shown that during the first phase foreign
Banks were ahead of Public Sector Banks, with their 1st mean of
3.8663 as against the Public Sector Banks mean of 8.3795. During
the second Phase the performance of Public Sector Banks has
drastically improved from 8.3795 to 2.5838.Foreign Banks have also
achieved a reduction from 3.8663 to 2.9590. However the progress
achieved by them is far lower when compared to the Public Sector
Banks.
The performance of Private Sector Banks vis-à-vis Foreign Banks
reveals that during the 1st phase private banks with a mean of 4.036
were slightly behind Foreign Banks whose 1st mean is3.8863. During
the second phase, the position of the Private Sector Banks is better
with a lower ratio of 2.7538 as against the ratio of Foreign Banks
which is 2.9590.
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Table:6
Inference:
From the above table it is conclude that
i) There is significant difference between the three groups with respect
to first means
ii) There is no significant difference in the case of second mean, and
ANOVA
Sum ofSquares df
MeanSquare F Sig.
Ist means BetweenGroups
237.939 2 118.970 10.350 .000
Within Groups 528.767 46 11.495
Total 766.707 48
IInd mean BetweenGroups
8.469 2 4.235 1.422 .252
Within Groups 136.958 46 2.977
Total 145.427 48
overall means BetweenGroups
43.229 2 21.614 3.685 .033
Within Groups 269.823 46 5.866
Total 313.052 48
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TABLE: 7
Post Hoc Tests
Dependent
Variable
(I)bank
type
(J bank
type Mean
Differenc
e (I-J)
Std.
Error Sig.
95% Confidence
Interval
Lower
Bound
Upper
Bound
Ist means pub private 4.3426 1.1073 .000 2.1137 6.5715
foreign 4.5131 1.3179 .001 1.8602 7.1661
pri public -4.3426 1.1073 .000 -6.5715 -2.1137
foreign .17050 1.4295 .906 -2.7069 3.0479
foreign public -4.5131 1.3179 .001 -7.1661 -1.8602
pri -.17050 1.4295 .906 -3.0479 2.7069IInd
medians
public pri -.8241 .5635 .150 -1.9584 .3102
foreign -.8439 .6707 .215 -2.1940 .5062
pri public .8241 .5635 .150 -.31022 1.9584
foreign -.0197 .7275 .978 -1.4842 1.4446
foreign public .84391 .6707 .215 -.50624 2.1940
pri .01977 .7275 .978 -1.4446 1.4842
overall
means
publi pri 1.8862 .7909 .021 .29410 3.4784
foreign 1.8664 .9414 .053 -.02859 3.7615
pri public -1.8862 .7909 .021 -3.4784 -.2941
foreign -.0198 1.0211 .985 -2.0753 2.0357
foreig public -1.8664 .94147 .053 -3.7615 .02859
pri .01980 1.0211 .985 -2.0357 2.0753
*. The mean difference is significant at the 0.05 level.
Post Hoc test revealed that the difference is significant in the First
mean between the Public Sector and Private Sector and Public Sector
and Foreign Banks, while there is no significant difference between
Private Sector and Foreign Banks. In the case of the Second Mean
there is no significant difference between the three Sectors.
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TABLE: 8 RANKING OF BANKS: NET NPA TO TOTAL ADVANCES
SECTOR BANK SCORE RANK SECTOR BANK SCORE RANK
FOR DEUTSCHE .04 1 PVT ICICI 2.06 26
PVT HDFC .35 2 PUB BOB 2.19 27
PUB A B .59 3 PUB ALL. BANK 2.24 28
FOR HSBC .64 4 PUB BOM 2.26 29
FOR ABN-AMRO .65 5 PVT B.RAJASTHAN 2.32 30
PUB ORIENTALBANK
.78 6 PUB BANK OF INDIA 2.60 31
PUB S BP .86 7 PUB SBI 2.63 32
PUB SBH .88 8 PUB UBI 2.71 33
FOR SCB 1.00 9 PVT INDUSIND 2.75 34
PUB C BANK 1.00 10 PUB UCO BANK 2.86 35
PUB VIJAYA 1.02 11 PVT SOUTHINDIAN
2.92 36
PUB PN B 1.11 12 PVT KARNATAKA 3.00 37
FOR CITI. 1.13 13 PVT TMC LTD 3.36 38
PUB SB INDORE 1.21 14 PUB CBI 3.51 39
PVT J&K 1.27 15 PVT CITY UNION 3.65 40
PVT K VB 1.56 16 PVT LVB. 3.75 41
PUB S BBIKANER
1.69 17 PVT CATHOLIC 3.79 42
FOR DBS 1.74 18 FOR SBM. 4.14 43
PUB SBT 1.74 19 PVT DHAN.BK 4.29 44
PUB S BMYSORE
1.78 20 PVT DCB. 4.30 45
PUB SYNDICATE 1.84 21 PUB DENA BANK 5.40 46
PUB I O B 1.86 22 FOR B.BAHRAIN 6.24 47
PUB CANARA 1.88 23 FOR ABU DHABI 11.07 48
PUB IB 1.93 24 PUB UBI 18.03 49
PVT FED.BANK 1.95 25
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In an attempt to assess the performance of the Banks in the three
Sectors, ranks have been assigned to individual Banks, and from the
above table, the following inferences are drawn:
Deutsche Bank AG in Foreign sector stands out the best with first
rank among all the 49 sample Banks. Sector wise the Banks in the
1st position are as under:
Public Sector: Andhra Bank
Private Sector: HDFC Bank
Foreign Bank: Deutsche Bank AG
II-Parameter
NET INTEREST MARGIN TO TOTAL ASSETS
The way to effectively measure the profitability of a Bank is to
compare the ratio of Net Interest margin to Total Assets. If the ratio is
increasing over a period of time, it is indicative that the Bank is
functioning efficiently. Net interest margin is arrived at after providing
for all interest expenses out of its total interest income. Annexure 3
contains the data relating to this Parameter.
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OVERALL COMPARISON OF THE PERFORMANCE
OF ALL THE SCHEDULED COMMERCIAL BANKS
H0: There is no significant change in the Net interest Margin to
total assets ratio of Scheduled Commercial Banks over the
study period.
H1: There is a significant change in the Net interest Margin to
total assets ratio of Scheduled Commercial Banks over the
study period.
TABLE:-9.1
Paired Samples Statistics
Mean N Std. Deviation
Std. Error
MeanPair 1 I means 2.8543 49 .5993 .08562
II nd means 2.7978 49 .5279 .07542
Table: 9.2 Paired Samples Correlations
N Correlation Sig.
Pair 1 I means & II nd means 49 .949 .000
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An attempt has been made to compare the performance of all the
sample Scheduled Commercial Banks with respect to their
performance over the study period in regard to the Ratio of Net
Interest Margin to total assets as per the above Table.
Paired Samples Correlations statement reveals that there is positive
correlation, and the ‘t’ tests suggests that level of variations in the
performance is significant. Hence the null Hypotheses is rejected.
Table: 9.3 Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed
)Mean
Std.
Devia
tion
Std.
Error
Mean
95% Confidence
Interval of the
Difference
Lower Upper
Pai
r 1
I
means
- II nd
means
.0564 .1938 .0276 .00078 .11214 2.039 48 .047
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PUBLIC SECTOR BANKS
HO: There is no significant change in the Net interest
Margin total assets ratio of Public Sector Banks over
the study period.
H1: There is a significant change in the Net interest
Margin total assets ratio of Public Sector Banks over
the study period.
Table: 10.1
Paired Samples Statistics
Mean NStd.Deviation
Std. ErrorMean
Pair 1 I means 2.959 25 .24124 .04824
IInd means 2.799 25 .21311 .04262
Table 10.2: Paired Correlation test
N Correlation Sig.
Pair 1 I means & II nd means 25 .912 .000
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Mean comparison reveals that the second mean at 2.7990 is lower
than the 1st mean at .2.9593. Karl Person’s Correlation test results
indicate highly positive correlation.
As per the‘t’ test since the significance value is less than 0.05, it is
concluded that there is a significant difference between the means
with respect to Public Sector Banks.
As per the Paired Samples Statistics the Public Sector Banks have
shown significant change in the Net Interest Margin to total assets
ratio. Hence the null hypothesis is rejected.
PRIVATE SECTOR BANKS
HO: There is no significant change in the Net interest Margin total
assets ratio of Private Sector Banks over the study period.
H1: There is a significant change in the Net interest Margin total
assets ratio of Private Sector Banks over the study period.
Table 10.3Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed
)Mean
Std.
Deviati
on
Std.
Error
Mean
95%
Confidence
Interval of the
Difference
Lower Upper
Pair
1
I means
- II nd
means
.1602 .0993 .0198 .1192 .2013 8.063 24 .000
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Table: 11.1
Paired Samples Statistics
Mean N Std. Deviation
Std. Error
MeanPair 1 I means 2.6411 15 .6223 .1606
IInd means 2.6291 15 .6051 .1562
Table 11.2 : Paired Samples Correlations:
N Correlation Sig.
Pair 1 I means
& II nd means
15 .991 .000
As per the above table the second mean at 2.6291 is lower than the 1 st
mean at .2.6411, which indicates that there is no significant
difference between the means.
As per Karl Person’s Correlation test, the results indicate highly
positive correlation.
As per the‘t’ test, since the significance value is more than 0.05, it is
concluded that there is no significant difference in the means with
respect to Private Sector Banks.
Table 11.3 : Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed)Mean
Std.
Deviatio
n
Std.
Error
Mean
95%
Confidence
Interval of the
Difference
Lower Upper
Pair 1 I means
IInd means
.0120 .0833 .0215 -.0340 .0582 .561 14 .584
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As per the Paired Samples Statistics the Private Sector Banks have
shown no significant change in the Net Interest Margin to total assets
ratio. Hence the null hypothesis is accepted.
FOREIGN BANKS
HO: There is no significant improvement in the Net interest Margin
total assets ratio of Foreign Banks over the study period.
H1: There is a significant improvement in the Net interest Margin
total assets ratio of Foreign Banks over the study period.
Table: 12.1
Paired Samples Statistics
Mean N Std. Deviation
Std.
Error
Mean
Pair 1 I means 2.9179 9 1.0857 .3619
II nd means 3.0757 9 .8689 .2896
Table 12.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 I means & II
nd means
9 .975 .000
Table 12.3 : Paired Samples Test
Paired Differences
t df
Sig.
(2-
taile
d)Mean
Std.
Deviati
on
Std.
Error
Mean
95%
Confidence
Interval of the
Difference
Lower Upper
Pair 1 I means
IInd
means
-.1578 .3076 .1025 -.3943 .0786 -1.539 8 .162
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As per the above table the second mean at 3.0757 is slightly higher
than the first mean at .2.9279, which indicates that there is no
significant difference between the means.
As per Karl Person’s Correlation test, the results indicate highly
positive correlation.
As per the ‘t’ test, since the significance value is more than 0.05, we
conclude that there is no significant difference with respect to Foreign
Banks.
As per the Paired Samples Statistics the Foreign Banks have shown
no significant change the Net Interest Margin to total assets ratio.
Hence the null hypothesis is accepted .
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Table: 13
COMPARISON IN THE PERFORMANCE OF BANKS – GROUPWISE
Bank Type
N Mean
Std.
Deviation
Std. Error
Mean
I means private bank 15 2.6411 .6223 .1606
foreign 9 2.9179 1.0857 .3618
IInd
means
private bank 15 2.6291 .6051 .15624
foreign 9 3.0757 .8689 .2896
overall
means
private bank 15 2.6899 .51288 .1324
foreign 9 3.2829 .85173 .2839
Bank Type
N MeanStd.Deviation
Std. ErrorMean
I means public 25 2.9593 .2412 .0482
private bank 15 2.6411 .6223 .1606
IInd means public 25 2.7990 .2131 .0426
private bank 15 2.6291 .6051 .1562
overall public 25 2.8857 .2809 .0561
private bank 15 2.6899 .5128 .1324
Bank
variable
N Mean
Std.
Deviation
Std.
Error
Mean
I means public 25 2.9593 .24124 .0482
foreign 9 2.9179 1.0857 .3619
IInd means public 25 2.7990 .2131 .0426
foreign 9 3.0757 .8689 .2896
overall means public 25 2.8857 .2809 .05619
foreign 9 3.2829 .8517 .2839
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A comparison of the performance of Public Sector and Private Sector
Banks has been made. The results have shown that during the first
phase Private Banks were lagging behind Public Sector Banks, with
their 1st mean of 2.6411 as against the Public Sector Banks mean of
2.9593. Even during the second Phase the performance of Private
Sector Banks with their mean of 2.6291are behind Public Sector
Banks with a second mean of 2.7990.
A similar comparison of Public Sector and Foreign Banks has also
been made. The results have shown that during the first phase foreign
Banks were slightly behind Public Sector Banks, with their 1st mean of
2.9179 as against the Public Sector Banks mean of 2.9593. However,
during the second Phase the performance of Foreign Banks has
improved from to 3.0757as against that of 2.7990 of the Public Sector
Banks.
The performance of Private Sector Banks vis-à-vis Foreign Banks
reveals that during the 1st phase private banks with a mean of 2.6411
were behind Foreign Banks whose 1st mean is 2.9179. The position of
the second means is Private Sector 2.6291 and Foreign Banks 3.0757.
This shows that the Private Sector Banks were behind Foreign Banks
during both the study periods.
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Table: 14
ANOVA
Sum of
Squares df
Mean
Square F Sig.
I means Between Groups .993 2 .497 1.406 .255Within Groups 16.250 46 .353
Total 17.244 48
IInd
means
Between Groups 1.122 2 .561 2.106 .133
Within Groups 12.258 46 .266
Total 13.380 48
overall means Between Groups 1.986 2 .993 4.014 .025
Within Groups 11.381 46 .247
Total 13.367 48
From the Anova table, it is conclude that:
i) There is no significant difference between the three Sectors in
respect of the first means and the second means
ii) In the case of the overall means, the difference is significant.
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Table: 15
Post Hoc Test
Dep. Variable (I) bank type (J) banktype Mean
Differenc
e
(I-J)
Std.
Error Sig.
95%Confidence
Interval
Lower
Bound
Upper
Bound
I means public private
.
.3181 .1941 .108 -.0726 .7088
foreign .0414 .2310 .859 -.4236 .5064
private public -.3181 .1941 .108 -.7088 .0725
foreign -.2767 .2506 .275 -.7811 .2277
foreign public -.0414 .2316 .859 -.5064 .4236
private .2767 .2506 .275 -.2277 .7811
IInd means public private .1699 .1685 .319 -.1694 .5094
foreign -.2766 .2006 .175 -.6805 .1274
private public -.1699 .1685 .319 -.5093 .1694
foreign -.446* .2176 .046 -.8847 -.0085
foreign Public .2766 .2006 .175 -.1272 .6805
private .4466* .2176 .046 .0085 .8847
overall means public private .1958 .1624 .234 -.1311 .5228
foreign -.3971* .1935 .046 -.7863 -.0079
private Public -.1958 .1624 .234 -.5221 .1311foreign -.5928* .2097 .007 -
1.0151
-.1707
foreign public .3971* .1933 .046 .0079 .7863
private .5929* .2097 .007 .1703 1.015
*. The mean difference is significant at the 0.05 level.
As per the Post Hoc Test, in the case of overall means, there is significant
difference in the case of Public and Foreign Banks and private and foreign
Banks while in the case of public and private banks there is no significant
difference. In the case of the first and second means there is no significant
difference in the three sectors.
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Table:16 RANKING OF BANKS: NET INTEREST MARGIN
SECTOR BANK SCORE RANK SECTOR BANK SCORE RANK
FOR CITI 4.2617 1 FOR SBMAUR 2.7583 26
FOR SCB 3.9483 2 PVT DHAN.BANK 2.7500 27
PVT T MC 3.8750 3 PUB SBT 2.7467 28
FORABN-AMRO
.3.8733 4 PUB SB INDORE 2.7367 29
FOR HSBC 3.5733 5 PUB BOB 2.7333 30
PVT HDFC 3.4183 6 PUB BOM 2.7067 31
PUB PN B 3.2550 7 PVT J& K BANK 2.6917 32
PUB I OB 3.2033 8 PUBST BANK
MYSORE2.6883 33
PVT K VB 3.1633 9 PUB DENA BANK 2.6833 34
PVTS. B &
JAIPUR3.1583 10 PUB
SB
PATIALA2.6500 35
PUB AB 3.0083 11 PUB CANARA B 2.5783 36
PVT CUB. 3.0033 12 PUB SBH 2.5617 37
FOR DBS 2.9767 13 PVT SOUTHINDIAN
2.5117 38
PUB C BI 2.9617 14 PUBBANK OF
INDIA2.4583 39
PUB VIJAYA 2.9117 15 PVTBANK OF
RAJ2.4033 40
PUB CORP.BANK 2.8900 16 PUB UCO BANK 2.3583 41
PUBINDIAN
BANK2.8833 17 PVT KARNATAKA 2.2817 42
PVTCATHOLIC
BANK2.8767 18 PVT LVB 2.1700 43
PUB SYNDICATE 2.8683 19 FORDEUTSCHE
BK2.1283 44
PVT FED BANK 2.8333 20 FORBK OF
BAHRAIN2.1050 45
PUB ALL BANK 2.8300 21 FOR ABU DHABI 2.0567 46
PUB O B C 2.8000 22 PVT DCB 1.9383 47
PUB CANARA 2.7717 23 PVT INDUSIND 1.8617 48
PUB IB 2.7667 24 PVT ICICI BANK 1.6583 49
PUB SBI 2.7667 25
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In an attempt to assess make the performance of the Banks in the
three Sectors, ranks have been assigned to individual Banks, and
from the above table, we draw the following inferences:
Citi Bank in Foreign sector stands out the best with first rank among
all the 49 sample Banks. Sector wise the Banks in the 1st position
are as under:
Public Sector: Punjab National Bank
Private Sector: TamilNadu mercantile Bank
Foreign Bank: Citi Bank
ICICI BANK in the Private Sector stood last in the above Ranking.
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III-Parameter
NET PROFIT TO TOTAL ASSETS RATIO
Net Profit to total assets ratio reflects the efficiency of Banks, and is a
very important indicator. Data relating to this Parameter is furnished
at Annexure 4.
In the Camels rating Net Profit takes the 4th place (Earnings). Banks
strive to improve the profitability, as the Regulator keeps a close
watch on the Return on Assets of Banks, and in extreme cases put the
Banks under watch list as per the PCA (Prompt Corrective Action)
guidelines. Since most Public Sector and Private Sector Shares are
quoted on the Stock Exchanges and actively traded, the Investor’
OVERALL POSITION OF THE SAMPLE SCHEDULED COMMERCIAL
BANKS:
HO: There is no significant change in the Net Profit to total
assets ratio of Scheduled Commercial Banks over the study
period.
H1: There is a significant change in the Net Profit to total
assets ratio of Scheduled Commercial Banks over the studyperiod.
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Table: 17.1
Paired Samples Statistics
Mean N
Std.
Deviation
Std.Error
Mean
Pair
1
I means .7678 49 .7502 .1071
II
means
.9559 49 .4544 .0649
Table 17.2 Paired Samples Correlations
N Correlation Sig.Pair
1
I means & II
means
49 .271 .060
Table: 17.3 Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed)Mean
Std.
Deviation
Std.
Error
Mean
95%
Confidence
Interval ofthe
Difference
Lower Upper
Pair
1
I
means
- II
means
-.1881 .7645 .1092 -.4077 .0315 -1.722 48 .091
Comparison of the two means reveals that there is a marginal change
among all the Scheduled Commercial Banks. The second mean at
.9559 is higher when compared to the first mean of 0.7678. Paired
Samples Correlations statement reveals that there is correlation, and
the ‘t’ tests suggests that since the significance value is greater than
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0.05, it is concluded that there is no significance in the working of
SCBs.
Since as per the Paired Sample Statistics, there is no significant
change, the Null hypotheses is accepted.
SECTORWISE ANALYSIS: PUBLIC SECTOR BANKS
HYPOTHESIS:Ho: There is no significant change in the
Net Profit to total assets ratio of Public Sector Banks over
the study period.
H1: There is a significant change in the Net Profit to total
assets ratio of Public Sector Banks over the study period.
Table:18.1
Paired Samples Statistics
Mean N
Std.
Deviation
Std. Error
Mean
Pair 1 Ist means .4296 25 .7391 .14782
IInd
means
.9592 25 .2052 .04105
Table 18.2 : Paired Samples Correlations
N Correlation Sig.
Pair1 Ist means &
IInd means
25 .200 .339
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18.3 Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed
)MeanStd.
Deviatio
n
Std.Error
Mean
95% Confidence
Interval of the
Difference
Lower Upper
Pair1
Ist
means
- IInd
means
-5296 .7265 .1453 -.8295 -.227 -3.64 24 .001
As per the able Table second mean at .9592 is significantly higher
than the first mean at .4296, which indicates that there is significant
difference between the means. Karl Person’s Correlation test has been
applied to find out if there is correlation between the means belonging
to the same Sector. The results indicate positive correlation.
As per the ‘t’ test since the significance value is less than 0.05, it is
concluded that there is significant difference between first mean and
second mean with respect to Public Sector Banks and hence the null
hypothesis is rejected.
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PRIVATE SECTOR BANKS : HYPOTHESIS
H0: There is no significant change in the Net Profit to total assets
ratio ratio of Private Sector Banks over the study period.
H1: There is a significant change in the Net Profit to total assets
ratio ratio of Private Sector Banks over the study period.
Table: 19.1
Paired Sample
Mean N
Std.
Deviation
Std. Error
Mean
Pair 1 Ist means 1.0095 15 .5342 .1379
IInd
means
.8856 15 .5720 .1477
Table 19.2: Paired Sample Correlations
N Correlation Sig.
Pair 1 I means & II means 15 .374 .170
Table 19.3 : Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed)Mean
Std.
Deviation
Std.
Error
Mean
95%
Confidence
Interval of the
Difference
Lower Upper
Pair 1 Ist
means
IIndmeans
.1238 .61987 .1600 -.2194 .4671 .774 14 .452
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Mean comparison: The first mean is computed for the period 1995-96
to 2001-2002 and the second mean is computed is computed for the
period 2002-2003 to 2007-2008. The analysis shows that the
performance of the Private Sector Banks has marginally declined as
shown by the fact that the 1st mean at 1.0095 is higher when
compared to the second mean at .8856.
As per Correlation test. there is slight positive correlation between the
first mean and second mean.
As per the‘t’ test, since the significance value is greater than 0.05, it is
concluded that there is no significant difference between the first
mean and second mean.
As per the Paired Samples Statistics the Private Banks have not
shown significant change in the Net Profit to total assets ratio. Hence
the null hypothesis is accepted.
FOREIGN BANKS
H0: There is no significant change in the Net Profit to total
assets ratio ratio of Foreign Banks over the study period.
H1: There is a significant change in the Net Profit to total
assets ratio ratio of Foreign Banks over the study period.
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Table: 20.1
As per Correlation test, there is slight positive correlation between the
first mean and second mean at 0.486.
As per the ‘t’ test, since the significance value is greater than 0.05, it
is concluded that there is no significant difference between the first
mean and second mean.
Since as per the Paired Samples Statistics, there is no significance in
the case of Foreign Banks the null hypothesis is accepted.
Paired Samples Statistics
Mean NStd.Deviation
Std. ErrorMean
Pair 1
Ist means 1.3044 9 .6691 .22304
IInd
means
1.0637 9 .7192 .23976
Table: 20.3 Paired Sample Test
Paired Differences
t df
Sig.
(2-
tailed)Mean
Std.
Deviation
Std.
Error
Mean
95% ConfidenceInterval of the
Difference
Lower Upper
Pair1 Ist
means -
IInd
means
.2407 .7053 .2351 -.3014 .7829 1.024 8 .336
Table 20.2 Paired Samples Correlations
N
Correlatio
n Sig.Pair 1 Ist means & IInd
means
9 .486 .185
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.COMPARISION IN THE PERFORMANCE OF BANKS-GROUPWISE
Table: 21
Group Statistics
Bank type
N Mean
Std.Deviatio
n
Std.ErrorMean
I means public 25 .4296 .7391 .1478
Private 15 1.0095
.5342 .1379
II means public 25 .5200 .5975 .1195
Private 15 .9747 .4937 .1274
overallmeans
public 25 .6474 .4569 .0913
Private 15 .9576 .4567 .1179
Bank type
N Mean
Std.
Deviation
Std.
Error
Mean
I means public 25 .4296 .7391 .1478
Foreign 9 1.3044 .6691 .2230
II means public 25 .5200 .5975 .1195
Foreign 9 1.2622 .4471 .1490
overall means public 25 .6474 .4569 .0913
Foreign 9 1.2053 .5819 .1939
A comparison of Public Sector and Private Sector Banks has been
made. The results have shown that during the first phase Private
Bank type
N Mean
Std.
Deviation
Std.
Error
Mean
I means Private 15 1.0095 .5342 .1379
Foreign 9 1.3042 .6691 .2230
II means Private 15 .9747 .4935 .1274
Foreign 9 1.2622 .4471 .1490
overall
means
Private 15 .9576 .4567 .1179
Foreign 9 1.2053 .5819 .1939
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Banks were well ahead of Public Sector Banks, with their 1st mean of
1.009523 as against the Public Sector Banks mean of 0.4296.
However, during the second Phase the performance of Private Sector
Banks has slipped from 1.009523 to 0.9747 and that of the Public
Sector Banks has drastically improved from 0.4296 to 0.5200. There
is no significant difference in the variances of the two sectors.
A similar comparison of Public Sector and Foreign Banks has also
been made. The results have shown that during the first phase foreign
Banks were well ahead of Public Sector Banks, with their 1st mean of
1.3044 as against the Public Sector Banks mean of 0.4296. However,
during the second Phase the performance of Foreign Banks has
slipped from 1.3044 to 1.2622 and that of the Public Sector Banks
has drastically improved from 0.4296 to 0.5200.
The performance of Private Sector Banks vis-à-vis Foreign Banks
reveals that during the 1st phase private banks with a mean of 1.009
were behind Foreign Banks whose 1st mean is 1.3044. The position of
the second means is Private Sector .9747 and Foreign Banks 1.2622.
This shows that both Sectors have slipped in their performance during
the second phase as revealed by the‘t’ test.
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Table: 22
ANOVA
Sum ofSquares df
MeanSquare F Sig.
I means Between Groups 6.328 2 3.164 7.034 .002
Within Groups 20.690 46 .450
Total 27.018 48
II means Between Groups .179 2 .089 .423 .658
Within Groups 9.733 46 .212
Total 9.911 48
overall
means
Between Groups 2.334 2 1.167 5.045 .010
Within Groups 10.642 46 .231
Total 12.976 48
In the case of Net Profit Anova Test has shown that there is
significant difference in the First Mean, and overall mean, while there
is no significant difference in the second mean.
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Post Hoc test revealed that the difference is significant in the case of
Public and Private Banks and Public and Foreign Banks. There is no
significant difference between Foreign and Private Sector Banks. In
the second mean there is no significant difference between the three
sectors.
Table: 23
Post Hoc Tests
Multiple Comparisons
Dep.
Variable
(I) bankvariable (J)
bankvariable Mean
Differenc
e (I-J)
Std.
Error Sig.
95% Confidence
Interval
Lower
BoundUpper
Bound
I means public private -.5799* .2190 .011 -1.0208 -.1390
foreign -.8748* .2607 .002 -1.3996 -.3500
private
bank
public .5799* .2190 .011 .1390 1.0208
foreign -.2949 .2827 .302 -.8641 .2742
foreign
bank
public .8748* .2607 .002 .3500 1.3996
private .2949 .2827 .302 -.2745 .8645
II means public private .0735 .1502 .627 -.2287 .3759
foreign -.1044 .1788 .562 -.4643 .2554
private
bank
public -.0735 .1502 .627 -.3759 .2287
foreign -.1780 .1939 .363 -.5684 .2123
foreign
bank
public .1044 .1788 .562 -.2554 .4643
private .1780 .1939 .363 -.2123 .5684
overall
means
public private -.3101 .1570 .054 -.6263 .0060
foreign -.5578* .1869 .005 -.9341 -.1814
private
bank
public .3101 .1570 .054 -.0060 .6263
foreign -.2476 .2027 .228 -.6558 .1605
foreignbank
public .5578* .1869 .005 .1814 .9341private .2476 .2027 .228 -.1605 .6558
*. The mean difference is significant at the 0.05 level.
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Table : 24 Ranking of Banks: Net profit to total Assets
SECTOR BANK SCORE RANK SECTOR BANK SCORE RANK
PUB ALL.BANK .556 44 PVT SEC B RAJASTHAN .764 34
PUB AB 1.134 16 PVT SEC CATHOLIC SY .836 30
PUB BOB .842 28 PVT SEC CITY UNION 1.362 8
PUB BOI .754 36 PVT SEC DHANALAKSHMI .612 43
PUB BOM .670 40 PVT SEC FEDERAL BANK .774 32
PUB CANARA .896 22 PVT SEC J & K BANK 1.632 3
PUB CBI .458 46 PVT SEC KARNATAKA 1.002 21
PUB CORPN. B 1.468 5 PVT SEC KARUR VYSYA 2.002 1
PUBDENABANK
.110 48 PVT SEC LAKSHMI VILAS 1.072 19
PUBINDIANBANK
-.232 49 PVT SEC SOUTH INDIAN .838 29
PUB IOB .654 41 PVT SEC TAMILNAD
MERC1.384 7
PUB OBC 1.178 13 PVT SEC DCB. .708 39
PUB PNB .862 27 PVT SEC HDFC 1.218 11
PUB SYNDICATE .866 25 PVT SEC ICICI BANK .876 24
PUB UCO BANK .476 45 PVT SEC INDUSIND .864 26
PUBUNIONBANK
.740 38 FOREIGN ABN-AMRO 1.420 6
PUBUNITEDBANK
.650 42 FOREIGN ABU DHABI .418 47
PUBVIJAYABANK
.892 23 FOREIGNBANK OFBAHRIN
.826 31
PUB SBI .744 37 FOREIGN CITIBANK N.A. 1.580 4
PUB SBIKANER 1.084 17 FOREIGN DBS BANK LTD. 1.148 15
PUB SBH 1.010 20 FOREIGNDEUTSCHE
BANK1.206 12
PUBS B
INDORE1.252 10 FOREIGN HSBC LTD. 1.078 18
PUBSBF
MYSORE.758 35 FOREIGN SCB 1.998 2
PUB SB PATIALA 1.326 9 FOREIGN SB MAURITIUS 1.152 14
PUB SBT .770 33
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In an attempt to assess the performance of the Banks in the three
Sectors, ranks have been assigned to individual Banks, and from the
above table, we draw the following inferences:
Karur Vysya Bank in Private sector stands out the best with first
rank among all the 49 sample Banks. Sector wise the Banks in the
1st position are as under:
Public Sector: Corporation Bank
Private Sector: Karur Vysya Bank
Foreign Banks: Standard Charatered Bank
Indian Bank in the Public Sector had negative profitability and so
stood last in the Ranking.
IV-Parameter
OPERATING EXPENSES AS PERCENTAGE OF TOTAL ASSETS
One of the most important performance indicators which shows the
efficient working of Banks is the ratio of Operating Expenses as per
cent age of Total Assets.
In the CAMELS rating of Banks, the ratio of Operating expenses as per
cent age of Total Assets plays a very important role as the earnings
capacity of a Bank is judged by the capacity of a Bank in achieving a
substantial reduction in this ratio.
This is a part of the fourth parameter which goes into the supervisory
rating awarded by the Reserve Bank of India to the respective Banks.
Hence Banks constantly are on the look out to achieve a reduction in
the ratio, as it will directly improve the profitability of Banks. Prior to
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the Reform period Banks have suffered the most on account of a high
degree of militancy among the Bank Employees. The productivity
levels were low. Since the Banks had a very low degree of
Computerization, the operating expenses ratio was high as most
operations were done manually. Post Reforms the things have
improved especially with the new Private Sector Banks bringing in the
new state of the art working conditions which contributed to higher
productivity levels. Hence the study of this ratio will be very helpful.
The Data relating to this Parameter is furnished at Annexure 5.
OVERALL COMPARISON OF THE PERFORMANCE OF ALL THE
SCHEDULED COMMERCIAL BANKS
An attempt has been made to compare the performance of all the
sample Scheduled Commercial Banks with respect to their
performance over the study period in regard to the Ratio of Net
Interest Expenses.
H0: There is no significant change in the ratio of
Operating expenses as per cent age of Total Assets in
respect of Scheduled Commercial Banks over the study
period.
H1: There is a significant change in the ratio of
Operating expenses as per cent age of Total Assets in
respect of Scheduled Commercial Banks over the study
period.
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Table: 25.1
Paired Samples Statistics
Mean N Std. Deviation
Std.
Error
MeanPair 1 I means 2.4383 49 .7168 .1024
II means 2.0923 49 .4970 .0710
: Table 25.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 I means
& II means
49 .210 .147
Comparison of the two means reveals that there is improvement
among all the Scheduled Commercial Banks. The second mean at
2.0923 lower when compared to the first mean of 2.4383. Paired
Samples Correlations statement reveals that there is correlation, and
the ‘t’ tests suggests that level of variations in the performance is
significant. Hence the null hypothesis is rejected.
Table 25.3 : Paired Samples Test :
Paired Differences
t df
Sig. (2-
tailed)Mean
Std.
Deviati
on
Std.
Error
Mean
95% Confidence
Interval of the
Difference
Lower Upper
Pair
1
I means
II means
.3459 .7818 .1116 .1214 .5705 3.09 48 .003
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SECTORWISE ANALYSIS: PUBLIC SECTOR BANKS
The following is the sector wise performance of Scheduled Commercial
Banks in respect of the ratio of Operating expenses as per cent age of
Total Assets.
H0: There is no significant change in the ratio of Operating
expenses as per cent age of Total Assets in respect of Public
Sector Banks over the study period.
H1: There is a significant change in the ratio of Operating
expenses as per cent age of Total Assets in respect of Public
Sector Banks over the study period.
Table:26.1
Paired Samples Statistics
Mean N Std. Deviation
Std. Error
Mean
Pair 1 I means 2.7376 25 .37600 .07520
II means 2.0027 25 .26394 .05278
Table 26.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 I means
& II means
25 .705 .000
Table 26.3 : Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed)Mean
Std.
Deviati
on
Std.
Error
Mean
95% Confidence
Interval of the
Difference
Lower Upper
Pair 1 I
means-
IImeans
.7348 .2665 .0533 .6248 .8448 13.78 24 .000
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Mean comparison test reveals that the Second mean at 2.0027 is
significantly lower than the first mean at 2.7376, which indicates that
there is significant difference between the means. This shows
substantial improvement in the working of the Public Sector Banks.
As per Karl Person’s Correlation test, the results indicate that there is
positive correlation
As per the ‘t’ test since the Significance value is less than 0.05, we
conclude that there is significant difference between first mean and
second mean with respect to Public Sector Banks.
As per the Paired Samples Statistics the Public Sector Banks have
shown significant change in the ratio of the ratio of Operating
expenses as per cent age of Total Assets in the case Public Sector
Banks. Hence the null hypothesis is rejected.
SECTORWISE ANALYSIS: PRIVATE SECTOR BANKS
We now proceed to see the sector wise performance of Private Sector
in respect of the ratio of Operating expenses as per cent age of Total
Assets. The following is the hypothesis:
H0: There is no significant change in the ratio of Operating
expenses as per cent age of Total Assets Of Private Sector Banks
over the study period.
H1: There is a significant change in the ratio of Operating
expenses as per cent age of Total Assets In respect of Private
Sector Banks over the study period.
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Table: 27.1
Paired Samples Statistics
Mean N
Std.
Deviation
Std. Error
Mean
Pair 1 I means 1.8172 15 .6144 .1586
II means 2.0338 15 .4886 .1261
As per the above Table second mean at 2.0338 is marginally higher
than the 1st mean at 1.8172 which indicates that there is no
significant difference between the means. This shows that in fact the
working of the Private Sector Banks has deteriorated during the study
period.
As per Correlation test has, the results indicate that there is positive
correlation, but statistically very insignificant.
Table 27.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 I means
& IInd means
15 .280 .312
Table 27.3 : Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed
)Mean
Std.
Deviati
on
Std.
Error
Mean
95% Confidence
Interval of the
Difference
Lower Upper
Pair
1
I means
II means
-.2166 .6695 .17286 -.587 .154 -1.25 14 .231
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As per the‘t’ test, since the significance value is more than 0.05, it is
concluded that there is no significant difference between first mean
and second mean with respect to Private Sector Banks.
As per the Paired Samples Statistics the Private Sector Banks have
not shown any significant change in the ratio of Operating Expenses
as a percentage of Total Assets in the case of Private Sector Banks.
Hence the null hypothesis is accepted.
SECTORWISE ANALYSIS: FOREIGN BANKS
The following is the sector wise performance of Foreign Banks in
respect of the ratio of Operating Expenses as a percentage of Total
Assets.
H0: There is no significant improvement in the ratio of Operating
Expenses as a percentage of Total Assets of Foreign Banks over the
study period.
H1: There is a significant improvement in the ratio of Operating
Expenses as a percentage of Total Assets in respect of Foreign
Banks over the study period.
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Table: 28.1
Paired Samples Statistics
Mean N Std. Deviation
Std. Error
Mean
Pair
1
I means 2.6420 9 .9737 .3245
II means 2.4381 9 .8301 .2767
Table 28.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 I means & IImeans
9 .035 .929
The first mean is computed for the period 1995-96 to 2001-2002 and
the second mean is computed is computed for the period 2002-2003
to 2007-2008. The second mean at 2.4385 is slightly lower than the
first mean at 2.6420, which indicates that there is no significant
difference between the means in the working of the Foreign Banks.
As per the Correlation test, the results indicate very slight positive
correlation which is not statistically significant.
Table 28.3 : Paired Samples Test
Paired Differences
t df
Sig.
(2-
tailed)Mean
Std.
Deviation
Std.
ErrorMean
95%
Confidence
Interval of the
DifferenceLower Upper
Pair 1 I means & II
means
.2035 1.2573 .4191 -.762 1.170 .486 8 .640
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As per the ‘t’ test, since the significance value is more than 0.05, it is
concluded that there is no significant difference between first mean
and second mean with respect to Foreign Banks.
As per the Paired Samples Statistics the Foreign Banks have not
shown any significant change in the ratio of ratio of Operating
Expenses as a percentage of Total Assets. Hence the null hypothesis is
accepted.
Table: 29
COMPARISION IN THE PERFORMANCE OF BANKS-GROUPWISE
Group Statistics
Bank type
N Mean Std. Deviation
Std. Error
Mean
I means public 25 2.737600 .3760077 .0752015
private 15 1.817238 .6144930 .1586614
II means public 25 2.002733 .2639479 .0527896
private 15 2.033889 .4886086 .1261582
overall means public 25 2.443840 .3099928 .0619986
private 15 1.903460 .4663746 .1204174
Bank type
N Mean Std. Deviation
Std. Error
Mean
I means private 15 1.8172 .61449 .15866
foreign 9 2.6420 .97377 .32459
II means private 15 2.0338 .48860 .12615
foreign 9 2.4385 .83018 .27672
overall means private 15 1.9034 .46637 .12041foreign 9 2.5630 .68272 .22757
Bank type
N Mean Std. Deviation
Std. Error
Mean
I means public 25 2.7376 .376 .0752
foreign 9 2.6420 .9737 .3245
II means public 25 2.0027 .2639 .0527
foreign 9 2.4385 .8301 .2767
overall means public 25 2.4438 .3099 .0619foreign 9 2.5630 .6827 .2275
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A comparison of Public Sector and Private Sector Banks has been
made. The results have shown that during the first phase Public
Sector Banks were behind Private Sector Banks, with their 1st mean of
2.7376as against the Private Sector Banks mean of 1.8172. During
the second Phase the performance of Private Sector Banks is more or
less similar ratio of 2.0338 as compared to the Public Sector Banks
ratio of 2.0027.
A similar comparison of Public Sector and Foreign Banks has also
been made. The results have shown that during the first phase foreign
Banks were slightly ahead of Public Sector Banks, with their 1st mean
of 2.6420 as against the Public Sector Banks mean of 2.7376.
However during the second Phase the performance of Foreign Banks is
lower at a ratio of 2.4385 as compared to the Public Sector Banks
ratio of 2.0027.
The performance of Private Sector Banks vis-à-vis Foreign Banks
reveals that during the 1st phase private banks with a mean of 1.1872
were ahead of Foreign Banks whose 1st mean is 2.6420. However
during the second phase, the position of the Private Sector Banks
has improved and they are ahead of Foreign Banks with their IInd
Mean of 2.0338 as against the ratio of Foreign Banks which is
2.4385.
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Table: 30
ANOVA
Sum of
Squares df
Mean
Square F Sig.I means Between Groups 8.399 2 4.199 11.876 .000
Within Groups 16.265 46 .354
Total 24.664 48
II means Between Groups 1.331 2 .665 2.907 .065
Within Groups 10.528 46 .229
Total 11.859 48
overall means Between Groups 3.499 2 1.749 8.862 .001
Within Groups 9.080 46 .197
Total 12.579 48
In the case of Operating Expenses Anova Test has shown that
i)there is significant difference in the case of the First mean
ii) there is no significant difference in the case of the second mean
iii) there is significant difference in the case of the overall between
different sectors of Banks.
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Table: 31
Post Hoc Tests
Multiple Comparisons
Depende
nt
Variable
(I) bank
type
(J) bank
typeMean
Differe
nce (I-
J)
Std.
Error Sig.
95% Confidence
Interval
Lower
Bound
Upper
Bound
I means public private .9203 .1942 .000 .5294 1.3112
foreign .0955 .2311 .681 -.3697 .5608
private public -.9203 .1942 .000 -1.3112 -.5294
foreign -.8248 .2507 .002 -1.3295 -.3201
foreign public -.0955 .2311 .681 -.5608 .3697
private .8248 .2507 .002 .320 1.3295
II means public private -.0311 .1562 .843 -.3456 .2833
foreign -.4357* .1859 .023 -.8101 -.0614
private public .0311 .1562 .843 -.2833 .3456
foreign -.4046 .2017 .051 -.8106 .0013
foreign public .4357 .1859 .023 .0614 .8101
private .4046 .2017 .051 -.00139 .8106
overall
means
public private .5403 .14510 .001 .248297 .8324
foreign -.1191 .1727 .494 -.4668 .2284
private public -.5403 .1451 .001 -.8324 -.2482
foreign -.6595 .1873 .001 -1.0366 -.2824
foreign public .1191 .1704 .494 -.2284 .4668
private .6595 .1873 .001 .2824 1.0366
*. The mean difference is significant at the 0.05 level.
Post Hoc Test has shown that in the case of the I mean the difference
is significant between Public and Private Sector and Private and
Foreign Banks, while there is no significant difference between Public
Sector and Foreign Banks. In the case of the overall mean the
difference is significant in the case of public and private banks and
private and foreign banks, while there is no significant in the case of
foreign and public banks.
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Table: 32
RANKING OF BANKS: OPERATING EXPENSES
SECTOR NAME SCORE RANK SECTOR NAME SCORE RANK
FB SBM 1.1500 1 PS ALLAHABAD 2.1200 26
FB DBS 1.2250 2 PS IOB 2.1350 27
PV J&K 1.3150 3 PV B.RAJASTHAN 2.1400 28
PV KARNATAKA 1.4900 4 PS SBI 2.1500 29
PS SBP 1.5000 5 PS INDIAN 2.1750 30
PS OBC 1.5200 6 PS DENA 2.1800 31
PV CUB 1.6000 7 PS PNB 2.2000 32
PS UBI 1.6550 8 PV HDFC 2.2050 33
PV INDUS 1.6700 9 FB ABU DHABI 2.2050 34
PS SBH 1.7350 10 FB BAHRAIN &KUWAIT
2.2400 35
PV FED. 1.7950 11 PS ANDHRA BANK 2.2750 36
PS SBT 1.8100 12 FB SCB 2.3200 37
PS CORP 1.8150 13 PS CBI 2.3800 38
PS CANARA 1.8400 14 PS SYNDICATE 2.3900 39
PV KVB 1.8400 15 PS UBI 2.4300 40
PV VIJAYA 1.9100 16 PS BIKANER &J 2.5600 41
PV SOUTHINDIAN
1.9150 17 PV DHANALAKSHMI 2.5850 42
PS SB INDORE 1.9300 18 PV CATHOLIC S 2.6250 43
PS UCO BANK 1.9450 19 PS SB MYSORE 2.6600 44
PS B0I 1.9550 20 FB HSBC 2.7850 45
PV ICICI 1.9800 21 FB CITI 2.9950 46
PS BOM 1.9900 22 PV DCB. 3.2000 47
PS B0B 2.0950 23 FB DEUTSCHE 3.3800 48
PV TMC 2.1050 24 FB ABN-AMRO 3.5200 49
PV LVB 2.1150 25
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In an attempt to assess the performance of the Banks in the three
Sectors, ranks have been assigned to individual Banks, and from the
above table, we draw the following inferences:
State Bank of Mauritius Ltd in Foreign sector stands out the best
with first rank among all the 49 sample Banks. Sector wise the
Banks in the 1st position are as under:
Public Sector : State Bank of Patiala
Private Sector : Jammu & Kashmir Bank Ltd
Foreign Bank : State Bank of Mauritius Ltd
ABN-AMRO Bank in the Foreign Sector stood last in the above
ranking.
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V-Parameter
INTEREST EXPENDED AS PERCENTAGE OF TOTAL ASSETS
One of the most important performance indicators which shows the
efficient working of Banks is the ratio of INTEREST EXPENDED AS
PER CENTAGE OF TOTAL ASSETS. Data pertaining to this Parameter
is furnished at Annexure 6.
In the CAMELS rating of Banks, the ratio of INTEREST EXPENDED
AS PER CENTAGE OF TOTAL ASSETS plays a very important role as
the earnings capacity of a Bank is judged by the capacity of a Bank in
achieving a substantial reduction in this ratio.
This is a part of the fourth parameter which goes into the supervisory
rating awarded by the Reserve Bank of India to the respective Banks.
Hence Banks constantly are on the look out to achieve a reduction in
the ratio, as it will directly improve the profitability of Banks.
This is an important profitability indicator. Prior to the Reform period
Banks have suffered the most on account of Regulated Regime of
Interest Rates which left very little scope for launching innovative
products which would help reduction in this ratio. Post Reforms the
interest rates have been de regulated except in the case of Savings
Bank Accounts. As per the Reserve Bank of India Governor
Dr.Duvvuru Subba Rao, the RBI is contemplating to de regulate even
this restriction.
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OVERALL PERFORMANCE OF THE SAMPE SCHEDULED
COMMERCIAL BANKS
H0: There is no significant change in the ratio of Net InterestExpended as a percentage of Total Assets of Scheduled Commercial
Banks over the study period.
H1: There is a significant change in the ratio of Net Interest
Expended as a percentage of Total Assets in respect of Scheduled
Commercial Banks over the study period.
Table: 33.1
Paired Samples Statistics
Mean N Std. Deviation
Std. Error
Mean
Pair 1 I means 6.5296 49 .9464 .1352
II nd means 4.4982 49 .8603 .1229
Table 33.2 Paired Samples Correlations
N Correlation Sig.
Pair 1 I means & II nd means 49 .499 .000
Table 33.3 Paired Samples Test
Paired Differences
t df
Sig. (2-
tailed)Mean
Std.
Deviatio
n
Std.
Error
Mean
95% Confidence
Interval of the
Difference
Lower Upper
Pair
1
I means
- IInd
means
2.0314 .9074 .1296 1.7708 2.2920 15.671 48 .000
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As per the Paired Samples Statistics the Scheduled Commercial Banks
have shown significant change in the ratio of Net Interest Expended as
percentage of Total Assets. Hence the null hypothesis is rejected.
SECTORWISE ANALYSIS: PUBLIC SECTOR BANKS
The following is the sector wise performance of Scheduled Commercial
Banks in respect of the ratio of Net Interest Expended as a percentage
of Total Assets. The following is the hypothesis for the purpose of
testing with the help of ‘t’ test.
H0: There is no significant change in the ratio of Net Interest
Expended as a percentage of Total Assets of Public Sector Banks
over the study period.
H1: There is a significant change in the ratio of Net Interest
Expended as a percentage of Total Assets in respect of Public
Sector Banks over the study period.
Table: 34.1
Paired Samples Statistics
Mean N Std. Deviation
Std. Error
Mean
Pair 1 I means 6.3088 25 .3872 .0774
IInd means 4.4898 25 .2326 .0465
Table 34.2: Paired Samples Correlations
N Correlation Sig.
Pair 1 I means &
IInd means
25 .244 .240
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Table 34.3 Paired Samples Test
Paired Differences
t df
Sig.
(2-
taile
d)Mean
Std.
Deviati
on
Std.
Error
Mean
95% Confidence
Interval of theDifference
Lower Upper
Pai
r 1
I means –
IInd means
1.818 .4002 .0800 1.6537 1.9841 22.72 24 .000
Mean comparison has been made between the first mean and the
mean. The first mean is computed for the period 1995-96 to 2001-
2002 and the second mean is computed is computed for the period
2002-2003 to 2007-2008. The second mean at 4.4898 is significantly
lower than the 1st mean at 6.3088, which indicates that there is
significant different between the means. This shows substantial
improvement in the working of the Public Sector Banks.
As per Karl Person’s Correlation test, the results indicate positive
correlation.
As per the ‘t’ test, since the significance value is less than 0.05, it is
concluded that there is significant difference between first mean and
second mean with respect to Public Sector Banks.
As per the Paired Samples Statistics the Public Sector Banks have
shown significant change in the ratio of Net Interest Expended as
percentage of Total Assets. Hence the null hypothesis is rejected.
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SECTORWISE ANALYSIS: PRIVATE SECTOR BANKS
The following is the sector wise performance of Private Sector Banks in
respect of the ratio of Net Interest Expended as a percentage of Total
Assets.
H0: There is no significant change in the ratio of Net Interest
Expended as a percentage of Total Assets of Private Sector
Banks over the study period.
H1: There is a significant change in the ratio of Net Interest
Expended as a percentage of Total Assets in respect of Private
Sector Banks over the study period.
Table: 35.1
Paired Samples Statistics
Mean N
Std.
Deviation
Std.
Error
Mean
Pair 1 I means 7.1038 15 1.0636 .2746
IInd means 4.9134 15 .6416 .1656
Table 35.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 I means
& IInd means
15 .465 .081
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Table 35.3 : Paired Samples Test
Paired Differences
t df
Sig.(2-
tailed
)Mean
Std.
Deviati
on
Std.
Error
Mean
95% ConfidenceInterval of the
Difference
Lower Upper
Pair 1 I means –
IInd
means
2.1903 .9534 .2461 1.6623 2.7183 8.89 14 .000
As per the above Table the second mean at 4.9134 is significantly
lower than the first mean at 7.1038, which indicates that there is
significant difference between the means. This shows substantial
improvement in the working of the Private Sector Banks.
As per Karl Person’s Correlation test, the results indicate positive
correlation.
As per the ‘t’ test, since the significance value is less than 0.05, it is
concluded that there is significance difference between first mean and
second mean.
As per the Paired Samples Statistics the Private Sector Banks have
shown significant change in the ratio of Net Interest Expended as
percentage of Total Assets. Hence the null hypothesis is rejected
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SECTORWISE ANALYSIS: FOREIGN BANKS
The following is the analysis of Foreign Banks in respect of the ratio
of Net Interest Expended as a percentage of Total Assets.
HYPOTHESIS: H0 There is no significant change in the ratio of Net
Interest Expended as percentage of Total Assets of Foreign Banks
over the study period.
H1: There is a significant change in the ratio of Net Interest
Expended as a percentage of Total Assets in respect of Foreign
Banks over the study period.
Table: 36.1
Paired Samples Statistics
Mean N Std. Deviation
Std.
Error
Mean
Pair 1 I means 6.1863 9 1.4286 .4762
IInd means 3.8294 9 1.6527 .5509
Table 36.3 Paired Samples statistics
Paired Differences
t df
Sig.
(2-
taile
d)Mean
Std.
Deviatio
n
Std.
Error
Mean
95% Confidence
Interval of the
Difference
Lower Upper
Pair 1 I means
- IInd
means
2.3560 1.6005 .5335 1.1266 3.5871 4.418 8 .002
Table 36.2 : Paired Samples Correlations
N Correlation Sig.
Pair 1 I means
IInd means
9 .468 .204
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The mean comparison reveals that there is substantial improvement
in the working of the Foreign Banks. The second mean of 38294 is far
lower than the first mean of 6.1863. There is positive correlation as
per the Karl Pearson Correlation test. The ‘t’ test is indicating a highly
significant difference.
As per the Paired Samples Statistics the Foreign Banks have shown
significant change in the ratio of Net Interest Expended as percentage
of Total Assets. Hence the null hypothesis is rejected
Table: 37
COMPARISION IN THE PERFORMANCE OF BANKS-GROUPWISE
Group Statistics
bank
type N Mean
Std.
Deviation
Std. Error
Mean
I means public 25 6.3088 .3872 .0774
pri bank 15 7.1038 1.0636 .2746
IInd means public 25 4.4898 .2326 .0465
pri bank 15 4.9134 .6416 .1656
overall means public 25 5.5806 .2687 .0537
pri bank 15 6.2270 .7862 .2030
Group Statistics
bank
type N Mean
Std.
Deviation
Std. Error
Mean
I means pri 15 7.1038 1.0636 .2746
forn 9 6.1863 1.4286 .4762
IInd means Pri. 15 4.9134 .64163 .1656
forn 9 3.8294 1.6527 .5509
overall means Pri. 15 6.2270 .78624 .2030
forn 9 5.2552 1.3152 .4384
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Group Statistics
Bank type
N Mean
Std.
Deviation
Std. Error
Mean
I means public 25 6.3088 .3872 .07745
forn 9 6.1863 1.4286 .4762
II nd means public 25 4.4898 .2326 .0465
forn 9 3.8294 1.6527 .5509
overall means public 25 5.5806 .2687 .0537
forn 9 5.2552 1.3152 .4384
A comparison of Public Sector and Private Sector Banks has been
made. The results have shown that during the first phase Public
Sector Banks were well ahead of Private Sector Banks, with their 1st
mean of 6.3088 against the Private Sector Banks mean of 7.1038.
Even, during the second Phase the performance of Private Sector
Banks is lower with a ratio of 4.9134 as compared to the Public
Sector Banks ratio of 4.4898.
A similar comparison of Public Sector and Foreign Banks has also
been made. The results have shown that during the first phase foreign
Banks were ahead of Public Sector Banks, with their 1st
mean of
6.1863 as against the Public Sector Banks mean of 6.30888. Even
during the second Phase the performance of Foreign Banks is lower at
a ratio of 3.8292 as compared to the Public Sector Banks ratio of
4.4898.
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The performance of Private Sector Banks vis-à-vis Foreign Banks
reveals that during the first phase private banks with a mean of
7.1038 were behind Foreign Banks whose first mean is 6.1863. Even
during the second phase, the position of the Private Sector Banks is
lower with a ratio of 4.9134 as against the ratio of Foreign Banks
which is 3.8294.
The Anova table suggests that there is significant difference between
the three groups with respect to 1st means, IInd Mean and the overall
means. Hence we conclude that there is homogeneity between the
three sectors of Banks.
Table: 38
ANOVA
Sum ofSquares df
MeanSquare F Sig.
I means Between
Groups
7.225 2 3.612 4.646 .015
Within Groups 35.769 46 .778
Total 42.994 48
II nd means Between
Groups
6.613 2 3.307 5.260 .009
Within Groups 28.915 46 .629
Total 35.529 48
overall means Between
Groups
6.285 2 3.142 5.967 .005
Within Groups 24.228 46 .527
Total 30.513 48
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Table: 39
Ranking of Banks: Interested expended to total Assets
SECTOR BANK SCORE RANK SECTOR BANK SCORE RANK
FOREIGN Deutche BankLtd.
2.73 1 PUB SBNK OFINDORE
4.60 26
FOREIGN HSBC LTD. 2.74 2 PUB UNION BANK 4.63 27
FOREIGN CITIBANK N.A. 2.83 3 PUB UNITED BANK 4.64 28
FOREIGN DBS BANK LTD. 3.03 4 PUB CANARA BANK 4.66 29
FOREIGN STANCHART 3.05 5 PUB DENA BANK 4.68 30
FOREIGN ABN-AMRO 3.17 6 PUB SB T 4.69 31
PVT SEC HDFC BANK 3.19 7 FOREIGN SB. MAURITIUS 4.73 32
PVT SEC BANK OF RAJ 3.89 8 PUB BOM 4.73 33
PUB PNB 4.02 9 PUB AL. BANK 4.75 34
PUB CORP. BANK 4.08 10 PUB UCO BANK 4.78 35
PUB B0B 4.12 11 PVT KVB 4.80 36
PUB INDIAN BANK 4.17 12 PVT FED BANK 4.83 37
PUB SYNDICATE 4.28 13 PUB OBC 4.85 38
PUB BOI 4.28 14 PVT SEC DHAN.BK 5.00 39
PUB S. BIKANER 4.29 15 PVT SEC SOUTH INDIANB
5.04 40
PUB SB OF PATIALA 4.32 16 PVT SEC DCB 5.19 41
PVT SEC J & K BANK 4.39 17 PVT SEC CUB 5.23 42
FOREIGN BANK OFBAHRAIN
4.40 18 PVT SEC ICICI BANK 5.23 43
PUB SBI 4.48 19 PVT SEC LAKSHMI VILAS 5.29 44
PUB S B MYSORE 4.50 20 PVT SEC CATHOLIC
SYRIAN
5.30 45
PUB CBI 4.51 21 PVT SEC INDUSINDBANK
5.38 46
PUB AB 4.53 22 PVT SEC KARNATAKABANK
5.42 47
PUB SBH 4.53 23 PVT SEC TMC 5.53 48
PUB IOB 4.55 24 FOREIGN ABU DHABIBANK
7.79 49
PUB VIJAYA 4.60 25
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In an attempt to assess the performance of the Banks in the three
Sectors, ranks have been assigned to individual Banks, and from the
above table, we draw the following inferences:
Deutsche Bank in Foreign sector stands out the best with first rank
among all the 49 sample Banks. Sector wise the Banks in the 1st
position are as under:
Public Sector : Punjab National Bank
Private Sector : HDFC Bank
Foreign Banks : Deutsche Bank
Abu Dhabi Commercial Bank in the foreign sector stood last in the
above ranking.
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SECTORBANK R1 R2 R3 R4 R5
AVG.
C.RANK
FOREIGN SEC DBS BANK LTD. 18 13 15 2 4 10 1
PUB BANK CORPORATION BANK 10 16 5 13 10 11 2
FOREIGN SEC STANDARD CHARTERED 9 2 2 37 5 11 3
PVT SEC HDFC BANK 2 6 11 34 7 12 4
FOREIGN SEC CITIBANK N.A. 13 1 4 46 3 13 5
FOREIGN SEC ABN-AMRO BANK N.V. 5 4 6 49 6 14 7
PVT SEC J & K BANK 15 32 3 3 17 14 7
PUB BANK STATE BANK OF PATIALA 7 33 9 5 16 14 7
FOREIGN SEC HSBC LTD. 4 5 18 45 2 15 9
PVT SEC KARUR VYSYA BANK 16 9 1 15 36 15 10
PUB BANK ORIENTAL BANK 22 13 6 38 17 11 6
PUB BANK PUNJAB NATIONAL BANK 12 7 27 32 9 17 12
PUB BANK ANDHRA BANK 3 11 16 36 22 18 13
PUB BANK VIJAYA BANK 11 15 23 16 25 18 14
PUB BANK STATE BANK OF INDORE 14 29 10 18 26 19 15
PUB BANK S BH 8 37 20 10 23 20 16
PUB BANK STATE BANK OF B& J 17 10 17 41 15 20 17
FOREIGN SEC DEUTSCHE BANK 1 44 12 48 1 21 18
PVT SEC CITY UNION BANK 40 12 8 7 43 22 19
FOREIGN SEC S BANK OF MAURITIUS 43 26 14 1 32 23 20
PUB BANK SYNDICATE BANK 21 19 25 39 13 23 21
PUB BANK BANK OF BARODA 27 30 28 23 11 24 22
PVT SEC TAMILNADU MERCANTILE 3 7 24 48 24 23 38
PUB BANK INDIAN OVERSEAS BANK 22 8 41 27 24 24 24
PUB BANK SBTRAVANCORE 19 28 33 12 31 25 25
PUB BANK CANARA BANK 23 36 22 15 29 25 27
PVT SEC FEDERAL BANK LTD. 25 20 32 11 37 25 27
PUB BANK INDIAN BANK 24 17 49 30 12 26 28
PUB BANK BANK OF INDIA 31 39 36 20 14 28 30
TableNo:40
Composite Ranking Table Based On All Parameters
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R=RANK C=COMPOSITE
In an attempt to assess the Overall performance of the Banks in the
three Sectors, Composite ranks based on all the five parameters have
been assigned to individual Banks, and from the above table, we
draw the following inferences:
Development Bank of Singapore Ltd. in the foreign Sector stands out
the best with first rank among all the 49 sample Banks. Sector wise
the Banks in the 1st position are as under:
PVT SEC BANK OF RAJASTHAN 30 40 34 28 8 28 30
PUB BANK STATE BANK OF INDIA 32 25 37 29 19 28 31
PUB BANK UNION BANK OF INDIA 49 23 38 8 27 29 32
PVT SEC KARNATAKA BANK 37 42 21 4 47 30 33
PUB BANK ALLAHABAD BANK 28 21 44 26 34 31 34
PUB BANK STATE BANK OF MYSORE 20 35 35 44 20 31 35
PUB BANK BANK OF MAHARASHTRA 29 31 40 22 33 31 36
PUB BANK CENTRAL BANK OF INDIA 39 14 46 38 21 32 37
PVT SEC SOUTH INDIAN BANK 36 38 29 17 40 32 38
PVT SEC ICICI BANK 26 49 24 21 43 33 40
PVT SEC INDUSIND BANK LTD. 34 48 26 9 46 33 40
PUB BANK UNITED BANK OF INDIA 33 25 42 40 28 34 41
PVT SEC LAKSHMI VILAS BANK 41 43 19 25 44 34 42
PUB BANK UCO BANK 35 41 45 19 35 35 43
FOREIGN SEC B. OF BAHRAIN 47 45 31 35 18 35 44
PVT SEC CATHOLIC SYRIAN BANK 42 18 30 43 45 36 45
PUB BANK DENA BANK 46 34 48 31 30 38 46
PVT SEC DHANALAKSHMI BANK 44 27 43 42 39 39 47
PVT SEC D CREDIT BANK 45 47 39 47 41 44 48
FOREIGN SEC ABU DHABI L BANK LTD. 48 46 47 34 49 45 49
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Public Sector : Corporation Bank Ltd.
Private Sector : HDFC BANK Ltd
Foreign Banks : Development Bank of Singapore Ltd.
Abu Dhabi Commercial Bank in the Foreign Sector stood last in the
above Ranking.
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VI-Parameter:
CAPITAL ADEQUACY (CA)
The following Table shows the position of Banks in the three Sectors
regarding Capital Adequacy during the study period:
Table No.41.1 PUBLIC SECTOR BANKS
PERIOD 1996 2002 2008
No. of Banks with negative CA 2 -- --
No. of Banks with CA of below 8% 4 1 --
No. of Banks with CA between 8-10% 14 2 1
No. of Banks with CA above 10% 5 22 24
TOTAL 25 25 25
Table No.41.2 PRIVATE SECTOR BANKS
PERIOD 1996 2002 2008
No. of Banks with negative CA -- -- --
No. of Banks with CA of below 8% 1 -- --
No. of Banks with CA between 8-10% 4 1 1
No. of Banks with CA above 10% 10 14 14
TOTAL 15 15 15
Table No.41.3 FOREIGN BANKS
PERIOD 1996 2002 2008
No. of Banks with negative CA -- -- --
No. of Banks with CA of below 8% 1 -- --
No. of Banks with CA between 8-10% 3 1 --
No. of Banks with CA above 10% 5 8 9
TOTAL 9 9 9
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Table No.41.4 POSITION OF SCHEDULED COMMERCIAL BANKS
PERIOD 1996 2002 2008
No. of Banks with negative CA 2 -- --
No. of Banks with CA of below 8% 6 1 --
No. of Banks with CA between 8-10% 21 4 2
No. of Banks with CA above 10% 20 44 47
TOTAL 49 49 49
Table No.41.5
The Banks with highest capital adequacy during 2008 are the
following Sector wise:
SECTOR NAME OF THE BANK
CAPITAL
ADEQUACYPER CENT
PUBLIC SECTOR STATE BANK OF INDIA 13.5
PRIVATE SECTOR FEDERAL BANK 22.5
FOREIGN BANKSABUDABHI COMMERCIAL
BANK51.71
The issue of lower capital adequacy had negative connotations both
nationally and internationally. The Reserve Bank of India addressed
this issue on priority and convinced the Government of India to
recapitalize the ailing Public Sector Banks. This process started even
before the study period, and by 1996 the no. of Banks with negative
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capital adequacy are 2 viz., Indian Bank and Vijaya Bank in the
Public Sector, while there are no Banks in the Private Sector and
Foreign Banks with negative capital adequacy. During this period
Banks with capital adequacy of below 8% are 4, 1and 1 in the Public
Sector, Private Sector and Foreign Banks respectively. Banks with
capital adequacy of between 1-10% are 14, 4, and 3 in the Public
Sector, Private Sector and Foreign Banks respectively. The no. of
Banks with capital Adequacy of more than 10% were 5, 10 and 5
respectively.
The benefits Prompt Corrective Action, CAMELS rating can be directly
seen in this very important area of capital adequacy. By 2002 all
Banks are positively capitalised, and there is only one Bank with
capital below 8% viz., Indian Bank. This is the benchmark capital
adequacy prescribed by Basel Accord. 4 Banks were between 8-10%,
and 44 Banks have enjoyed capital adequacy of above 10%, much
above the requirements of Basel Committee8% and the Reserve Bank
Guidelines of 9%. The position has further improved by 2008 with all
the Banks enjoying capital adequacy above the regulatory
requirements. During this period 2 Banks had capital adequacy
between 8-10% while the rest 47 had capital adequacy of over 10%.