Midas Touch International Journal of Commerce, Management and Technology Volume … S G Patel.pdf · · 2015-02-25Midas Touch International Journal of Commerce, Management and Technology

Midas Touch International Journal of Commerce, Management and Technology Volume 3, No. 1 & 2 January & February- 2015 ISSN: 2320 -7787

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A CRITICAL EVALUATION OF PERFORMANCE OF IDBI BANK WITH CAMEL MODEL

S .G. Patel, Faculty of Commerce, M.P. Arts and M.H. Commerce College, Ahmedabad V.G. Vadhel, Principal, M.P. Arts and M.H. Commerce College, Ahmedabad

ABSTRACT Indian Banking sector is passing through very crucial phase of development. India banking sector is highly influenced by the government policies and procedure. After nationalization of the Banks Banking sector is considered to be one of the medium though which different sector get the financial fuel for the growth and development. After late nineties entry of New Private Sector banks becomes very easy and creates good competition amongst the Private Sector Banks as well Public Sector Banks. IDBI Bank is one the efficient Bank of Private Sector Banks in India. With high market presence in mega and metro cities of India and reasonable fair market shares in the deposits (in comparing with other private sector Banks) as well as advances bank is performing just satisfactory well in terms of Profitability. Quick Adoptability of Technology, Efficient Staff and Quality decision making creates great impact on the bank’s performance. We have evaluated financial performance of the IDBI Bank on the basis of various components recommended by CAMEL model. Managerial efficiency as well financial efficiency plays very important role for the development of the bank.

Key Works: Financial Performance, Managerial Efficiency, CAMEL model

1. INTRODUCTION

Industrial Development Bank of India Ltd. (since renamed as IDBI Bank Ltd.) was incorporated under Companies Act 1956, as a Limited Company, registered with the Registrar of Companies, Maharashtra, Mumbai vide Certificate of incorporation dated 27th September, 2004. In terms of the Articles of Association of the IDBI Bank Ltd., the Central Government being a shareholder of the company shall, at all times, maintain not less than 51% of the Issued Capital of the company. Considering the shareholding pattern, IDBI Ltd. has been categorized under a New Sub-Group "Other Public Sector Banks".

2. FINANCIAL POSITION OF THE BANK

IDBI Bank is the youngest, new generation, public sector universal bank that rides on a cutting edge core banking Information Technology platform. This enables the Bank to offer personalized banking and financial solutions to its clients. The Bank had an aggregate Balance sheet size of Rs.3, 28,997 crore and total business of Rs.4,33,460 crore as on March 31, 2014. IDBI Bank's operations during the financial year ended March 31, 2014 resulted in a net profit of Rs. 1121 crore.

For over 40 years, IDBI Bank has essayed a key nation-building role, first as the apex Development Financial Institution (DFI) (July 1, 1964 to September 30, 2004) in the realm of industry and thereafter as a full-service commercial Bank (October 1, 2004 onwards). As a DFI, the erstwhile IDBI stretched its canvas beyond mere project financing to cover an array of services that contributed towards balanced geographical spread of industries, development of identified backward areas, emergence of a new spirit of enterprise and evolution of a deep and vibrant capital market. On October 1, 2004, the erstwhile IDBI Bank converted into a Banking company (as Industrial Development Bank of India Limited) to undertake the entire gamut of Banking activities while continuing to play its secular DFI role. Post the mergers of the erstwhile IDBI Bank with its parent company (IDBI Ltd.) on April 2, 2005 (appointed date: October 1, 2004) and the subsequent merger of the erstwhile United Western Bank Ltd. with IDBI Bank on October 3, 2006, the tech-savvy, new generation Bank with majority Government shareholding today touches the lives of millions of Indians through an array of corporate, retail, SME and Agri products and services.



3. LITERATURE REVIEW

Khurana A., and Singh M., (2010) : observed that new private banks have a strong competitive advantage over public sector banks on several dimensions such as use of low cost technology and operations to address the urban mass market, alignment between IT and business heads, more focus on value adding activities, better talent management, superior complexity handling and the ability to use infrastructure optimization facilities. In spite of all this, these new generation banks have also become a victim of NPAs. However, NPAs should not be seen as a dilemma but as a challenge for the banking sector.

Madhavankutty (2007) concludes the banking system in India has attained enough maturity and is ready to address prudential management practices as comprehensively as possible, which an integral part of policy is making. Banking in India is poised to enter yet another phase of reforms once the door opens further to foreign players in 2009. This requires further improvement in technology management, human resource management and the ability to foresee rapid changes in management earnings of state owned banks and private, as well as foreign banks. Banks have to lay down sound risk management strategies and internal capital adequacy assessment committees to ensure that they do not diverge from the prudential requirements.

Misra (2003) in his article, "Managing Non-Performing Assets: A Professional Approach", highlighted that the profitability of the financial institutions largely depended upon the level of income generated through optimum use of the assets after paying the cost of fund for acquiring them and other administrative costs involved therein. Redefined objective of managing NPAs through profit maximization approach and risk management approach were suggested. The author further concluded that the high rise in gross and net NPAs of the banking sector in the recent past was at an exponential rate giving an indication that present ongoing recession was taking a heavy toll on corporate credit discipline.

Rajendran P. and Karthikeyan K. (2008) stated that high level of Non-performing assets will also affect the productivity of the banks by increasing the cost of funds and by reducing the efficiency of the bank employees. Since, the employees are involved with the task of recovery of non-performing assets, productivity of employees is affected. They made an attempt to study the impact of non-performing assets on the productivity of SCBs and observed that the Non-performing assets continue to influence the profitability and productivity of the scheduled commercial banks in India to a greater extent.

Vijaykumar A. (2012) has evaluated performance of SBI and its associates with CAMEL model. State Bank of India and its associate banks have maintained adequate capital adequacy indicating moderate solvency level. Dependence of debt capital has increased over last four years in case of State Bank of India, State Bank of Mysore and State Bank of Travancore respectively. Declining trend has been observed in case of asset quality ratios. Though improvement in the asset quality position of State Bank of India and its associate banks have been observed. Through management efficiency ratios study concluded that associate banks have succeeded in maintaining higher level of management efficiency. Interest income to non-interest income, non-interest income to total income shows that SBI and its associates has maintained moderate amount of profitability. SBI and its associates have maintained very good liquidity which affects adversely to the efficiency of the bank to a greater extent. The managerial aspects of the bank are required to be focused. Bank has to consider repaying capacity, security and other aspects before granting finance to respective person. NPA and its management is the most critical factor for SBI as well as for its associates as it affects efficiency and profitability also.

4. RESEARCH METHODOLOGY

IDBI Bank’s performance for the capital adequacy is quiet satisfactory. IDBI Bank had made aggressive efforts for increasing advances in last five year. This leads to higher portion of Nonperforming assets in the total assets in the span of five years. Financial ratios are often used to



measure the overall financial soundness of a bank and the quality of its management. Bank’s regulators, for example, use financial ratios to help evaluate a bank‘s performance as part of the CAMEL system. Despite continuous use of ratios analysis in banks performance appraisal by regulators, opponents to it still thrive. Financial ratios are somewhat limited in scope, that is, simple gap analysis are one dimensional views of a service, product, or process that ignore any interactions, substitutions or trade-offs between key variables.

The role of banker has been widen by the reserve bank of India but still the management of various activities of the banks are not professionally executed which results into lower profitability and inadequate liquidity. Due to intervention of the reserve bank of India and strict control, more or less the products of almost all the banks are similar and like commodities. It indirectly increases the importance of the quality of management.

The Assets and Liability management of the bank plays significant part in the solvency and profitability of the bank. An attempt has been made to evaluate the bank‘s capital adequacy, Management Quality and Liquidity for the period of last five years. The attempt has been made to compare the financial position of Punjab National Bank.

The present research study has following research objectives.

1. To examine financial position of IDBI Bank with CAMEL model.

2. To analyze the performance of IDBI Bank.

3. To know the Non-Performing Assets Management by the IDBI Bank.

5. CAMEL RATIO ANALYSIS:

Figure-1

Capital Adequacy Ratio of IDBI Bank

Capital Adequacy ratio of IDBI Bank as per Basel-II requirement is quiet satisfactory. As per Reserve Bank Requirement, it must be at least 9% but bank has maintained it very high. It shows that bank has sufficient amount of capital as to requirement. Bank can management all types of risk with the present level of capital. However, the performance of last three year’s shows declining trend to certain extent. In a span of five years, there is increase to the extent of 3.85 bases in the Capital Adequacy Ratio. Higher the ratio lower is the possibility of Bankruptcy or higher the level of confidence of shareholders in Bank.

02468

10121416

2008-09 2009-10 2010-11 2011-12 2012-13

11.5713.23

15.8913.85

15.36

CAPI

TAL

ADEQ

UAC

Y RA

TIO



Figure-2

Net NPA to Net Advance Ratio of IDBI Bank

Nonperforming Assets In comparison of the Net Advances by the Bank is reflected in this ratio. In case of IDBI Bank Net Non-Performing Assets of the Bank is very lower as compare to total Net Advances of the Bank. In the first year of the study 2008-09 it was just 0.92 of the Net Advances by the Bank. It shows upward trend up to 2011-12. In the year 2011-12 had been raised significantly. It indicates that the bank had generated poor quality assets in that year. However, bank had made some efforts for recovery of such Assets in the year 2012-13 and brings down total Net NPA to 1.58 to Net Advances.

Figure-3

Net NPA to Total Assets Ratio of IDBI Bank

Non-perforating Assets In comparison of the Total Assets of Bank is reflected in the above ratio. During first three years of study the amount of Non-performing assets reaming constant. However, in the fourth year of study it was increased to 1.00 % of Total Assets of the Bank, in the last year of study it had been slightly reduced to 0.9605. Thus in last three years Non Performing Assets of the Bank in comparison to Total Assets has been increased @ 100%. It shows that in last year bank had given finance to the weak borrowers. It is also indicatives very inefficient credit management.

Figure-4

0

0.5

1

1.5

2

2008-09 2009-10 2010-11 2011-12 2012-13

0.92 1.02 1.06

1.61 1.58

NET

NPA

TO

NET

ADV

ANCE

RA

TIO

0.0000

0.2000

0.4000

0.6000

0.8000

1.0000

1.2000

2008-09 2009-10 2010-11 2011-12 2012-13

0.5504 0.6021 0.6622

1.0027 0.9605

NET

NPA

TO

TO

TAL

ASSE

TS



Gross NPA of IDBI Bank

The above figure shows the amount and trend of Gross NPA of Bank. Out of total five years of study in the first three years there is very slow increase in the Gross Non Performing Assets. In the last two years there is significant increase In the amount of Gross NPA. During 2011-12 there had been increase of Gross NPA more than Rs. 1700 cores and in the last year of study there had been increase in Gross NPA for more than Rs. 1900cores. Increase in Gross NPA adversely affects the Profitability of the Bank.

Figure-5

Net NPA of IDBI Bank

Non-performing Assets of Banks always put pressure on the efficacy of the overall performance of the Bank. From the above chart, we can conclude that there is very slow or marginal increase In the Net NPA of Banking the first three years of study. In the fourth year of study NPA had been raised by just less than four times. In last year of the study the problem of NPA is becoming very sever for the management. In other way we can conclude that IDBI Bank had increased its Non-Perfuming Assets by more than nine times in span of five years. It shows that management of the bank is required to adhere very strict standard of credit.

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

7000.00

2008-09 2009-10 2010-11 2011-12 2012-13

1435.692129.38

2784.73

4551.37

6449.98

GRO

SS N

PS

0.00

500.00

1000.00

1500.00

2000.00

2500.00

3000.00

3500.00

2008-09 2009-10 2010-11 2011-12 2012-13

948.96

1406.321677.91

2910.933100.35

NET

NPA



Figure-6

Business Per Employee Ratio of IDBI Bank

The efficiency of bank in terms of Business per employee is very satisfactory in the span of five years. In the second year of the study there had been reduction in Business per Employee to great extent but from the next year due to bank’s efforts it has been improved a lot and it reaches to the same level of efficiency which we found in the first year of the study.

Figure 7

Profit Per Employee Ratio of IDBI Bank

Profitability of the Bank In terms of Profit Per Employee shows increasing trend up-to first four years of study. In the first two years the profit per employee is almost unchanged. But In the third year due it raised up to 50% and it consistently followed in the last three years too.

0.00

20.00

40.00

60.00

80.00

100.00

120.00

2008-09 2009-10 2010-11 2011-12 2012-13

112.86

71.21

91.60

107.81119.03

BUSI

NES

S PE

R EM

PLO

YEE

RATI

O

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

2008-09 2009-10 2010-11 2011-12 2012-13

0.08 0.08

0.120.13

0.12

PRO

FIT

PER

EMPL

OYE

E



Figure 8

Advance Per Employee Ratio of IDBI Bank

Efficiency of Bank of generating Advances per employee is improving constantly over the period of five years. Bank’s employee has contributed consistently higher In achieving Advances target of the Bank. In the year 2008-09 Advances Per Employee was Rs. 10.14 cores which had been raised to Rs. 12.69 cores In 2012-13. There is increase in the efficiency of employees by Rs. 2.50 crores per employ In last five years.

Figure 9

Deposit Per Employee Ratio of IDBI Bank

Deposit Per employee is showing increasing trend In all five years of study. In the span of five years the Employees efficiency In terms of Deposit per employee has been doubled. It was 11.02 cores per employee In the year 2008-09 and rose to 14.69 cores per employee In the year 2012-13. Efficiency In terms of Advances and Deposit per employee shows increasing trend indicating efficient employee and management for operational activities of the Bank.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2008-09 2009-10 2010-11 2011-12 2012-13

10.1411.32 11.55 11.70

12.69

ADVA

NCE

PER

EM

PLO

YEE

0.002.004.006.008.00

10.0012.0014.0016.00

2008-09 2009-10 2010-11 2011-12 2012-13

11.02

13.73 13.27 13.6414.69

DEPO

ST P

ER E

MPL

OYE

E



Figure 10

Advance per Branch Ratio of IDBI Bank

Efficiency of Branch In terms of Advances Per Branch is measured In the above ratio. Branches are efficient In generating business of the IDBI Bank. The above figure indicates that banks branch’s performance is improving consistently In al five years. In the all five years of the study it has been increased from Rs. 203.20 crores per branch to Rs. 182.44 cores per branch. It is reduced by 10% in span of five years. Bank has proven inefficient consistency in generating advance per branch.

Figure 11

Deposit per Branch Ratio of IDBI Bank

Branches are efficient In generating Deposit In Bank. The above figure shows that there is consistent improvement In the efficiency of Branch In generating deposits In span of five years. As it had been raised from Rs. 220.83 cores to Rs. 236.82 cores per branch in the first year. However In the fifth year of study there was an reduction with high intensity. In the fifth year there has been reduction in the efficiency of the branch in terms of Deposit per Branch by Rs. 5.5 Crore per Branch.

170.00175.00

180.00185.00

190.00195.00

200.00205.00

2008-09 2009-10 2010-11 2011-12 2012-13

203.20

195.20192.76

185.77182.44

ADVA

NCE

PER

BRA

NCH

195.00200.00205.00210.00215.00220.00225.00230.00235.00240.00

2008-09 2009-10 2010-11 2011-12 2012-13

220.83

236.82

221.45216.56

211.07

DEPO

STI P

ER B

RAN

CH



Figure 12

Total Advances to Total Deposits Ratio of IDBI Bank

This ratio measures the efficiency and ability of the banks management In converting the deposits available with the banks (excluding other funds like equity capital, etc.) into high earning advances. In the span of five years the bank’s ability of converting Deposit in the Advances is slightly fluctuating. However the bank has maintained this ratio above 0.80%. It means 80% of the deposits are maintained. In the year 2009-10 there was slightly reduction in the conversion ratio to 82%.

Figure 13

No. of Employees of IDBI Bank

Bank is expanding its activities consistently in span of last five years. Bank tries tapping the market for various banking products across the globe. Constantly there was increase in no of employees of the Bank. In span of five years 5264 employees are increased. Hence we can conclude that in five years bank as widen its scope of activities to greater extent.

0.760.780.800.820.840.860.880.900.920.94

2008-09 2009-10 2010-11 2011-12 2012-13

0.92

0.82

0.870.86 0.86

TOTA

L ADV

ANCE

S TO

TO

TAL

DEPO

STS

0

2000

4000

6000

8000

10000

12000

14000

16000

2008-09 2009-10 2010-11 2011-12 2012-13

10201

1221313598

15435 15465

NO

OF

EMPL

OYE

ES



Figure 14

No. of Branches of IDBI Bank

Increase In no of branches proves to that bank is expanding its business. From the above figure, we can conclude that bank is searching new opportunities and avenues of business and tries to increase profitability. In the span of four years bank has expended its business and opened 569 new branches. Increased branch contribute in increasing profitability of Bank.

Figure 15

Operating profit to avg. Working fund ratio of IDBI Bank

The above ratio shows the profitability of the bank in comparison of the Networking Fund (Total Assets of Bank). The ratios show efficiency of the assets to generate operational profit. Earning quality of IDBI Bank is not consistent. It is shows high volatility. In the first year of the study it was moderate. In the year 2009-10 the earning in comparison of Total asset is just 4.77% than after there was recovery of earning capacity and in 2011-12 it reached to 5.60% but further in the year 2012-13 it fall down to 5.35% of total assets dues to Non-performing assets.

0

200

400

600

800

1000

1200

2008-09 2009-10 2010-11 2011-12 2012-13

509

708815

9721076

NO

. OF

BRAN

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4.2004.4004.6004.8005.0005.2005.4005.6005.800

2008-09 2009-10 2010-11 2011-12 2012-13

4.8924.773

5.025

5.604

5.356

OPE

RATI

ON

G PR

OFI

T TO

AVG

. W

ORK

ING

FUN

D RA

TIO



Figure 16

Spread or Net Margin to Total Assets of IDBI Bank

Net margin in the form of Net Interest (Interest earned-Interest Paid) ratio shows the earning of Bank In relation to the Total assets. This ratio shows mix trend. In the first two years of study, it shows upward trends. In the year 2010-11, it was raised to 1.708% of total Assets than in the last year of the study it shows downward trend to 1.66 % of total assets. In short the bank can’t manage the net earnings in the consistent level.

Figure 17

Net Profit to Average Capital Employees of IDBI Bank

This ratio shows the profitability of the Capital Employees on Average Basis. The ratio shows increasing trend for the first three years of study and then shown declining trend. The bank had generated profit of just 0.361% in the first year of the study which is very poor In the span of five years bank is not able to increase profitability significantly. High volatility has been observed in the profitability of the bank with reference to average capital employed.

0.0000.2000.4000.6000.8001.0001.2001.4001.6001.800

2008-09 2009-10 2010-11 2011-12 2012-13

0.7690.966

1.7081.565

1.665

SPRE

AD O

R N

ET M

ARG

IN T

O

TOTA

L ASS

ETS

0.000

0.100

0.200

0.300

0.400

0.500

2008-09 2009-10 2010-11 2011-12 2012-13

0.3610.322

0.4460.487

0.402

NET

PRO

FIT

TO A

VERA

GE

CAPI

TAL

EMPL

OYE

ES



Figure 18

Interest Income to Total Income of IDBI Bank

This ratio shows the portion of Interest Income-main source of income In case of Bank. The above figure shows that in the year 2008-09 out of total income of the bank 89.32% income is from interest earned on advances. This portion was 86.89%, 89.92% in the year 2009-10 and 2010-11 respectively. In this two years there had been reducing in the profitability from core business by 3%. Very significant decrease in the operating return is register in the year 2011-12 and 2012-13.

Figure 19

Non Interest Income to Total Income of IDBI Bank

Non-Interest income shows other income of the Bank. The portion of the other income for the bank is showing downward trend in the above figure. In a span of five years there is reduction of 1.1% non-interest income. In the first year of study 10.67 % of total income is relating to other income which is raised to 13.10% in 2009-10 and later on in the year it became 11.38%. This indicates that the bank cant concentrating on the main business of the Banking.

84.000

85.00086.000

87.00088.000

89.00090.00091.000

92.000

2008-09 2009-10 2010-11 2011-12 2012-13

89.326

86.894

89.927

91.711

88.617

INTE

REST

INCO

ME

TO T

OTA

L IN

COM

E

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

2008-09 2009-10 2010-11 2011-12 2012-13

10.674

13.106

10.0738.289

11.383

NO

N IN

TERE

ST IN

COM

E TO

TO

TAL I

NCO

ME



Figure 20

Liquidity Ratio of IDBI Bank

Liquidity plays very important role in banking. Out of one rupee of the total assets in the first year bank has kept 0.06 in the form of cash in the first year of study. In the second year of study 200-10 bank has maintained slightly higher amount of liquidity at 0.082% of the total assets. In the span of five years bank has followed mixed trend of liquidity in comparison to the Total Assets of the company. In span of five years, there has been increase in the liquidity. It has been reached 0.056 in the year 2012-13 which is very low. This situation creates risk of the short term solvency.

Figure 21

Liquid Assets to Total Deposit Ratio of IDBI Bank

This ratio shows ability of the bank to pay all deposit on a single day. Out of one rupee deposit accepted by bank, bank is in a position to pay deposit of 0.004at any point of time in the year 2008-09 which is very pathetic. The ability to pay deposit at a time shows banks efficiency to meet the sudden requirement. Higher the ratio betters the ability to meet deposit of the bank. Liquid Assets to Total Deposit shows increasing trend. Bank has not maintained or increased liquid assets portion In the Total Assets. There is over all five percent increases in the liquidity of the bank to payout deposit. There is reduction in Liquid Assets consistency in last three years.

0.000

0.020

0.040

0.060

0.080

0.100

2008-09 2009-10 2010-11 2011-12 2012-13

0.065 0.062

0.082

0.0620.056

LIQ

UDI

TY R

ATIO

0.000

0.020

0.040

0.060

0.080

0.100

0.120

2008-09 2009-10 2010-11 2011-12 2012-13

0.004

0.087

0.115

0.0860.079

LIQ

UID

ASSE

TS T

O T

OTA

L DE

POSI

T



6. FINDINGS:

CAPITAL ADEQAUCY

· Bank has maintained high amount of Capital Adequacy as to the norms of the Reserve Bank of India, which shows sound capital of the bank.

· As per RBI guidelines minimum Capital Adequacy requirement is 9% but Bank of Baroda has maintained very high capital Adequacy on Average Basis at 14.56%

· The bank‘s ability to absorb financial and non-financial risks very high has the Adequacy ratio is higher.

· In the last three years, there is increasing trend in the capital adequacy ratio. There is increase in this ratio by 5.65% in the span of five years indicating very sound capital amount of bank.

ASSETS QUALITY

· NPA is following constantly increasing trend in the span of five years. It was just 0.92% of Net Advances in the beginning of the of study. It was later on raised to 1.58% of Net Advances.

· Significant increase in the NPA in the fourth and fifth year leads to deteriorating quality of assets of banks to certain extent.

· Constant increase in the NPA affects adversely to the profitability of the bank as well as to efficiency of the Assets.

· NPA in comparison to total Assets was just 0.55% in the first year of study and became nearly double in the last year of study.

· In case of the stand-alone comparison management decision for granting credit in many cases proven to be focused towards recovery of advances by the bank. As Net NPA was 179.13 cores in the first year of study which becomes 136.76 cores. Slightly decrease Net NPA in the span of five years.

· This increasing trend in NPA of Axis Bank indirectly indicates inactive or inefficient efforts of bank for the recover even after sending many accounts in the Debt Restructuring specifically in the case of last year of study.

EFFICIENCY

· Bank‘s efficiency with reference to Employees and Branch is satisfactory and showing increasing trend.

· Efficiency in terms of business per employee is following increasing trend in the span of five years and business per branch is highly fluctuating but maintained at Rs.100 cores per branch on average basis. . .

· Profit per employee had shown increasing trend in all five years and increased to Rs.0.12 cores per employee from Rs.0.08 cores per employee.

· Profit per employee on an average basis is Rs.10.87 lakhs, which is fair enough. · Performance of employee in terms of Advances Per employee and Deposit per Employees

shows increasing trend in the all five years of study. · Deposit per employee and Advances per employees both are very important aspects for

measuring efficiency of the bank. Here in this case both aspects show improvement. · Efficiency on terms of Branch for generating Advances as well as accepting deposit is

fluctuating. There has been significant decrease in efficiency in terms of Advances per Branch and Deposit per Branch.

· Efficiency of bank is also measured in terms of conversion of the Deposit amount in the Advances of the bank. Bank is in a position to convert it is almost 86% deposits in the advances which can consider fair efforts of generating revenue.



MANAGEMENT

· Operating profit of the bank is showing increasing trend in the span of study with an average of 5.13% of Average Working Capital Fund.

· Net Interest income (Interest received-Interest Paid) of bank is reduced slightly from 0.76% to 1.66% in last five years indicating that bank‘s earned interest is increased as compare to interest spent.

· Return on the Average Capital Employed is following increasing trend. In last five years, it has been raised to great extent from 4.892% to 5.359%.

· Net Operating income in all five years was showing an increasing trend even after increasing NPA. .

· Income of the bank from core business is stabilized in span of five years. Portion of Interest income of the Bank in comparison of the total income has been maintained at 83.546%.

LIQUIDITY:

· Bank has maintained liquidity nearly 6.5% of the total assets on average basis, which is significantly lower for meeting any all of sudden cash requirement.

· Bank‘s liquidity wad slightly reduced during the study period. · If all deposit holders ask bank to payout the amount then bank is in a position to 7% deposits

of banks on an average basis. · As liquid assets has been reduced bank‘s ability to pay out deposit at any point of time is

question mark for the management of bank.

7. CONCLUSION:

IDBI bank has maintained higher capital adequacy to absorb unexpected and expected changes in the business environment. Financing Policy of the bank is very unpredictable and not followed on continuous basis. Bank should have very sound policy for the finance to the various sectors of the economy. Efficiency of the bank in terms of Business per Branch shows fluctuation in the span of five years. This indicates fluctuation in the banks over all activities and its impact on the performance of bank. Profitability of the business has been increased to great extent. Bank had made an excellent attempt of increasing market share by increasing reach to the consumers by making double branches in span of five years. Liquidity of the Bank is satisfactory. Bank needs to restructure the financing policy for the various sectors as well as adopt new technology for the speedier and efficient work. Conversion of the Non-Performing assets in to Performing assets can be a priority task for the bank in the present scenario.

References:

· Khurana A., and Singh M., [2010]: ―NPA Management: A study of New Private Sector Banks in Indiaǁ, Indian Journal of Finance, pp.3-13, Sept, 2010.

· Madhavankutty, G. (2007) Indian Banking – Towards Global Best Practices, Bankers Conference Proceedings (Nov.): 84-86.

· Misra (2003) ―Managing Non-Performing Assets: A Professional Approachǁ: Indian Banking Association (IBA) Bulletin: XXV (1), pp.14-19, 2003.

· Rajendran P. and Karthikeyan K. (2008): ―Impact of NPAs on Micro Banking Variablesǁ, Published in Southern Economist, pp.5-8, May 15, 2008.

· Vijaykumar A. (2012) ISSN-2249-9598: Evaluating Performance of Banks through Camel Model – A Case Study of State Bank of India and its Associates. Vol.II, Issue VI, pp. 104-124. Nov-Dec.2012. Vinimaya, Vol. XXIII, No.2, July-September.



· Kothari C R (2009) Research Methodology: Methods and Techniques, New Age Publication, SBN (13): 978-81-224-2488-1 New Delhi

Online References:

1. http://economictimes.indiatimes.com/industry/banking/finance/banking/articlelist/13358319.cms

2. http://en.wikipedia.org/wiki/CAMELS_rating_system 3. http://www.business-standard.com/article/opinion/npa-recovery-cases-rise-sharply-but-

recovery-drops-114123000440_1.html 4. http://www.ibef.org/industry/banking-india.aspx 5. http://www.idbi.com/idbi-bank-anual-report.asp 6. http://www.rbi.org.in/scripts/AnnualReportPublications.aspx?year=2014

AUTHOR’S PROFILE: S .G. Patel is a Faculty Member at M.P. Arts and M.H. Commerce College, Ahmedabad

Dr. V.G. Vadhel is a Principal at M.P. Arts and M.H. Commerce College, Ahmedabad

http://economictimes.indiatimes.com/industry/banking/finance/banking/articlelist/13358319.cms

http://economictimes.indiatimes.com/industry/banking/finance/banking/articlelist/13358319.cms

http://en.wikipedia.org/wiki/CAMELS_rating_system

http://www.business-standard.com/article/opinion/npa-recovery-cases-rise-sharply-but-recovery-drops-114123000440_1.html

http://www.business-standard.com/article/opinion/npa-recovery-cases-rise-sharply-but-recovery-drops-114123000440_1.html

http://www.ibef.org/industry/banking-india.aspx

http://www.idbi.com/idbi-bank-anual-report.asp

http://www.rbi.org.in/scripts/AnnualReportPublications.aspx?year=2014

Documents

Midas Touch International Journal of Commerce, Management and Technology Volume … S G Patel.pdf · · 2015-02-25Midas Touch International Journal of Commerce, Management and Technology