PERFORMANCE ANALYSIS OF NEW GENERATION PRIVATE …ictactjournals.in/.../IJMS_Vol_5_Iss_1_Paper_10_954_963.pdf · 2019-07-30 · Credit Bank in 1995, IndusInd bank in 1994, Kodak Mahindra

M SELVAKUMAR et al.: PERFORMANCE ANALYSIS OF NEW GENERATION PRIVATE SECTOR BANKS IN INDIA

DOI: 10.21917/ijms.2019.0131

954

PERFORMANCE ANALYSIS OF NEW GENERATION PRIVATE SECTOR BANKS

IN INDIA

M. Selvakumar, H. Janani, V. Sathyalakshmi and R. Mohammed Abubakkar Siddique

Department of Commerce, Ayya Nadar Janaki Ammal College, India

Abstract

The economic growth of the country is an indicator for the development

of the banking sector. The Indian economy is expected to grow at a rate

of 5 to 6 percent the country’s banking industry is probable to reflect

this growth. The banking sector is laying greater importance on

providing enhanced services to their customers and also advancement

their technology infrastructure in order to increase the customer’s

overall experience as well as give banks a competitive edge. After

introduction of New Generation private sector commercial banks, the

banking industry underwent key changes. The Indian banking industry

was dominated by public sector banks. At present, the position has

changed private sector banks with use of technology and professional

management has gained a realistic point in the banking industry. This

paper examined the performance of new generation private sector

banks in India and also compares the performance of banks which are

coming under new generation category using certain financial

performance parameters during the period from 2008-09 to 2014-15.

The researcher has applied some statistical tools such as ratio analysis,

average and Friedman’s test through SPSS. The study shows that

Kodak Mahindra Bank has the first largest new generation private

sector banks in India.

Keywords:

Performance, New Generation Private Sector Banks, Axis Bank,

Development Credit Bank, HDFC Bank, IDBI Bank, ICICI Bank,

Indusind Bank, Kotak Mahindra Bank and Yes Bank

1. INTRODUCTION

The Government constituted a committee to observe the

structure and functioning of the existing Indian Financial

system. Based on the committees report, the Government has

allowed individuals, corporation, foreign non-resident Indians

to open private banks in India. The Reserve Bank of India has

issued on 22nd January, 1993 explicit rules for the establishment

of new private banks in the country. This is in gratitude of the

need to initiate greater competition which can guide to higher

productivity and efficiency in the banking system. These banks

came into existence after March, 1995 and are called New

Private Sector Banks (NPSB) or popularly New Generation

Banks (NGB) [1]. New private sector banks are the fastest

emergent sector in India. Performance and efficiency of these

banks have improved manifold. Evaluation of this sector is not

a simple duty. Behind the banks nationalization process done in

the year 1969, the number of private sector banks increased. And

due to existence of the new private sector banks and foreign

banks has made the market viable and it also develop the quality

of services during the last two decade in India. These banks have

established themselves in new and latest system and standard

with superior quality of service and excellent efficiency [2]. The

leading new private sector banks are AXIS Banks established in

1994, HDFC Bank in 1994, ICICI Bank in 1996, Development

Credit Bank in 1995, IndusInd bank in 1994, Kodak Mahindra

Bank in 2003 and Yes Bank in 2005 [1]. The performance of

New Generation Private Sector Banks in India has been assessed

by considering variables, viz. Credit deposit, Net profit, Deposit

to total assets, Deposit to fixed assets, Fixed Assets to total

assets, Investments to advance, Return on equity, Interest

expenses, Return on assets, Profit margin, Equity multiplier,

Asset utilization, provision for loan loss, Non-interest expenses,

Non-interest income and Interest income. So, this research paper

aim is to analyze the performance analysis of New Generation

Private Sector Banks in India.

2. REVIEW OF LITERATURE

The followings are the previous studies related to the financial

performance of banks in India.

The last decade has seen many optimistic developments in the

Indian banking sector. Public banks must give concentration on

their functioning to compete private banks. Banks should be well

versed in appropriate collection of borrower/project and in

analyzing the financial statement [3]. SBI and ICICI banks are

maintaining the required standards and running profitably. This

comparative study of SBI and ICICI Bank demonstrates that there

are significant differences on the performance of SBI and ICICI

Bank in terms of Deposits, Advances, Investments, Net profit and

Total assets. Based on the study, it can be said that SBI have an

extensive operation than ICICI Bank [4]. Profitability ratios are

employed by the management in order to evaluate how capably

they carry on their business operations and also it is recommended

for the entire bank to receive effective steps to develop the

operating efficiency of the business [5]. All new private sector

banks shifted their focal point from service to customer. If any

bank needs to acquire success in this field they have to know the

customer and focus their requirements. And also they have to

work based on the current market development [6]. The banking

customers have more trust on private sector banks as compared to

public sector banks [7]. SBI is performing well and financially

sound than ICICI Bank but in context of deposits and expenditure

ICICI bank has better managing efficiency than SBI [8]. It was

found that private sector banks were better utilized the available

resources such as assets, deposits, advances, and investments.

Therefore, it is essential for public sector banks to give more

consideration on improve their productivity/efficiency of

employee by training, incentive and proper management [9].

Banking constitutes an important link in several socio-economic

activities. Therefore, the banking industry must be on a sound

footing, while in India, there is stress on the social responsibility

of banks, the significance of liquidity and profitability is not to be

neglected. The financial viability of the banking system is

certainly essential; not only to instill public confidence but also to

make banks capable of discharging their social responsibilities

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[10]. The bank groups are able to increase their assets,

profitability, income (interest and non-interest), advances,

investments and deposits. But, there is a strong need to improve

the functioning of the Public Sector Banks, so that they can make

their presence felt in the modern era of cut throat competition.

RBI must frame its policies in such a way that these banks can

grow and satisfy their customers as well as themselves. Foreign

banks needs to quickly recover from their financial and other

crisis and reorganize their functioning in order to maintain their

position in the Indian Banking Industry [11]. The SBI is

performing well and financially sound than ICICI Bank. Also, the

market position of SBI is better than ICICI in terms to earning per

share, price ratio per share and dividend payout ratio, but on the

other hand ICICI bank is performing well in terms of NPA and

provision for NPA in comparison of SBI bank [12]. The private

and foreign sector banks have been performing well than the

public sector banks [13]. Increasing use of modern technology has

further improved reach and accessibility [14]. HDFC bank

performance is good in financial perspective of the BSC. The two

banks ICICI and Axis performance is moderate in the variables in

customer satisfaction perspective of the BSC. Finally, the

performance of ICICI bank is best followed by Axis and HDFC

banks during the study period in the BSC framework. It is

recommended the banks to improve performance in all

perspectives of the BSC as well as to improve overall

performance [15]. Bank customers have a lot of belief in public

sector banks compared to private sector banks. Individuals well-

liked PNB bank to necessitate loans and advances as compare to

ICICI bank. However, PNB bank has lower operational efficiency

comparatively than ICICI bank. In case of dividend payout ratio,

debt-equity ratio and Interest expended to interest earned, ICICI

bank has performed sounder as compare to PNB bank [16]. While

go through the existing studies relating to performance analysis,

particularly in banking sector, most of the studies analyzed either

public sector banks or private sector banks or both. A limited

study is made in New Generation Private Sector banks; however,

such banks contribute more to Indian economy. Moreover, new

generation banks plays important role in Indian banking sector.

Therefore, the researcher makes an attempt to analyze the

performance of new generation private sector banks in India.

3. STATEMENT OF THE PROBLEM

In the era of globalization, the utilization of finance is

considered as the most important function of an organization. The

firms are facing a stiff competition from the whole market, so the

inflow and outflow of funds will be managed well. Finance is one

of the most important aspects of business management. Without

proper financial planning an enterprise is unlikely to be

successful. Financial performance analysis is the process of

identifying the financial strengths and weaknesses of the company

by properly establishing the relationship between the items of

balance sheet and profit and loss account. It also helps in short-

term and long term forecasting and growth can be identified with

the help of financial performance analysis. The Indian Banking

Sector has been the backbone of the Indian economy over the past

few decades, helping it survive various national and worldwide

economic shocks and meltdowns. It is one of the healthiest

performers in the world banking industry seeing tremendous

competitiveness, growth, efficiency, profitability and soundness,

especially in the recent years. The Indian market is a growing

market and to keep succeeding one has to explore the existing

opportunities well. The banking sector is expected to grow at 2.5

to three times the country’s GDP growth rate. For individual

banks, a lot will depend on their underlying business strategy. The

differentiator will be a bank’s efficiency and innovation. How

well it manages risk and therefore, profitability will also be a key

factor. The new generation private sector banks play an important

role in the economic development of a country. Today they have

a market share of around 20 per cent in deposits and advances.

This has been achieved in a growing market indicating that private

bank have successfully capitalized on the growth of the Indian

economy. The new generation private sector banks are

experiencing the positive change in their work and performance.

Therefore, it is necessary to know the performance of the banks is

very important. Hence, the researcher aim is to analyze the

performance of new generation private sector banks in India.

4. METHODOLOGY

4.1 SCOPE OF THE STUDY

This study is under taken to measure the financial performance

of New Generation Private Sector Commercial banks in India.

The study also compares the performance of banks which are

coming under New Generation Category.

4.2 OBJECTIVES OF THE STUDY

The objectives of the study are listed below

• To analyze the profitability, liquidity, capital adequacy

positions of New Generation Private Sector Banks in India.

• To compare the performance of New Generation Private

Sector Banks among them.

• To offer suitable suggestions on the basis of findings of the

study.

4.3 METHOD OF DATA COLLECTION AND

TOOLS USED FOR ANALYSIS

The study comprises the secondary data only. The secondary

data pertaining to the study were collected from the head offices

of selected banks, websites, journals and magazines. This study

analyses the performance of the banks by using the data for the

period from 2008-2009 to 2014-2015. The researcher has used the

statistical tools such as ratio analysis, average and Friedman’s test

with the help of SPSS.

5. RESULTS AND DISCUSSIONS

5.1 ANALYSIS OF PERFORMANCE OF NEW

GENERATION PRIVATE SECTOR BANKS IN

INDIA

The researcher has analyzed the performance of New

Generation Private Sector Banks in India by using ratio analysis.

Ratio is the quantitative relationship between two amounts

showing the number of times one value contains or it’s contained

within the other. To analyze the performance of the banks, the

researcher has computed 16 ratios, which are


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• Credit Deposit Ratio

• Net profit Ratio

• Deposit to Total Assets Ratio

• Deposit to Fixed Assets Ratio

• Fixed Assets to Total Assets Ratio

• Investments to Advance Ratio

• Return on Equity Ratio

• Interest Expenses Ratio

• Return on Assets Ratio

• Profit Margin Ratio

• Equity Multiplier Ratio

• Asset Utilization Ratio

• Provision for loan loss Ratio

• Non-interest Expenses Ratio

• Non-interest Income Ratio

• Interest Income Ratio

5.1.1 Credit Deposit Ratio:

Credit Deposit ratio is a commonly used statistic for assessing

a bank’s liquidity by dividing the banks total loans by its total deposits. The formula for calculate the credit deposit ratio is

“Credit Deposit Ratio = Credit/Deposits”. The ratio of Credit to

Deposit of New Generation Private Sector Banks in India during

the study period is shown in Table.1.

Table.1. Credit Deposit Ratio of New Generation Private Sector

Banks in India

Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.69 0.70 1.00 0.92 0.71 1.63 0.46 0.69

2009-10 0.74 0.72 0.90 0.82 0.77 1.36 0.48 0.75

2010-11 0.75 0.76 0.96 0.87 0.76 1.51 0.70 0.77

2011-12 0.77 0.83 0.99 0.86 0.83 1.46 0.57 0.79

2012-13 0.78 0.79 0.99 0.86 0.82 0.95 0.63 0.81

2013-14 0.82 0.79 1.02 0.84 0.91 0.90 0.61 0.82

2014-15 0.87 0.84 1.07 0.80 0.93 1.22 0.83 0.81

Average 0.77 0.78 0.99 0.85 0.82 1.29 0.61 0.78

Minimum 0.69 0.70 0.90 0.80 0.71 0.90 0.46 0.69

Maximum 0.87 0.84 1.07 0.92 0.93 1.63 0.70 0.82

Source: Annual Report of New Generation Private Sector Bank of India Ltd

The Table.1 review that the highest average credit deposit

ratio of new generation private sector banks over the study period

was registered as 1.29 in Kotak Mahindra bank. The minimum

ratio was registered as 0.46 in the year 2008-09 in YES Bank Ltd

and maximum ratio of 1.63 was registered in Kotak Mahindra

bank in the year 2008-09.

5.1.2 Net Profit Ratio:

Net Income ratio is a measurement of financial efficiency. It

is determined on the basis of information derived from the

financial statements of business firm. It measures the relationship

between net profit and advances. The formula for calculate the

Net profit ratio is “Net profit Ratio = (Net profit/Advance) × 100”.

The ratio of Net profit to Total Advance of New Generation

Private Sector Banks in India during the study period is shown in

Table.2.

Table.2. Net Profit Ratio of New Generation Private Sector

Banks in India

Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 2.23 2.69 1.72 0.83 0.94 2.90 2.45 2.27

2009-10 2.41 2.27 2.22 0.75 1.70 4.47 2.15 2.34

2010-11 2.38 0.50 2.38 1.05 2.21 3.80 2.12 2.45

2011-12 2.50 1.04 2.55 1.12 2.29 3.48 2.57 2.64

2012-13 2.63 1.55 2.87 0.96 2.39 2.81 2.77 2.81

2013-14 2.70 1.86 2.90 0.55 2.56 2.83 2.91 2.80

2014-15 2.62 1.83 2.88 0.42 2.61 3.46 2.65 2.80

Average 2.50 1.68 2.50 0.81 2.10 3.39 2.52 2.59

Minimum 2.23 0.50 1.72 0.42 0.94 2.81 2.12 2.27

Maximum 2.70 2.69 2.90 1.12 2.61 4.47 2.91 2.81


The Table.2 analyses that the highest average net profit ratio

of new generation private sector banks over the study period was

registered as 3.39 in Kotak Mahindra bank. The lowest ratio was

registered as 0.42 in the year 2014-15 in IDBI bank and maximum

ratio of 4.47 was registered in Kotak Mahindra bank in the year

2009-10.

5.1.3 Deposit to Total Assets Ratio:

The deposit to total assets ratio is an indicator of financial

leverage. It tells you the percentage of total assets that were

financed by creditors, liabilities and debt. The deposits to total

assets ratio is calculated by dividing total deposits by its total

assets. The formula for calculate the Deposit to total assets ratio

is “Deposit to Total assets Ratio = Deposit/Total assets”. The ratio

of Deposit to Total Assets of New Generation Private Sector

Banks in India during the study period is shown in Table.3.

Table.3. Deposit to Total Assets Ratio of New Generation

Private Sector Banks in India

Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.79 0.78 0.58 0.65 0.80 0.34 0.71 0.78

2009-10 0.78 0.78 0.56 0.72 0.76 0.40 0.74 0.75

2010-11 0.78 0.76 0.56 0.71 0.75 0.37 0.79 0.75

2011-12 0.77 0.73 0.54 0.72 0.74 0.39 0.67 0.73

2012-13 0.74 0.74 0.55 0.70 0.74 0.61 0.68 0.74

2013-14 0.73 0.82 0.56 0.72 0.70 0.67 0.68 0.75

2014-15 0.70 0.78 0.56 0.73 0.68 0.49 0.66 0.76

Average 0.76 0.77 0.56 0.71 0.74 0.47 0.70 0.75

Minimum 0.70 0.73 0.54 0.65 0.68 0.34 0.66 0.73

Maximum 0.79 0.82 0.58 0.73 0.80 0.67 0.79 0.78


The Table.3 reviews that the highest average deposit to total

asset ratio of new generation private sector banks over the study

period was registered as 0.77 in DCB bank. The minimum ratio

was registered as 0.34 in the year 2008-09 in Kotak Mahindra

bank and maximum ratio of 0.82 was registered in DCB bank in

the year 2013-14.


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5.1.4 Deposit to Fixed Assets Ratio:

Deposit to Fixed assets ratio may be defined as the ratio of

total deposit to total fixed assets. The formula for calculate the

Deposit to Fixed assets ratio is “Deposit to Fixed assets Ratio =

Deposit/Fixed assets”. The ratio of Deposit to Fixed Asset of New

Generation Private Sector Banks in India during the study period

is shown in Table.4.

Table.4. Deposit to Fixed Assets Ratio of New Generation


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 109.40 31.20 57.44 39.80 35.48 40.85 123.32 82.35

2009-10 115.59 35.26 62.88 55.95 41.42 35.74 232.09 78.86

2010-11 83.25 43.99 47.55 59.42 57.62 45.75 346.89 96.09

2011-12 97.42 34.31 55.37 69.73 64.50 59.59 277.53 105.11

2012-13 107.24 34.93 62.97 77.64 71.57 109.88 291.69 109.60

2013-14 116.56 43.27 70.95 79.03 59.52 53.37 252.81 124.95

2014-15 128.24 53.28 76.51 84.90 64.04 52.73 285.85 144.411

Average 108.24 39.46 61.95 66.64 56.31 56.84 258.60 105.91

Minimum 83.25 31.20 47.55 39.80 35.48 35.74 123.32 78.86

Maximum 128.24 53.28 76.51 84.90 71.57 109.88 346.89 144.41


The Table.4 evaluates that the highest average deposit to fixed

asset ratio of new generation private sector banks over the study

period was registered as 258.60 in YES bank Ltd. The lowest ratio

was registered as 31.20 in the year 2008-09 in DCB bank and

maximum ratio of 346.89 was registered in YES bank Ltd in the

year 2010-11.

5.1.5 Fixed Assets to Total Assets Ratio:

Fixed assets to total assets ratio may be defined as the ratio of

fixed assets to total assets. It is concerned with the relationship

between fixed assets and total assets. The formula for calculate

the fixed assets to total assets ratio is fixed assets to “Total assets

Ratio = Fixed assets/Total assets”. The ratio of Fixed Assets to

Total Assets of New Generation Private Sector Banks in India

during the study period is shown in Table.5.

Table.5. Fixed Assets to Total Assets Ratio of New Generation


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.007 0.025 0.010 0.016 0.023 0.008 0.006 0.009

2009-10 0.006 0.022 0.008 0.013 0.002 0.011 0.003 0.010

2010-11 0.009 0.017 0.011 0.012 0.013 0.008 0.002 0.008

2011-12 0.007 0.021 0.009 0.010 0.011 0.007 0.002 0.007

2012-13 0.006 0.021 0.008 0.010 0.010 0.006 0.002 0.007

2013-14 0.006 0.018 0.008 0.009 0.011 0.013 0.003 0.006

2014-15 0.005 0.014 0.007 0.008 0.011 0.009 0.001 0.005

Average 0.007 0.020 0.009 0.011 0.012 0.009 0.003 0.007

Minimum 0.005 0.014 0.007 0.008 0.002 0.006 0.001 0.005

Maximum 0.009 0.025 0.011 0.016 0.023 0.013 0.006 0.010


It is striking disclosure from the Table.5 that the highest

average fixed asset to total asset ratio of new generation private

sector banks over the study period was registered as 0.020 in DCB

bank. The minimum ratio was registered as 0.002 in the year

2009-10 in Indusind bank and maximum ratio of 0.025 was

registered in DCB bank in the year 2008-09.

5.1.6 Investment to Advance Ratio:

Investments to advance ratio may be defined as the ratio of

investments to total advance. It is concerned with the relationship

between investments and total advance. The formula for calculate

the Investment to Advance ratio is “Investment to Advance Ratio

= Investment/Advance”. The ratio of Investments to Total

Advance of New Generation Private Sector Banks in India during

the study period is shown in Table.6.

Table.6. Investment to Advance Ratio of New Generation


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.57 0.05 0.47 0.48 0.59 0.59 0.57 0.59

2009-10 0.54 0.58 0.67 0.53 0.66 0.66 0.46 0.47

2010-11 0.51 0.54 0.62 0.43 0.63 0.63 0.55 0.44

2011-12 1.34 0.48 0.63 0.46 0.60 0.60 0.73 0.50

2012-13 0.58 0.51 0.59 0.50 0.60 0.60 0.91 0.47

2013-14 0.49 0.45 0.52 0.52 0.48 0.48 0.74 0.40

2014-15 0.47 0.43 0.48 0.58 0.53 0.53 0.62 0.46

Average 0.64 0.43 0.57 0.50 0.58 0.58 0.65 0.48

Minimum 0.47 0.05 0.47 0.43 0.48 0.48 0.46 0.40

Maximum 1.34 0.58 0.67 0.58 0.66 0.66 0.91 0.59


It is clear from Table.6 that the highest average Investment


was registered as 0.65 in YES bank Ltd. The least ratio was

registered as 0.05 in the year 2008-09 in DCB bank and highest

ratio of 1.34 was registered in Axis bank in the year 2011-12.

5.1.7 Return on Equity Ratio:

It measures the amount of net income after taxes earned for

each dollar of equity capital contributed by the bank’s stock

holders. The formula for calculate the Return on Equity ratio is

“Return on Equity Ratio = Net Income/Total equity capital”. The

ratio of Net income to total equity capital of New Generation


Table.7.

Table.7. Return on Equity Ratio of New Generation Private

Sector Banks in India

Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 5.06 0.51 3.38 1.18 0.42 1.89 1.02 5.29

2009-10 6.12 0.39 3.61 1.42 0.85 3.81 1.41 6.44

2010-11 8.14 0.11 4.47 1.68 1.24 4.26 2.09 8.44

2011-12 10.27 0.23 5.61 1.57 1.72 5.00 2.77 11.01

2012-13 11.07 0.41 7.22 1.41 2.03 5.90 3.63 14.13

2013-14 13.23 0.60 8.49 0.70 2.68 6.52 4.49 17.67

2014-15 15.52 0.68 11.16 0.54 3.39 7.94 4.80 20.38

Average 9.92 0.42 6.28 1.21 1.76 5.05 2.89 11.91

Minimum 5.06 0.11 3.38 0.54 0.42 1.89 1.02 5.29

Maximum 15.52 0.68 11.16 1.68 3.39 7.94 4.80 20.38


The Table.7 shows that the highest average return on equity



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was registered as 9.92 in Axis bank. The lowest ratio was

registered as 0.11 in the year 2010-11 in DCB bank and maximum

ratio of 20.38 was registered in HDFC bank in the year 2014-15.

5.1.8 Interest Expenses Ratio:

Interest expense is the second major category on a bank’s

income statement. Items listed here come directly from the

liability section of the balance sheet: interest on deposits. The

formula for calculate the Interest Expenses ratio is “Interest

Expenses Ratio = Interest Expenses/Total operating income”. The

ratio of Interest expenses to Total operating income of New



Table.8. Interest Expenses Ratio of New Generation Private


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 1.92 5.95 2.55 7.48 5.02 1.48 2.83 1.71

2009-10 1.27 6.58 1.80 4.77 2.59 0.73 1.83 1.21

2010-11 1.35 4.03 1.87 3.43 2.05 1.10 2.35 1.20

2011-12 1.89 5.83 2.20 4.63 2.66 1.65 3.05 1.60

2012-13 1.87 5.01 1.99 3.60 2.58 1.81 2.84 1.68

2013-14 1.61 4.04 1.67 3.62 2.07 1.58 2.70 1.58

2014-15 1.57 3.30 1.41 3.91 2.02 1.46 2.49 1.50

Average 1.64 4.96 1.93 4.49 2.71 1.40 2.58 1.50

Minimum 1.27 3.30 1.41 3.43 2.02 0.73 1.83 1.20

Maximum 1.92 6.58 2.55 7.48 5.02 1.81 3.05 1.71


The Table.8 reviews that the highest average Interest expenses


was registered as 4.96 in DCB bank. The bottom ratio was

registered as 0.73 in the year 2009-10 in Kotak Mahindra bank

and supreme ratio of 7.48 was registered in IDBI bank in the year

2008-09.

5.1.9 Return on Assets Ratio:

ROA determines the net income produced per dollar of assets.

ROA measures profit generated relative to the Financial

Institution’s assets. The formula for calculate the Return on assets

ratio is “Return on assets Ratio = Net income/Total assets”. The

ratio of Net income to Total Assets of New Generation Private

Sector Banks in India during the study period is shown in Table.9.

Table.9. Return on Assets Ratio of New Generation Private


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.012 0.015 0.009 0.005 0.005 0.016 0.013 0.01

2009-10 0.014 0.013 0.011 0.004 0.009 0.024 0.013 0.01

2010-11 0.014 0.003 0.013 0.007 0.013 0.021 0.012 0.01

2011-12 0.015 0.006 0.013 0.007 0.014 0.020 0.013 0.02

2012-13 0.015 0.009 0.016 0.006 0.014 0.019 0.013 0.02

2013-14 0.016 0.012 0.016 0.003 0.016 0.021 0.014 0.01

2014-15 0.016 0.012 0.016 0.002 0.016 0.021 0.015 0.02

Average 0.015 0.010 0.013 0.005 0.012 0.020 0.013 0.01

Minimum 0.012 0.003 0.009 0.002 0.005 0.016 0.012 0.01

Maximum 0.016 0.015 0.016 0.007 0.016 0.024 0.015 0.02


The Table.9 clear that the highest average Return on asset ratio

of new generation private sector banks over the study period was

registered as 0.020 in Kotak Mahindra bank. The minimum ratio

was registered as 0.01 in the year 2008-11 and 2013-14 in HDFC

bank and highest ratio of 0.024 was registered in Kotak Mahindra

bank in the year 2009-10.

5.1.10 Profit Margin Ratio:

Profit Margin measures a bank’s ability to control expenses

and thus its ability to produce net income from its operating

income (or revenue). These ratios measure the proportion of total

operating income that goes to pay the particular expense item. The

formula for calculate the Profit Margin ratio is “Profit Margin

Ratio = Net income /Total operating income”. The ratio of Net

income to Total operating income of New Generation Private

Sector Banks in India during the study period is shown in

Table.10.

Table.10. Profit Margin Ratio of New Generation Private Sector

Banks in India

Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.49 1.17 0.42 0.62 0.40 0.48 0.58 0.43

2009-10 0.47 1.63 0.41 0.38 0.50 0.55 0.55 0.46

2010-11 0.52 0.25 0.57 0.39 0.53 0.66 0.61 0.51

2011-12 0.57 0.66 0.62 0.50 0.58 0.67 0.63 0.55

2012-13 0.55 0.81 0.63 0.34 0.58 0.66 0.61 0.59

2013-14 0.54 0.81 0.59 0.20 0.54 0.63 0.60 0.59

2014-15 0.54 0.69 0.57 0.15 0.59 0.64 0.62 0.60

Average 0.53 0.86 0.54 0.37 0.53 0.61 0.60 0.53

Minimum 0.47 0.25 0.41 0.15 0.40 0.48 0.55 0.43

Maximum 0.57 1.63 0.63 0.62 0.59 0.67 0.63 0.60


The Table.10 reviews that the highest average Profit margin


was registered as 0.86 in DCB bank. The minimum ratio was

registered as 0.15 in the year 2014-15 in IDBI bank and maximum

ratio of 1.63 was registered in DCB bank in the year 2009-10.

5.1.11 Equity Multiplier Ratio:

This ratio measures the extent to which assets of the financial

institutions are funded with equity relative to debt. EM measures

the dollar value of assets funded with each dollar of equity capital

(the higher this ratio, the more leverage or debt the bank is using

to fund its assets).The formula for calculate the Equity Multiplier

ratio is “Equity Multiplier Ratio = Total assets/Total equity

Capital”. The ratio of Total assets to total equity capital of New



Table.11. Equity Multiplier Ratio of New Generation Private


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 411.48 34.10 340.70 237.87 77.75 116.39 77.11 431.15

2009-10 445.85 30.69 325.95 322.23 86.13 158.31 107.11 485.99

2010-11 590.84 36.83 352.69 257.35 97.94 199.98 169.98 596.17

2011-12 690.74 36.05 410.88 227.39 123.15 249.36 208.68 719.97


959

2012-13 727.76 45.10 465.31 242.18 140.20 310.30 276.34 841.24

2013-14 822.29 51.63 514.82 205.12 165.56 317.37 302.29 1024.57

2014-15 985.53 57.20 712.354 221.97 206.09 387.74 325.97 1177.95

Average 667.78 41.66 446.10 244.87 128.12 248.49 209.64 753.86

Minimum 411.48 30.69 325.95 205.12 77.75 116.39 77.11 431.15

Maximum 985.53 57.20 712.354 322.23 206.09 387.74 325.97 1177.95


The Table.11 reveals clearly that the highest average equity

multiplier ratio of new generation private sector banks over the

study period was registered as 753.86 in HDFC bank. The lowest

ratio was registered as 30.69 in the year 2009-10 in DCB bank

and maximum ratio of 1177.95 was registered in HDFC bank in

the year 2014-15.

5.1.12 Asset Utilization Ratio:

The Asset Utilization ratio measures the extent to which the

bank’s assets generate revenue. This ratio measure the bank’s

ability to generate interest income and non-interest income

respectively. The formula for calculate the Asset Utilization ratio

is “Asset Utilization Ratio = Total operating income/Total

assets”. The ratio of Total operating income to Total assets of

New Generation Private Sector Banks in India during the study

period is shown in Table.12.

Table.12. Asset Utilization Ratio of New Generation Private


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.025 0.013 0.024 0.008 0.013 0.033 0.023 0.028

2009-10 0.029 0.008 0.027 0.012 0.020 0.044 0.024 0.030

2010-11 0.026 0.012 0.022 0.016 0.023 0.033 0.020 0.02

2011-12 0.026 0.010 0.022 0.014 0.024 0.030 0.021 0.028

2012-13 0.028 0.011 0.022 0.017 0.025 0.029 0.022 0.029

2013-14 0.030 0.015 0.025 0.017 0.030 0.033 0.025 0.029

2014-15 0.029 0.017 0.028 0.016 0.028 0.032 0.024 0.027

Average 0.027 0.012 0.024 0.014 0.023 0.033 0.022 0.027

Minimum 0.025 0.008 0.022 0.008 0.013 0.029 0.020 0.02

Maximum 0.030 0.017 0.028 0.017 0.030 0.044 0.025 0.030


It is apparent from Table.12 that the highest average asset

utilization ratio of new generation private sector banks over the

study period was registered as 0.033 in Kotak Mahindra bank. The

least ratio was registered as 0.02 the year 2010-11 in HDFC bank

and highest ratio of 0.044 was registered in Kotak Mahindra bank

in the year 2009-10.

5.1.13 Provision for Loan Loss Ratio:

The provision for loan losses is noncash, tax deductible

expense. The provision for loan losses is the current period’s

allocation to the allowance for loan losses listed on the balance

sheet. This item represents the bank management’s prediction of

loans at risk of default for the period. The formula for calculate

the Provision for loan loss ratio is “Provision for loan loss Ratio

= Provision for loan loss/Total operating income”. The ratio of

Provision for loan losses to Total operating income of New



Table.13. Provision for Loan Loss Ratio of New Generation


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.51 2.17 0.58 0.38 0.60 0.52 0.42 0.57

2009-10 0.52 2.63 0.59 0.62 0.50 0.45 0.45 0.54

2010-11 0.48 0.75 0.43 0.60 0.47 0.34 0.39 0.49

2011-12 0.43 0.34 0.38 0.50 0.42 0.33 0.37 0.45

2012-13 0.44 0.19 0.37 0.66 0.42 0.34 0.39 0.41

2013-14 0.46 0.20 0.41 0.80 0.46 0.37 0.37 0.41

2014-15 0.45 0.31 0.43 0.85 0.41 0.36 0.39 0.40

Average 0.47 0.94 0.46 0.63 0.47 0.39 0.40 0.47

Minimum 0.43 0.19 0.37 0.38 0.41 0.33 0.37 0.40

Maximum 0.52 2.63 0.59 0.85 0.60 0.52 0.45 0.57


The Table.13 reveals that the highest average provision for

loan loss ratio of new generation private sector banks over the

study period was registered as 0.94 in DCB bank. The minimum

ratio was registered as 0.19 in the year 2012-13 in DCB bank and

maximum ratio of 2.63 was registered in DCB bank in the year

2009-10.

5.1.14 Non-Interest Expenses Ratio:

Non-interest expenses items consist mainly of personnel

expenses and are generally large relative to non-interest income.

Items in this category include salaries and employee benefits

expenses of premises and fixed assets. The formula for calculate

the Non-interest Expenses ratio is “Non-interest expenses Ratio =

Non-interest expenses/Total operating income”. The ratio of Non-

interest expenses to total operating income of New Generation


Table.14.

Table.14. Non-Interest Expenses Ratio of New Generation


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 1.28 5.38 1.37 1.35 2.08 3.45 1.22 1.65

2009-10 1.23 6.79 1.19 1.29 1.55 2.88 1.03 1.44

2010-11 1.24 3.25 1.16 1.15 1.40 2.85 0.96 1.42

2011-12 1.25 3.28 1.13 1.17 1.39 2.40 0.97 1.44

2012-13 1.20 2.37 1.05 1.23 1.38 2.32 1.02 1.40

2013-14 1.16 1.89 1.03 1.39 1.30 2.11 1.05 1.25

2014-15 1.15 1.74 1.97 1.55 1.30 2.41 1.09 1.22

Average 1.22 3.53 1.27 1.30 1.49 2.63 1.05 1.40

Minimum 1.15 1.74 1.03 1.15 1.30 2.11 0.96 1.22

Maximum 1.28 6.79 1.97 1.55 2.08 3.45 1.22 1.65


From Table.14 shows that the highest average Non-interest

expenses ratio of new generation private sector banks over the

study period was registered as 3.53 in DCB bank. The minimum

ratio was registered as 0.96 in the year 2010-11 in YES bank Ltd

and maximum ratio of 6.79 was registered in DCB bank in the

year 2009-10.

5.1.15 Non-Interest Income Ratio:

Non-interest income includes all other income received by the

bank as a result of its on- and off-balance-sheet activities and is

becoming increasingly important as the ability to attract core


960

deposits and high-quality loan applicants becomes more difficult.

The formula for calculate the Non interest Income ratio is “Non

interest Income Ratio = Non-interest Income/Total assets”. The

ratio of Non-interest income to Total assets of New Generation


Table.15.

Table.15. Non-Interest Income Ratio of New Generation Private


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.020 0.020 0.020 0.007 0.017 0.073 0.019 0.019

2009-10 0.022 0.017 0.020 0.010 0.016 0.099 0.016 0.017

2010-11 0.019 0.015 0.016 0.008 0.014 0.066 0.011 0.016

2011-12 0.019 0.012 0.016 0.008 0.018 0.049 0.012 0.017

2012-13 0.020 0.010 0.013 0.010 0.019 0.044 0.013 0.017

2013-14 0.020 0.011 0.018 0.009 0.022 0.043 0.016 0.016

2014-15 0.018 0.009 0.043 0.011 0.020 0.055 0.015 0.015

Average 0.020 0.013 0.021 0.009 0.018 0.061 0.015 0.017

Minimum 0.018 0.009 0.013 0.007 0.014 0.043 0.011 0.015

Maximum 0.022 0.020 0.043 0.011 0.022 0.099 0.019 0.019


It is apparent from Table.15, evaluations that the highest

average Non interest income ratio of new generation private

sector banks over the study period was registered as 0.061 in

Kotak Mahindra bank. The least ratio was registered as 0.007 in

the year 2008-09 in IDBI bank and supreme ratio of 0.099 was

registered in Kotak Mahindra bank in the year 2009-10.

5.1.16 Interest Income Ratio:

Interest income is recorded on an accrued basis (see earlier

discussion). Thus, loans on which interest payments are past due

can still be recorded as generating income for a bank. Interest

income is taxable, except for that on municipal securities and tax-

exempt income from direct lease financing. The formula for

calculate the Interest Income ratio is “Interest income Ratio =

Interest income/Total Assets”. The ratio of Interest income to

Total Assets of New Generation Private Sector Banks in India

during the study period is shown in Table.16.

Table.16. Interest Income Ratio of New Generation Private


Year Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank

2008-09 0.073 0.109 0.082 0.067 0.084 0.109 0.087 0.089

2009-10 0.064 0.075 0.071 0.065 0.077 0.083 0.065 0.073

2010-11 0.062 0.073 0.064 0.073 0.078 0.081 0.069 0.072

2011-12 0.077 0.083 0.070 0.080 0.093 0.092 0.086 0.082

2012-13 0.080 0.081 0.075 0.078 0.096 0.094 0.084 0.088

2013-14 0.082 0.087 0.074 0.081 0.095 0.098 0.092 0.084

2014-15 0.076 0.088 0.067 0.079 0.089 0.090 0.085 0.082

Average 0.073 0.085 0.072 0.075 0.087 0.092 0.081 0.081

Minimum 0.062 0.073 0.064 0.065 0.077 0.081 0.065 0.072

Maximum 0.082 0.109 0.082 0.081 0.096 0.109 0.092 0.089


It is heartening to note from Table.16, that the highest average

Interest income ratio of new generation private sector banks over

the study period was registered as 0.092 in Kotak Mahindra bank.

The lowest ratio was registered as 0.062 in the year 2010-11 in

Axis bank and maximum ratio of 0.109 was registered in DCB

bank and Kotak Mahindra bank in the year 2008-09.

5.2 PROFITABILITY POSITION OF NEW

GENERATION PRIVATE SECTOR BANKS

Profitability management ratios indicated that the bank ability,

capability and capacity to earn a reasonable and satisfactory profit

and return on investment. These ratios are the indicator of the

bank’s financial health and give the complete idea and knowledge

about how much effectively the banks do their work. Profitability

can be measured by the number of ratios depending upon the

purpose of the study. The results of the profitability performance

measurement by the different ratios indicate the profitability of

the banks. To measure the profitability, the researcher has

computed eleven ratios such as

Return of Equity Asset Utilization

Return on Assets Provision for Loan Loss

Profit Margin Non-Interest Expenses

Net Profit Interest Income

Investments to Advance Non-Interest Income

Interest Expenses

The Table.17 shows the profitability ratio of new generation

private sector banks in India and its ranking.

Table.17. Profitability Position of New Generation Private

Sector Banks

Ratio Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank Total

ROE 9.92

(7)

0.42

(1)

6.28

(6)

1.21

(2)

1.76

(3) 5.05(5)

2.89

(4)

11.91

(8) 36

ROA 0.015

(7) 0.010

(3) 0.013 (5.5)

0.005 (2)

0.012 (4)

0.020 (8)

0.013 (5.5)

0.01 (1)

36

PM 0.53 (3)

0.86 (8)

0.54 (5)

0.37 (1)

0.53 (3)

0.61 (7)

0.60 (6)

0.53 (3)

36

NP 2.50

(4.5)

1.68

(2)

2.50

(4.5)

0.81

(1)

2.10

(3)

3.39

(8)

2.52

(6)

2.59

(7) 36

IA 0.64

(7)

0.43

(1)

0.57

(5)

0.50

(4)

0.45

(2)

0.58

(6)

0.65

(8)

0.4128

(3) 36

IE 1.64

(6)

4.96

(1)

1.93

(5)

4.49

(2)

2.71

(3)

1.40

(8)

2.58

(4)

1.50

(7) 36

AU 0.027

(6.5)

0.012

(1)

0.025

(5)

0.014

(2)

0.023

(4)

0.033

(8)

0.022

(3)

0.027

(6.5) 36

PLL 0.47 (3.5)

0.94 (1)

0.46 (5)

0.63 (2)

0.39 (7.5)

0.39 (7.5)

0.40 (6)

0.47 (3.5)

36

NIE 1.22 (7)

3.53 (1)

1.27 (6)

1.30 (5)

1.49 (3)

2.63 (2)

1.05 (8)

1.40 (4)

36

II 0.073

(2)

0.085

(6)

0.072

(1)

0.075

(3)

0.087

(7)

0.092

(8)

0.081

(4.5)

0.081

(4.5) 36

NII 0.020

(6)

0.013

(2)

0.021

(7)

0.009

(1)

0.018

(5)

0.061

(8)

0.015

(3)

0.017

(4) 36

Total 59.5 27 55 25 44.5 75.5 58 51.5 396

Note: The figures in brackets denote the ranks among the New Generation Private

Sector Banks each year.


961

The Table.17 shows that Kotak Mahindra bank has favorable

position in profitability comparing with other banks followed by

Axis bank as second.

5.3 RANKING OF PROFITABILITY OF BANKS

Table.18. Ranking of Banks Profitability

Bank Name Score Rank

Axis bank 59.5 2

DCB bank 27 7

ICICI bank 55 4

IDBI bank 25 8

Indusind bank 44.5 6

Kotak Mahindra bank 75.5 1

YES bank 58 3

HDFC bank 51.5 5

The Table.18 shows that the first rank is got by Kotak

Mahindra Bank in New Generation Private Sector Banks in India.

The eighth rank is got by IDBI bank over the study period.

5.4 LIQUIDITY POSITION OF NEW GENERATION

PRIVATE SECTOR BANKS

Liquidity risk management ratios are used to determine the

bank’s ability to meet its short term obligation. Investors often

take a close look at liquidity ratios when performing essential

analysis on a bank for investment. Since, a company that is

consistently having trouble meeting its short-term debt is at a

higher risk of bankruptcy, liquidity ratios are a good measure of

whether a bank will be able to comfortably continue as a going

concern. Some important liquid assets are cash with other banks

and with central bank and with bank locker for daily requirements,

investment in short term like Treasury bills and bounds that can

be call of any time, and other market securities. The main aim and

purpose of this management is to control the liquid assets for daily

and sudden requirements. The Table.19 shows the liquidity ratios

of various banks. The researcher has computed four liquidity

ratios such as

• Credit Deposit Ratio

• Deposit to Total Asset

• Deposit to Fixed Asset

• Fixed Asset to Total Asset

Table.19. Liquidity Position of New Generation Private Sector

Banks

Ratio Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank Total

CD 0.77

(2)

0.78

(3.5)

0.99

(7)

0.85

(6)

0.82

(5)

1.29

(8)

0.61

(1)

0.78

(3.5) 36

DTA 0.76

(7)

0.77

(8)

0.56

(2)

0.71

(4)

0.74

(5)

0.47

(1)

0.70

(3)

0.75

(6) 36

DFA 108.24

(7)

39.46

(1)

61.95

(4)

66.64

(5)

56.31

(2)

56.84

(3)

258.60

(8)

105.91

(6) 36

FATA 0.007

(2.5)

0.020

(8)

0.009

(4.5)

0.011

(6)

0.012

(7)

0.009

(4.5)

0.003

(1)

0.007

(2.5) 36

Total 18.5 20.5 17.5 21 19 16.5 13 18 144



The Table.19 shows that IDBI bank has favorable position in

liquidity comparing with other banks.

5.5 RANKING OF LIQUIDITY OF BANKS

Table.20. Ranking of Liquidity


Axis bank 18.5 4

DCB bank 20.5 2

ICICI bank 17.5 6

IDBI bank 21 1

Indusind bank 19 3

Kotak Mahindra bank 16.5 7

YES bank 13 8

HDFC bank 18 5

The Table.20 shows that the first rank got by IDBI Bank in

New Generation Private Sector Banks in India. The eighth rank

got by YES bank Ltd over the study period.

5.6 CAPITAL ADEQUACY POSITION OF NEW

GENERATION PRIVATE SECTOR BANKS

Capital adequacy analysis which determines the quality of

assets and the adequacy of provisions since any overvaluation of

assessor shortfalls in loan loss provisions will overstate capital. It

expresses capital as a percentage of total risk-weighted assets and

shows the margin of protection available to both depositors and

creditors against unanticipated losses that may be experienced by

the bank.

Table.21. Capital Adequacy Position of New Generation Private

Sector Banks

Ratio Axis

Bank

DCB

Bank

ICICI

Bank

IDBI

Bank

Indusind

Bank

Kotak

Mahindra

Bank

YES

Bank

HDFC

Bank Total

EMR 667.78

(7) 41.66

(1) 446.10

(6) 244.87

(4) 128.12

(2) 248.06

(5) 209.64

(3) 753.86

(8) 36

Total 7 1 6 4 2 5 3 8 36



The Table.21 shows that HDFC bank has favorable position

in capital adequacy compacting with other banks.

5.7 RANKING OF CAPITAL ADEQUACY OF

BANKS

Table.22. Capital Adequacy of Banks


Axis bank 7 2

DCB bank 1 8

ICICI bank 6 3

IDBI bank 4 5

Indusind bank 2 7

Kotak Mahindra bank 5 4

YES bank 3 6

HDFC bank 8 1


962

The Table.22 shows that the first rank is given to HDFC Bank

in New Generation Private Sector Banks in India. The eighth rank

is given DCB bank over the study period.

5.8 RANKING OF BANKS ON THE BASIS OF

OVERALL PERFORMANCE

In order to analyze the overall performance of the banks, all

the sixteen ratios have been taken into account. Ranking of banks

can be made on the basis of ranks of each ratio. The Table.23

shows the average of each ratio and its ranks.

Table.23. Overall Performance of New Generation Private


Ratio Axis

bank

DCB

Bank

ICICI

bank

IDBI

Bank

Indusind

bank

Kotak

Mahindra

bank

YES

bank

HDFC

bank Total

1 0.77 (2)

0.78 (3.5)

0.99 (7)

0.85 (6)

0.82 (5)

1.29 (8)

0.61 (1)

0.78 (3.5)

36

2 2.50

(4.5)

1.68

(2)

2.50

(4.5)

0.81

(1)

2.10

(3)

3.39

(8)

2.52

(6)

2.59

(7) 36

3 0.76 (7)

0.77 (8)

0.56 (2)

0.71 (4)

0.74 (5)

0.47 (1)

0.70 (3)

0.75 (6)

36

4 108.24

(7)

39.46

(1)

61.95

(4)

66.64

(5)

56.31

(2)

56.84

(3)

258.60

(8)

105.91

(6) 36

5 0.007 (2.5)

0.020 (8)

0.009 (4.5)

0.011 (6)

0.012 (7)

0.009 (4.5)

0.003 (1)

0.007 (2.5)

36

6 0.64

(7)

0.43

(1)

0.57

(5)

0.50

(4)

0.45

(2)

0.58

(6)

0.65

(8)

0.48

(3) 36

7 9.92 (7)

0.42 (1)

6.28 (6)

1.21 (2)

1.76 (3)

5.05 (5)

2.89 (4)

11.91 (8)

36

8 1.64

(6)

4.96

(1)

1.93

(5)

4.49

(2)

2.71

(3)

1.40

(8)

2.58

(4)

1.50

(7) 36

9 0.015

(7) 0.010

(3) 0.013 (5.5)

0.005 (2)

0.012 (4)

0.020 (8)

0.013 (5.5)

0.01 (1)

36

10 0.53

(3)

0.86

(8)

0.54

(5)

0.37

(1)

0.53

(3)

0.61

(7)

0.60

(6)

0.53

(3) 36

11 667.78

(7) 41.66

(1) 446.10

(6) 244.87

(4) 128.12

(2) 248.06

(5) 209.64

(3) 753.86

(8) 36

12 0.027

(6.5)

0.012

(1)

0.025

(5)

0.014

(2)

0.023

(4)

0.033

(8)

0.022

(3)

0.027

(6.5) 36

13 0.47 (3.5)

0.94 (1)

0.46 (5)

0.63 (2)

0.39 (7.5)

0.39 (7.5)

0.40 (6)

0.47 (3.5)

36

14 1.22

(7)

3.53

(1)

1.27

(6)

1.30

(5)

1.49

(3)

2.63

(2)

1.05

(8)

1.40

(4) 36

15 0.020

(6) 0.013

(2) 0.021

(7) 0.009

(1) 0.018

(5) 0.061

(8) 0.015

(3) 0.017

(4) 36

16 0.073

(2)

0.085

(6)

0.072

(1)

0.075

(3)

0.087

(7)

0.092

(8)

0.081

(4.5)

0.081

(4.5) 36

Total 85 48.5 78.5 50 65.5 97 74 77.5 576



The Table.23 shows that Kotak Mahindra bank has favorable

position in overall performance of New Generation Private Banks

in India.

5.9 COMPARISON OF PERFORMANCE OF THE

NEW GENERATION PRIVATE SECTOR

BANKS IN INDIA

In order to know whether there is any statistically significant

difference in the performance of New Generation Private Sector

Banks in India, Friedman’s Test was used. For the purpose of this

study, the following null hypothesis is formed and tested with the

help of Statistical Package for Social Sciences (SPSS). “There is

no significant difference in the performance of New Generation

Private Sector Banks in India” during the period under study. For

testing the above hypothesis, the p-value was calculated. The

application of Friedman’s Test is given below.

5.10 FRIEDMAN’S TEST

Friedman’s test is a non-parametric test. This test requires less

restrictive assumptions concerning the level of data measurement.

The test does not require the assumption of normality and equal

variance. It is used whenever the number of sample is greater than

or equal to 3 (say k) and each of sample size is equally parallel to

two-way analysis of variance. Under the null hypothesis, the

Friedman’s test statistic is:

2

1

123 1

1

k

j

jk

F R n kN k

The decision to accept or reject the null hypothesis is taken on

the basis of p-value in SPSS test result. If p-value is more than

0.05, the null hypothesis is accepted otherwise rejected. The

Friedman’s test result is shown in the Table.24.

Table.24. Friedman’s Test Result

Bank Mean Rank Chi-

Square p-value

Axis Bank 4.94

6.963 0.433

DCB Bank 4.31

ICICI 4.59

IDBI 3.62

Indusind 4.09

Kotak Mahindra 5.56

YES 4.06

HDFC 4.81

Source: Computed Data

Since p-value (0.433) is greater than 0.05, the null hypothesis

is accepted at 5% significant level. Hence, it is concluded that

there is no significant difference in the performance of new

generation private sector banks in India. However, based on the

mean rank of various banks, it is possible to rank the performance

of new generation private sector banks in India. According to

mean rank, Kotak Mahindra bank ranks first and IDBI ranks last.

6. SUGGESTIONS OF THE STUDY

• The role of new generation banks to Indian economy is

inevitable however comparing to the public sector banks it

wants to walk a long distance. Therefore, all new generation

banks in India frame their own strategy and adopt new and

innovative schemes for better service to the customers.

• However, Kotak Mahindra bank ranks first, it should also

concentrate to increase profit by way of increasing the

network all over the India.

• As DCB bank rank last, it should take more efforts to

improve their operation to overcome the difficulties.

• It is suggested to form a new forum among the new

generation banks to their own problem and difficulties.

• All the banks should take the steps to increase the branch

network all over the India particularly rural places.

• They should come forward to increase their capital to meet

the contingencies in the market place.


963

7. CONCLUSION

This research is aimed at studying the financial performance

of new generation private sector commercial banks in India. After

conducting a comprehensive financial ratio analysis of the above

Eight banks, the Kodak Mahindra bank rank is first. The

researcher has given some suggestions based on the findings of

the study. The banks should follow the suggestions and improve

their performance than the existing level of new generation

private sector banks in India.

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Documents

PERFORMANCE ANALYSIS OF NEW GENERATION PRIVATE …ictactjournals.in/.../IJMS_Vol_5_Iss_1_Paper_10_954_963.pdf · 2019-07-30 · Credit Bank in 1995, IndusInd bank in 1994, Kodak Mahindra