A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT BANK

A COMPARATIVE STUDY ON FINANCIAL
PERFORMANCE OF SELECT BANK
DISSERTATION SUBMITTED TO
BHARATHIAR UNIVERSITY
In partial fulfilment of the requirements for the award of the degree of
MASTER OF PHILOSOPHY IN COMMERCE
Submitted by
STEGY. V. J. M.Com., PGDCA.,
(Reg.No:2013R1065)
Under the guidance of
Dr. (Mrs).R.KAVITHA, M.Com., MPhil., PGDCA., Ph.D.,
ASSISTANT PROFESSOR IN COMMERCE
DEPARTMENT OF COMMERCE
NIRMALA COLLEGE FOR WOMEN (AUTONOMOUS)
REACCREDITED WITH ‘A’ GRADE BY NAAC
Coimbatore-641018
2013-2014

CERTIFICATE
This is to certify that the dissertation, entitled “A COMPARATIVE STUDY ON
FINANCIAL PERFORMANCE OF SELECT BANK” Submitted to Bharathiar
University, in partial fulfilment of the requirements for the award of the degree of
MASTER OF PHILOSOPHY in Commerce is a record of original research work done
by STEGY .V .J during the period 2013-2014 of her study under my supervision and
guidance and the dissertation basis for the award on has not formed the basis for the
award of any Degree/Diploma/Associate ship/fellowship or other similar title to any
candidate of the university.
________________________________ _______________________
Signature of the Head of Department Signature of the Guide
(With Seal) (With Seal)
________________________________
Counter Signed
Principal/Head of the Department/Director
(College/ (University)/ Res.Institute)
(With Seal)

DECLARATION
I, STEGY.V .J hereby declare that the dissertation entitled “A COMPARATIVE
STUDY ON FINANCIAL PERFORMANCE OF SELECT BANK” submitted to
Bharathiar University, in partial fulfilment of the requirements for the award of the
degree of MASTER OF PHILOSOPHY in commerce is a record of original research
work done during the year 2013-2014 under the guidance of
Dr. (Mrs).R.KAVITHA, M.Com., MPhil., PGDCA., Ph.D., ASSISTANT
PROFESSOR IN COMMERCE, Department of Commerce NIRMALA COLLEGE
FOR WOMEN (AUTONOMOUS) Coimbatore and it has not formed the basis for the
award of any Degree/Diploma/Associate ship/fellowship or other similar title to any
candidate of the university.
____________________
Signature of the candidate
(STEGY .V.J)
Place:
Date:

ACKNOWLEDGEMENT
Success of my task is impossible without the guidance, advice and criticism from
elders. I would like to acknowledge all those whom helped in successful competition of
this project.
I wish to express my sincere gratitude to the GOD ALMIGHTY for grateful
blessing showered on me.
I truly indebted to the Secretary Rev. Sr. Mary Lucy Juliet Nirmala College for
Women (Autonomous), Coimbatore, for providing the opportunity to conduct my
research in this esteemed college.
I take this opportunity express my profound thanks to the principal
Rev.Dr.Sr.DONA GRACE JEYASEELY, M.A., MPhil., Ph.D., Nirmala College for
Women (Autonomous) Coimbatore, for providing facilities to carry out the study.
I am express my sincere thanks to the Head of Department Commerce
Dr.D.S.UMA. M.Com., MPhil., Ph.D., Nirmala College for Women (Autonomous)
Coimbatore, without her encouragement this project would not have possible.
I feel extremely privileged and fortunate in having worked under the able
supervision of Dr. (Mrs).R.KAVITHA, M.Com., MPhil., Ph.D., PGDCA.,
ASSISTANT PROFESSOR IN COMMERCE, Department of Commerce
NIRMALA COLLEGE FOR WOMEN (AUTONOMOUS) Coimbatore, for her
inimitable kindness and showered on me to make progress at every stage of the research.
I extent my deep sense of gratitude to all Head of the Department other faculty
members of Department of Commerce (CA) and Department of Commerce(PA) for their
encouragement during the course of this study.
I deeply indebted to my FAMILY, not only for comment on early draft, but also
for their constant support and encouragement. I grateful to thank my friends for provide
worthwhile suggestion for the betterment of the project work.

CONTENTS
CHAPTER TITLE PAGE.NO
LIST OF TABLES
LIST OF EXHIBITS
I INTRODUCTION 1
II REVIEW OF LITERATURE 10
III PROFILE OF THE COMPANY 15
IV DEFINITION, TERM AND CONCEPTS 26
V ANALYSIS AND INTERPRETATION 49
VI FINDINGS AND CONCLUSION 105
BIBLIOGRAPHY

CHAPTER - I
INTRODUCTION OF THE STUDY
Finance is regard as the life blood of a business enterprise. This is caused in
the modern money oriented economy finance is of the basic foundation of all kinds
of economic activities. The term finance mainly involves, rising of funds and their
effectively utilization of keeping in view the overall objective of the firm. The
management make use of various financial techniques, device, etc., for administering the
financial affairs of the firm in the most effective and efficient way. Financial statement
analysis is a process which examines past and current financial data for the purpose of
evaluating performance and estimating future risks and potential. Financial statement
analysis is used by investors, creditors, security analysts, bank lending officers, managers,
auditors, taxing authorities, regulatory agencies, labour unions, customers, and many
other parties who rely on financial data for making economic decisions about a
company. Financial statements are merely summaries of detailed financial information.
Many different groups are interested in getting inside financial statements, especially
investors and creditors. The basic tools and techniques of financial statement
analysis can be effectively applied by all of the interested groups. Financial statement
analysis can assist investors and creditors in finding the type of information they require
for making decisions relating to their interests in a particular company.
Finance always being disregarded in financial decision making since it involves
investment and financing in short-term period. Further, also act as a restrain in financial
performance, since it does not contribute to return on equity . A well designed and
implemented financial management is expected to contribute positively to the creation of
a firm’s value . Dilemma in financial management is to achieve desired trade off between
liquidity, solvency and profitability. Management of working capital in terms of liquidity
and profitability management is essential for sound financial recital as it has a direct
impact on profitability of the company. The crucial part in managing working capital is
required maintaining its liquidity in day-to-day operation to ensure its smooth running
and meets its obligation . Ultimate goal of profitability can be achieved by efficient use of

resources. It is concerned with maximization of shareholders or owners wealth . It can be
attained through financial performance analysis. Financial performance means firm's
overall financial health over a given period of time. Financial performance analysis is the
process of determining the operating and financial characteristics of a firm from
accounting and financial statements. The goal of such analysis is to determine the
efficiency and performance of firm’s management, as reflected in the financial records
and reports. The analyst attempts to measure the firm’s liquidity, profitability and other
indicators that the business is conducted in a rational and normal way; ensuring enough
returns to the shareholders to maintain at least its market value.
Financial reporting provides information that is useful in making business and
economic decisions. The objectives of general purpose external financial reporting
primarily come from the needs of external users who must rely on information that
management communicates to them. The financial reporting has the following major
objectives: Financial reporting should provide information that is useful to present
and potential investors and creditors and other users in making rational investment,
credit, and similar decisions. Financial reporting should provide information to help
present and potential investors and creditors and other users in assessing the amounts,
timing, and uncertainty of prospective cash receipts from dividends or interest and the
proceeds from the sales, redemption, or maturity of securities or loans. Since
investors’ and creditors’ cash flows are related to enterprise cash flows, financial
reporting should provide information to help investors, creditors, and others assess
the amounts, timing, and uncertainty of prospective net cash inflows to the related
enterprise. Financial reporting should provide information about the economic
resources of an enterprise, the claims to those resources (obligations of the enterprise to
transfer resources to other entities and owners’ equity), and the effects of
transactions, events, and circumstances that change its resources and claims to those
resources. The primary focus of financial reporting is ordinarily considered to be
information about earnings and its components. Earnings analysis gives clue to
management’s performance, long-term earning capabilities, future earnings, and risks
associated with lending to and investing in the enterprise.

A ratio is an expression of a mathematical relationship between one quantity and
another. The ratio of 400 to 200 is 2:1. If a ratio is to have any utility, the element which
constitutes the ratio must express a meaningful relationship. For example, there is a
relationship between accounts receivable and sales, between net income and total
assets, and between current assets and current liabilities. Ratio analysis can disclose
relationships which reveal conditions and trends that often cannot be noted by inspection
of the individual components of the ratio.
Ratios are generally not significant of themselves but assume significance when
they are compared with previous ratios of the same firm, some predetermined standard,
ratios of other enterprises in the same industry or ratios of the industry within which the
company operates. When used in this manner, ratios serve as “benchmarks” against
which the company can evaluate itself. Ratios are not ends in themselves but help
provide answers to questions concerning specific issues and insights into the operations
of a business enterprise. Benchmarking is comparing one company’s financial results
with results from other companies or with an industry average. Many sites offer
benchmark ratios. When using ratios, analysts must understand the factors which enter
into the structure of the ratio and the way changes in such factors influence the ratio.
Bank is very old institution that is contributing toward the development of any
economy and its treated as an important service industry in modern world. Now
days the function of bank is not limited to within the same geographical limit of
any country. It is an important source of financing for most businesses. The
common assumption, which underpins much of the financial performance research
and discussions, is that increasing financial performance will lead to improved
functions and activities of the organisations. The concept of financial performance and
research into its measurement is well advanced within finance and management fields.
Recently a well-judged technique named CAMELS rating is widely used for evaluating
performance of financial institutions, especially to banks. In Bangladesh, Bangladesh
bank as a Central bank, which is regulatory body has been calculating this rating till now.
Performance of the banking sector under CAMELS frame work, which involves analysis
and evaluation of the six crucial dimensions of banking operations. Thus

CAMELS consists of a set of performance measures that give a comprehensive
view of the banks based on the following rates.
Capital Adequacy : Focuses on the total position of bank capital and protects the
depositors from the potential shocks of losses that a bank incur.
Asset Quality : The composition of all commercial banks shows the concentration
of loans and advances in total assets. The high concentration of loans and advances
indicates vulnerability of assets to credit risk, especially since the portion of non-
performing assets is significant
Management Soundness: Sound management is the most important pre-requisite
for the strength and growth of any financial institution. Since indicators of Management
quality are primarily specific to individual institution.
Earnings and Profitability: Strong earnings and profitability profile of a bank
reflect its ability to support present and future operations. More specifically, this
determines the capacity to absorb losses by building an adequate capital base,
finance its expansion and pay adequate dividends to its shareholders.
Liquidity : Liquidity indicators measured as percentage of demand and time
liabilities (excluding interbank items) of the banks.

OBJECTIVES OF THE STUDY
Primary objective:
 To study the financial performance of select bank.
Secondary objective:
 To study the Capital adequacy of select bank.
 To study the Asset quality of select bank.
 To study the Management quality of select bank.
 To study the Earning ability of select bank.
 To study the Liquidity of select bank.

RESEARCH MEHODOLOGY
Nature of data:
The entire study is based on the audited annual reports of selected bank. Thus
the study is carried out from the collected secondary data. By applying the management
tool such as ratio analysis, comparative CAMEL rating to know the financial health of
the bank has been examined. A clear and appropriate understanding has been promoted
through the graphical charts and their representations.
Tools and Techniques:
The entire study undertaken uses the ratio analysis and comparative financial
statements. Graphical charts further support the ratio analysis and comparative CAMEL
rating, which gives a pictorial presentation of the bank entire financial performance for
the year taken into consideration.
Correlation:
The degree of relationship between the variable under consideration is measured
through the correlation analysis and it refers to the techniques used in measuring the
looseness of the relationship between the variables.
Period of study:
The period covered by the present study extent over 7 year from 2008-2009 to
2013-2014. This period has been selected mainly to study the financial performance
pattern and its impact on CAMEL rating.
Sampling Design:
The study covers selected bank in India which are listed in the National Stock
Exchange and Bombay Stock Exchange. The study focused on the state bank of India,
nationalized bank, public and private sector bank in India. The list of selected bank in
India covered for the study as give below:

S.No Codes Name of the company
1 SBI State Bank Of India
2 IOB Indian Oversea Bank
3 CANARA Canara Bank
4 KVB Karur Vysya Bank
5 SIB South Indian Bank
6 HDFC Housing Development Finance Corporation
7 AXIS Axis Bank
Sources of data:
Financial data for 7 year for the selected bank were collected from the annual
reports. The study is based on secondary data obtained from audited annual report of the
selected bank in India were profit and loss A/c and Balance Sheet. Collected data was
summarized into necessary tables for the purpose of analysis. Various accounting ratios
and Statistical techniques were used for analyzing the data.

LIMITATIONS
This study is subject to the following limitations:
 The study was limited to seven banks only.
 Foreign bank, regional rural bank, Schedule Co-operative Bank are not taken for
the study.
 Time and resource constrains.
 The analysis made in this study is based on the published accounting date of the
banks therefore limited number of seen data are applicable to the study.

CHAPTERIZATION SCHEME
The study consists of six chapters:
CHAPTER I INTRODUCTION
CHAPTER II REVIEW OF LITERATURE.
CHAPTER III PROFILE OF THE BANK
CHAPTER IV DEFINITION, TERM AND CONCEPTS.
CHAPTER V ANALYSIS AND INTERPRETATION
CHAPTER VI FINDING AND CONCLUSIONS

CHAPTER II
REVIEW OF LITERURE
 Singla (2008) examines that how financial management plays a crucial role
industrialists growth of banking. It is concerned with examining the profitability
position of the selected sixteen banks of banker index for a period of six years (2001-
06). The study reveals that the profitability position was reasonable during the period
of study when compared with the previous years. Strong capital position and balance
sheet place. Banks are in better position to deal with and absorb the economic
constant over a period of time.
 Meyer C., (2007) Accounting plays a significant role within the concept of
generating and communicating wealth of the companies. Financial statements still
remain the most important source of externally feasible information on banks.
Regardless of their extensive use and enduring advance, there is some concern that
accounting theory and practice have not kept pace with rapid economic changes and
high technology changes.
 Wahab (2001) has analyzed the performance of the commercial banks under reforms.
He also highlighted the major issues need to be considered for further improvement.
He concluded that reforms have produced favorable effects on performance of
commercial banks in general but still there are some distortions like low priority
sector advances, low profitability etc. that needs to be reformed again.
 Kaveri (2001) studied the non-performance assets of the various banks and suggested
various strategies to reduce the extent of NPAs. In view of the steep rise in fresh NPA
advances, credit should be strengthening. RBI should use some new
policies/strategies to prevent NPAs.
 Haslem (1968, 1969) computed balance sheet and income statement ratios for all the
member banks of the banks in a two-year study. His results indicated that most of the
ratios were significantly related to profitability, particularly capital ratios, interest
paid and received, salaries and wages. He also stated that a guide for improved
management should first emphasis expense management, fund source management
and lastly funds use management. Wall (1985) concludes that a bank’s asset and

liability management, its funding management and the non-interest cost controls all
have a significant effect on the profitability record.
 Molyneux (1993) found a positive relationship between staff expenses and total
profits. As he suggests high profits earned by firms in a regulated industry may be
appropriated in the form of higher payroll expenditures. External determinants of
bank profitability are concerned with those factors which are not influenced by
specific banks decisions and policies, but by events outside the influence of the bank.
Several external determinants are included separately in the performance examination
to isolate their influence from that of bank structure so the impact of the formers on
profitability may be more clearly discerned.
 Germon and Meek (2001). For financial reporting to be effective, accounting
information to be relevant, complete and reliable. (Hendricks, 1976) The primary
purpose of the financial statements is to provide information about a company in
order to make better decisions for users particularly the investors.
 Oyerinde D.T., (2009), Number of previous studies explored that accounting
information decreased their relevance over the period of time. In the same time a
number of researchers claim that accounting information has not lost its relevance. It
should also increase the knowledge of the users and give a decision maker the
capacity to predict future actions.
 Bernanke, (2007).The banking supervision mainly ensures that the commercial
banks operate in a safe and sound manner, and do not take the excessive risks. It also
makes sure that those banks operate in accordance with federal banking regulations.
The Fed examines the safe and sound of financial stability in banks through the on-
site bank examination with the support of the CAMEL rating, and in complement
with the off-site monitoring.
 Prashanta Athma (2000), in his Ph D research submitted at Usmania University
Hyderabad, “Performance of Public Sector Banks – A Case Study of State Bank of
Hyderabad, made an attempt to evaluate the performance of Public Sector
Commercial Banks with special emphasis on State Bank of Hyderabad. Statistical
techniques like Ratios, Percentages, Compound Annual rate of growth and averages
are computed for the purpose of meaningful comparison and analysis. Profits of SBH

showed an increasing trend indicating a more than proportionate increase in spread
than in burden. Finally, majority of the customers have given a very positive opinion
about the various statements relating to counter service offered by SBH.
 Singh R (2003), in his paper Profitability management in banks under deregulate
environment, IBA bulletin, No25, has analyzed profitability management of banks
under the deregulated environment with some financial parameters of the major four
bank groups i.e. public sector banks, old private sector banks, new private sector
banks and foreign banks, profitability has declined in the deregulated environment.
He emphasized to make the banking sector competitive in the deregulated
environment. They should prefer non-interest income sources.
 The Financial Express (2004), titled “India’s Best Banks” has been doing for several
years through its annual exercise to evaluate and rate Indian banks. With the objective
of making the comparison more meaningful, Banks were categorized into Public
Sector Banks, New Private Sector Banks and Foreign Banks. Five major criteria were
identified against which the banks were ranked. 'These criteria are (1) Strength and
soundness (ii) Growth, (iii) Profitability, (iv) Efficiency/Productivity, and (v) Credit
quality. Considering the current banking, industrial and over-all economic scenario,
pertinent weights were assigned to each of the major criteria. In the first category of
"State-Run" or Public Sector Banks, State Bank of Patiala and Andhra Bank is the top
two. In the category of best old private sector banks, the magazine ranks the Jammu
and Kashmir Bank and Karur Vysya Bank as the first best and second best. In the
category of 'New' Private Banks, HDFC as number one and ICICI Bank at number
two. Finally, in the category of Foreign Banks, the magazine ranks Standard
Chartered Bank and Citi Bank at the top two slots.
 Singla HK (2008), in his paper,’ financial performance of banks in India,’ in ICFAI
Journal of Bank Management No 7, has examined that how financial management
plays a crucial role in the growth of banking. It is concerned with examining the
profitability position of the selected sixteen banks of banker index for a period of six
years (2001-06). The study reveals that the profitability position was reasonable
during the period of study when compared with the previous years. Strong capital

position and balance sheet place, Banks in better position to deal with and absorb the
economic constant over a period of time.
 Bodla & Verma (2006) examined the performance of SBI and ICICI through
CAMEL model. Data set for the period of 2000-01 to 2004-05 were used for the
purpose of the study. With the reference to the Capital Adequacy, it concluded that
SBI has an advantage over ICICI. Regarding to assets quality, earning quality and
management quality, it can be said that ICICI has an edge upon SBI. Therefore the
liquidity position of both banks was sound and did not differ much.
 Cinko & Avci (2008) noticed that globally all the banking supervisory authorities are
using CAMEL rating system for many years. In this synthesis financial ratios were
applied to calculate components of CAMEL ratings for the period of 1996-2000. The
financial ratios were also employed to anticipate the delegation of commercial banks
in 2001 to the SDIF by adopting discriminant analysis, logistic regression and neural
network models. However the conclusion revealed that it was impossible to predict
the transfer of a bank to SDIF by mode of CAMEL ratios.
 Agarwal & Sihna (2010) have analyzed the financial performance and thereby the
sustainability of micro finance institutions (MFIs) in India by employing the CAMEL
model.
 Hays, Lurgio & Arthur (2009) have utilized CAMEL model to examine the
performance of low efficiency vs. high efficiency community banks in conjunction
with the logistical regression analysis. The analysis used data which are based on
quarterly reports by commercial banks. The discriminated model derived from the
CAMEL parameters is tested among data for 2006, 2007, 2008. Its results concluded
that the model accuracy floats from approximately 88% to 96% for both original and
cross-validations data sets.
 Gupta and Kaur (2008) conducted a research on the sole aim of examining the
performance of Indian private Sector banks by using CAMEL model and by assigning
rating to the top five and bottom five banks. They rated 20 old and 10 new private
sector banks based on CAMEL framework. The study covered financial data for the
period of 5 years i.e. from 2003-07. The research as determined by CAMEL Model
revealed that HDFC was at its higher position of all private sectors banks in India

succeeded by the Karur Vyasa and the Tamilnaud Mercantile Bank. However the
Gobal Trust Bank and the Nedungradi Banks was considered as bad management.
 Barth and Landsman (2010) discuss the role of financial reporting by banks in the
financial crisis. They discuss such financial reporting features as fair values, asset
securitisations, derivatives and loan loss provisioning. They conclude that a lack of
transparency on derivative financial instruments and the pooling of debt resulted in
problems in determining the real financial position of a bank. Determining the real
position of a bank through financial reports is the key to reliability, which in turn
affects the usefulness of the reports in decision making.
 Chander and Chandel (2010) studied financial viability and performance of
cooperative credit institutions in Haryana for the period from 1997-98 to 2008-09
using Financial Analysis and Z-score Analysis. They used five key financial
parameters namely profitability, liquidity, solvency, efficiency and risk. Under each
of these five categories four different ratios were calculated and analyzed. The results
revealed that four District Central Cooperative Banks, with approximately fifty
branches, had not been performing well on all financial parameters used in the study.

PROFILE OF THE COMPANY
The evolution of State Bank of India can be traced back to the first decade of the
19th century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2
June 1806. The bank was redesigned as the Bank of Bengal, three years later, on 2
January 1809. It was the first ever joint
the sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay
(established on 15 April 1840) and the Bank of Madras (established on 1 July 1843)
followed the Bank of Bengal. These three banks dominated the modern banking scenario
in India, until when they were amalgamated to form the Imperial Bank of India, on 27
January 1921. The State Bank of India emerged as a pacesetter, with its operations
carried out by the 480 offices comprising branches, sub offices and three Local Head
Offices, inherited from the Imperial Bank. Instead of serving as mere repositories of the
community's savings and lending to creditworthy parties, the State Bank of India catered
to the needs of the customers, by banking purposefully. The bank served the
heterogeneous financial needs of the planned economic development.
Branches
The corporate center of SBI is located in Mumbai. In order to cater to different
functions, there are several other establishments in and outside Mumbai, apart from the
corporate center. The bank boasts of having as many as 14 local head offices and 57
Zonal Offices, located at major cities throughout India. It is recorded that SBI has about
10000 branches, well networked to cater to its customers throughout India.
CHAPTER – III
PROFILE OF THE COMPANY
STATE BANK OF INDIA (SBI)
uary 1809. It was the first ever joint-stock bank of the British India, established under
wed the Bank of Bengal. These three banks dominated the modern banking scenario
out by the 480 offices comprising branches, sub offices and three Local Head
heterogeneous financial needs of the planned economic development.
several other establishments in and outside Mumbai, apart from the
s, well networked to cater to its customers throughout India.
stock bank of the British India, established under
wed the Bank of Bengal. These three banks dominated the modern banking scenario
out by the 480 offices comprising branches, sub offices and three Local Head
several other establishments in and outside Mumbai, apart from the
s, well networked to cater to its customers throughout India.

ATM Services
SBI provides easy access to money to its customers through more than 8500
ATMs in India. The Bank also facilitates the free transaction of money at the ATMs of
State Bank Group, which includes the ATMs of State Bank of India as well as the
Associate Banks – State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank
of Indore, etc. You may also transact money through SBI Commercial and International
Bank Ltd by using the State Bank ATM-cum-Debit (Cash Plus) card.
Subsidiaries
The State Bank Group includes a network of eight banking subsidiaries and
several non-banking subsidiaries. Through the establishments, it offers various services
including merchant banking services, fund management, factoring services, primary
dealership in government securities, credit cards and insurance.
The eight banking subsidiaries are:
 State Bank of Bikaner and Jaipur
(SBBJ)
 State Bank of Hyderabad (SBH)
 State Bank of India (SBI)
 State Bank of Indore (SBIR)
 State Bank of Mysore (SBM)
 State Bank of Patiala (SBP)
 State Bank of Saurashtra (SBS)
 State Bank of Travancore (SBT)
Indian Overseas Bank(IOB)
In 1937, Thiru.M. Ct. Chidambaram Chettiyar establishes the Indian Overseas
Bank (IOB) to encourage overseas banking and foreign exchange operations. IOB started
up simultaneously at three branches, one each in Karaikudi, Madras (Chennai) and
Rangoon (Yangon). It then quickly opened a branch in Penang and another in Singapore.
The bank served the Nattukottai Chettiars, who were a mercantile class that at the time

had spread from Chettinad in Tamil Nadu state to Ceylon (Sri Lanka), Burma
(Myanmar), Malaya, Singapore, Java, Sumatra, and Saigon. As a result, from the
beginning IOB specialized in foreign exchange and overseas banking.
The Indian economy has been through challenging times for the past two years,
faced with the twin problem of prolonged high inflation and low growth. The
consequence of this resulted in decline of GDP growth from 6.7 percent in 2011-12 to 4.5
percent in 2012-13. The GDP growth for 2013-14 is projected at 5.3%. Bank had
operated in an environment of subdued growth caused by slump in general economic
conditions throughout the year. Agriculture sector performed well due to satisfactory
monsoon and the absence of extreme climatic conditions. The concrete steps taken by
the Government to revive industrial activities, improve the flow of credit to agricultural
sector, contain rupee volatility and inflation are expected to put the economy on recovery
path and improve the business climate and boost consumer confidence.
Performance Highlights – 2013-14
Net Profit of the Bank for the year ended 31.03.2014 stood at Rs 601.74 crore
against`. 567.23 Crore for the year ended 31.03.2013. Net investments of the Bank
increased to`. 70,237 crore as on 31.03.2014 from`. 61,417 crore as on 31.03.2013.
Branch Expansion:-
The domestic branch net work of the Bank crossed the milestone mark of 3000 on
17.08.2013. As on 31.03.2014, the Bank had 3265 domestic branches, as against 2902
branches as on 31.03.2013, comprising of 985 rural branches (30.17% to total branches),
904 Semi Urban branches (27.68%), 728 Urban branches (22.30%) and 648 Metropolitan
branches (19.85%). Apart from 3265 branches, as on 31.03.2014, the Bank had 59
Regional Offices, 3 Extension Counters, 20 Satellite Offices, 39 City Back Offices, 33
Rapid Retail Centre’s (RLPCs), 18 MSME Processing Centres and 6 Inspectorates.

CANARA BANK
Canara Bank was founded by Shri Ammembal Subba Rao Pai, a great visionary
and philanthropist, in July 1906, at Mangalore, then a small port town in Karnataka.
The Bank has gone through the various phases of its growth trajectory over hundred
years of its existence. Growth of Canara Bank was phenomenal, especially after
nationalization in the year 1969, attaining the status of a national level player in terms
of geographical reach and clientele segments. Eighties was characterized by business
diversificatn for the Bank. In June 2006, the Bank completed a century of operation in
the Indian banking industry. The eventful journey of the Bank has been characterized
by several memorable milestones. Today, Canara Bank occupies a premier position in
the comity of Indian banks. With an unbroken record of profits since its inception,
Canara Bank has several firsts to its credit. These include:
 Launching of Inter-City ATM Network
 Obtaining ISO Certification for a Branch
 Articulation of ‘Good Banking’ – Bank’s Citizen Charter
 Commissioning of Exclusive Mahila Banking Branch
 Launching of Exclusive Subsidiary for IT Consultancy
 Issuing credit card for farmers
 Providing Agricultural Consultancy Services
Vision & Mission:
Vision: To emerge as a ‘Preferred Bank’ by pursuing global benchmarks in
profitability, operational efficiency, asset quality, risk management and expanding the
global reach.
Mission: To provide quality banking services with good customer care, create value
for all stakeholders and continue as a responsive corporate social citizen. Sound
founding principles, enlightened leadership, unique work culture and remarkable
adaptability to changing banking environment have enabled Canara Bank to be a
frontline banking institution of global standards.

Monetary And Banking Developments
Growth in key monetary aggregates and money supply in 2013
the changing liquidity conditions arising from domestic and global financial
environment. The monetary policy stance during the year was primarily to contain
inflation and manage liquidity. Money supply (M3) growth, which was 12.4% at the
beginning of the financial year, rose to 14.9% by end
to 13.5% by end-March 2014, slightly higher than RBI’s indicative projection of 13%.
During the year, growth in Scheduled Commercial Banks’ (SCBs) aggregate
deposits and credit was at 14.6%
compared to last year’s aggregate deposits growth at 14.3% and credit growth at
14.1%. The C-D ratio remained high at 77.69% as on March 21, 2014.One of the
significant developments in the banking industry
parallel run under Basel III norms from 1stApril, 2013. Asset Quality of the banking
sector came under increased pressure during the year, owing to continued economic
slowdown and rising Non
of banks.The year 2013-
announced by the RBI.
• Repo rate and Reverse Repo rate increased by 75 basis points (bps) to 8% and
7% respectively.
• Accordingly, Marginal Sta
aligned 100 bps above repo rate at 9%.
• Cash Reserve Ratio (CRR) was kept unchanged at 4% of Net Demand and
Time Liabilities (NDTL) during the year.
• Statutory Liquidity Ratio (SLR) was kept unchanged.
Karur Vysya Bank
The Karur Vysya Bank Ltd., was started in the year 1916 in Karur, then
a small textile town with a vast agricultural background, by two illustrious sons
of the soil – Sri M.A. Venkatarama Chettiar and Sri Athi Krishna Chettiar. A seed
Monetary And Banking Developments
Growth in key monetary aggregates and money supply in 2013
financial year, rose to 14.9% by end-December 2013 and moderated
March 2014, slightly higher than RBI’s indicative projection of 13%.
deposits and credit was at 14.6% and 14.3% respectively, almost at the same levels
D ratio remained high at 77.69% as on March 21, 2014.One of the
significant developments in the banking industry was the commencement of the
slowdown and rising Non-Performing Assets of banks, severely affecting profitability
-14 saw the following changes in the key policy measures
Repo rate and Reverse Repo rate increased by 75 basis points (bps) to 8% and
Accordingly, Marginal Standing Facility (MSF) Rate and Bank Rate was
aligned 100 bps above repo rate at 9%.
Cash Reserve Ratio (CRR) was kept unchanged at 4% of Net Demand and
Liabilities (NDTL) during the year.
Statutory Liquidity Ratio (SLR) was kept unchanged.
Sri M.A. Venkatarama Chettiar and Sri Athi Krishna Chettiar. A seed
Growth in key monetary aggregates and money supply in 2013-14 reflected
December 2013 and moderated
March 2014, slightly higher than RBI’s indicative projection of 13%.
and 14.3% respectively, almost at the same levels
D ratio remained high at 77.69% as on March 21, 2014.One of the
was the commencement of the
affecting profitability
14 saw the following changes in the key policy measures
Repo rate and Reverse Repo rate increased by 75 basis points (bps) to 8% and
nding Facility (MSF) Rate and Bank Rate was
Cash Reserve Ratio (CRR) was kept unchanged at 4% of Net Demand and
Sri M.A. Venkatarama Chettiar and Sri Athi Krishna Chettiar. A seed

capital of Rs. 1.00 lakh has grown into a leading financial institution that offers the
wide gamut of financial services to millions of its customers under one roof.
Mission
 Adapt technology to introduce innovative products and services as well as
increase the value of products on an on-going basis and provide them at
reasonable rates.
 Expand branch network to reach the top business centers, besides unbanked
and under banked areas in the country;
 Strengthen the financials through effective deployment of funds and ensuring
financial discipline while adhering to the regulator's guidelines.
Vision: Delight the customer continually by blending tradition with technology to
deliver innovative products and services with affordable rates through a pan India
branch network.
Total Business
During the year ended 31.03.2014, Total Business of the Bank recorded an increase of
14.08% at ` 77983.66 Cr as compared to ` 68358.87 Cr as on 31.03.2013.
Credit Rating
CRISIL has reaffirmed A1+ rating (pronounced CRISIL A one plus) for ` 30
bn Certificate of Deposits Programme of your Bank.ICRA Limited has confirmed
ICRA A1+ (Pronounced ICRA A one plus) rating to the Bank’s Certificate of
Deposits Programme for ` 30 bn. Both the ratings indicate a very strong degree of
safety regarding timely payment of financial obligations.
Investments
The gross domestic investments of your Bank stood at ` 13445.46 Cr as at
31.03.2014 as against ` 13868.85 Cr as on 31.03.2013.
Branch Network
During the financial year 2013-14, Bank opened 21 Branches and added 345
ATMs. With this, as at the end of March 31, 2014 the Bank has a total network of 572

branches and 1617 ATMs with PAN India presence. The aggregate customer outlets
of the Bank (both Branch net work and ATMs installed) rose to 2189. To facilitate
remittance of cash on real time basis to customers’ accounts, your Bank has
introduced 153 Cash Deposit Machines or Bunch Note Acceptors (BNA).
South Indian Bank
One of the earliest banks in South India, "South Indian Bank" came into being
during the Swadeshi movement. The establishment of the bank was the fulfillment of
the dreams of a group of enterprising men who joined together at Thrissur, a major
town (now known as the Cultural Capital of Kerala), in the erstwhile State of Cochin
to provide for the people a safe, efficient and service oriented repository of savings of
the community on one hand and to free the business community from the clutches of
greedy money lenders on the other by providing need based credit at reasonable rates
of interest. Translating the vision of the founding fathers as its corporate mission, the
bank has during its long sojourn been able to project itself as a vibrant, fast growing,
service oriented and trend setting financial intermediary.
Vision: To be the most preferred bank in the areas of customer service,
stakeholder value and corporate governance.
Mission : To provide a secure, agile, dynamic and conducive banking
environment to customers with commitment to values and unshaken confidence,
deploying the best technology, standards, processes and procedures where customer
convenience is of significant importance and to increase the stakeholders’ value.
Financial Performance
Profit: The Bank had achieved a net profit of `507.50 crore during the
year against the net profit of `502.27 crore posted during the previous year. The Bank
was able to achieve this growth in net profit essentially on account of higher scale of

operations, better management of assets and liabilities and focus on enhancement
of non-interest revenue of the Bank. . The Operating Profit for the year under
review was `928.95 crore before depreciation, taxes and provisions. Net profit
was `507.50 crore and the profit available for appropriation was `544.46 crore.
Expansion Programme / Policy Of The Bank
During the last financial year, the Bank has opened 54 new branches
and 200 ATMs across the country. The Bank has been successful in widening its
presence pan India with 794 branches and 9 service branches. The branch network
now covers 29 states / union territories and has a network of 1000 ATMs. The Bank
further plans to open 25 new branches, 25 Extension Counters, 250 ATMs, 3 USBs
and increasing the network of branches to establish foot prints in the states not
covered hither to, Arunachal Pradesh and Sikkim during the current financial year.
Capital & Reserves
The Bank’s issued and paid up capital stood at `134.39 crore as on March 31,
2014. During the year, 54, 09,172 stock options granted under Employee Stock
Option Scheme had been exercised by eligible employees. The capital plus
reserves of the Bank has gone up from `3,003.61 crore to `3,368.05 crore owing
to plough back of profits during the year.
HDFC Bank
The Housing Development Finance Corporation Limited (HDFC) was
amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India
(RBI) to set up a bank in the private sector, as part of RBI’s liberalisation of the
Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the
name of ‘HDFC Bank Limited’, with its registered office in Mumbai, India. HDFC
Bank commenced operations as a Scheduled Commercial Bank in January 1995.
HDFC Bank began operations in 1995 with a simple mission: to be a "World-class
Indian Bank". HDFC Bank is a young and dynamic bank, with a youthful and
enthusiastic team determined to accomplish the vision of becoming a world-class
Indian bank. Our business philosophy is based on four core values - Customer Focus,
Operational Excellence, Product Leadership and People.

Financial Performance
The financial performance of your Bank during the financial year ended
March 31, 2014 remained healthy with total net revenues (net interest income plus
other income) increasing by 16.5% to `26,402.3 crore from `22,663.7 crore in the
previous financial year. Revenue grow
interest income and other income. Net interest income grew by 16.9% due to
acceleration in loan growth of 26.4% coupled with a net interest margin (NIM) of
4.4% for the year ending March 31, 2014.
Corporate Social Responsibility
Bank continues its endeavors to build a sustainable business philosophy
through three platforms namely governance, social responsibility and environmental
responsibility. Bank has undertaken several community interventions/projects through
the year to create a positive impact on society. These projects take shape in many
ways from corporate philanthropy to employee driven projects. The Bank has
partnered with over 18 NGOs and over 70,000 lives impacted through our initiatives.
Mission and Business Strategy:
Our mission is to be "a World Class Indian Bank", benchmarking ourselves
against international standards and best practices in terms of product offerings,
technology, service levels, risk management and audit & compliance. The objective is
to build sound customer franchises across distinct businesses so as to be a preferred
provider of banking services for target retail and wholesale customer segments, and to
achieve a healthy growth in profitability, consistent with the Bank's risk appetite
highest levels of ethical standards, professional integrity, corporate governance and
regulatory.
Axis Bank
Axis Bank is the third largest private sector bank in India. Axis Bank offers
the entire spectrum of financial services to customer segments covering Large and
Mid-Corporates, MSME, Agriculture and Retail Businesses. The Bank has a large
erformance of your Bank during the financial year ended
previous financial year. Revenue growth was driven by an increase in both, net
4.4% for the year ending March 31, 2014.
Responsibility
he year to create a positive impact on society. These projects take shape in many
iness Strategy:
achieve a healthy growth in profitability, consistent with the Bank's risk appetite
trum of financial services to customer segments covering Large and
Corporates, MSME, Agriculture and Retail Businesses. The Bank has a large
erformance of your Bank during the financial year ended
th was driven by an increase in both, net
he year to create a positive impact on society. These projects take shape in many
achieve a healthy growth in profitability, consistent with the Bank's risk appetite. The
trum of financial services to customer segments covering Large and
Corporates, MSME, Agriculture and Retail Businesses. The Bank has a large

footprint of 2402 domestic branches (including extension counters) and 12,922 ATMs
spread across the country as on 31st March 2014. The overseas operations of the Bank
are spread over its seven international offices with branches at Singapore, Hong
Kong, DIFC (Dubai International Financial Centre), Colombo and Shanghai and
representative offices at Dubai and Abu Dhabi. The Bank was promoted in 1993,
jointly by Specified Undertaking of Unit Trust of India (SUUTI) (then known as Unit
Trust of India),Life Insurance Corporation of India (LIC), General Insurance
Corporation of India (GIC), National Insurance Company Ltd., The New India
Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India
Insurance Company Ltd. The shareholding of Unit Trust of India was subsequently
transferred to SUUTI, an entity established in 2003.
Highlights
 Profit after tax up 20.05% to `6,217.67crores
 Net Interest Income up 23.64% to `11,951.64crores
 Fee & Other Income up 15.75% to `6,709.23crores
 Deposits up 11.22% to `280,944.56 crores
 Demand Deposits up 12.81% to `126,462.34 crores
 Advances up 16.81% to `230,066.76 crores
 Retail Assets up 38.05% to `74,491.24 crores
 Network of branches and extension counters increased from 1,947 to 2,402
 Total number of ATMs went up from 11,245 to 12,922
 Earnings per share (Basic) increased from `119.67 to `132.56
 Proposed Dividend up from 180% to 200%

CHAPTER IV
DEFINITION, TERM AND CONCEPTS.
DEFINITION OF FINANCIAL MANAGEMENT
According to soloman “Financial management is concerned with efficient use
of important economic resources, namely capital fund”.
MEANING AND SIGNIFICANCE OF FINANCIAL STATEMENT
A financial statement or financial report is a format record of the financial
activities of a business person or other entity. British English and company law
financial statement is often referred an account, although the term financial statement is
also used particularly by accountants. All the relevant financial information, present in
a structure manner and in a form easy to understand are called the fins. They are
typically included four basic financial statements, accompanied by a management
discussion and analysis.
 Balance sheet
 Income statement or profit and loss account
 Statement of change in owner’s equity or retained earning
 Statement of change in financial position
FINANCIAL ANALYSIS
The term ‘financial analysis ’ also known as analysis and interpretation of
financial statement refer to the process of determining financial strengths and
weakness of the firm by establishing strategic relationship between the items of the
balance sheet, profit and loss account and the other operative data. Financial statement
analysis is an important part of the overall financial assessment. Business concern are
interest in knowing about it profitability and financial condition is the overall objective
of financial statement analysis. Analyzing financial statements, according to Metcalf
and Tigard, “is a process of evaluating the relationship between component parts of a
financial statement to obtain a better understanding of a firm’s position and
performance.”
METHOD OR DEVICE OF FINANCIAL ANALYSIS

 Comparative balance sheet
 Profit or loss account
 Trend analysis
 Common size statement
 Fund flow statement
 Cash flow analysis cost volume profit analysis
 Ratio analysis
COMPARATIVE FINANCIAL STATEMENTS
The comparative financial statements are statements of the financial position at
different periods; of time. The element of financial position is shown in a comparative
form so as to give an idea of financial position at two or more periods.
The two comparative statements are
 Balance sheet
 Income statement
COMPARATIVE BALANCE SHEET
The comparative balance sheet analysis is the study of the trend of the same
item, group of item and computed item in two or more balance sheet of the business
enterprise on different dates. The changes in periodic balance sheet item reflect the
conduct of a business.
COMPARATIVE INCOME STATEMENT
The income statement gives the results of the operations of a business. The
comparative income statement gives an idea of the progress of a business over a period
of time. The changes in absolute data money values and percentages can be determined
to analyses the profitability of the business.
TREND ANALYSIS
The financial statement may be analysed by computing trends of series of
information. This method determined the direction upwards or downwards involves the
computation of the percentage relationship that each statement item bears to the same
item in base year.

COMMON-SIZED STATEMENT
The common-sized statement balance sheet and income statement are shown in
analytical percentages. The common-size statement may be prepared I the following
way:
 The total of assets or liabilities is taken as 100.
 The individual assets are expressed as percentages of total assets.
COMMON-SIZE BALANCE SHEET
A statement in which balance sheet items are expressed as the ratio of each to
total assets and the ratio of each liability is expressed as a ration of total liabilities is
called common-size balance sheet.
COMMON SIZE INCOME STATEMENT
The item in income statement can be shown as percentage sales to show the relation of
each item to sales. A significant relationship can be established between items of
income statement.
FUNDS FLOW STATEMENT
The funds flow statement is a statement which shows the movement of funds
and is a report of the financial operations of the business undertaking. In simple words,
it is a statement of sources and application of funds.
CASH FLOW STATEMENT
Cash flow statement is statement which describes the inflows and outflow of
cash and cash equivalents in an enterprise during a specified period of time. Such a
statement enumerates net effects of various business transactions a cash and its
equivalents takes into account receipts and disbursements of cash.
RATIO ANALYSIS
According Kennedy and McMillan “the relationship of an item to another
expressed in simple mathematical form is known as ration” A tool used by individuals
to conduct a quantitative analysis of information in a company's financial statements.
Ratios are calculated from current year numbers and are then compared to previous

years, other companies, industry, or even the economy to judge the performance of
the company. Ratio analysis is predominately used by proponents of fundamental
analysis.
The Bank
The word bank means an organization where people and business can invest or
borrow money; change it to foreign currency etc. According to Halsbury “A Banker is
an individual, Partnership or Corporation whose sole pre-dominant business is
banking, that is the receipt of money on current or deposit account, and the payment
of cheque drawn and the collection of cheque paid in by a customer.’’
The Origin and Use of Banks
The Word ‘Bank’ is derived from the Italian word ‘Banko’ signifying a bench,
which was erected in the market-place, where itof the twelfth century it became
evident, as the advantage of coined money was gradually acknowledged, that there
must be some controlling power, some corporation which would undertake to keep
the coins that were to bear the royal stamp up to a certain standard of value; as,
independently of the ‘sweating’ which invention may place to the credit of the
ingenuity of the Lombard merchants- all coins will, by wear or abrasion, become
thinner, and consequently less valuable; and it is of the last importance, not only for
the credit of a country, but for the easier regulation of commercial transactions, that
the metallic currency be kept as nearly as possible up to the legal standard. Much
unnecessary trouble and annoyance has been caused formerly by negligence in this
respect. The gradual merging of the business of a goldsmith into a bank appears to
have been the way in which banking, as we now understand the term, was introduced
into England; and it was not until long after the establishment of banks in other
countries-for state purposes, the regulation of the coinage, etc. that any large or
similar institution was introduced into England. It is only within the last twenty years
that printed cheques have been in use in that establishment. First commercial bank
was Bank of Venice which was established in1157 in Italy.

THE BANKING REFORMS
In 1991, the Indian economy went through a process of economic
liberalization, which was followed up by the initiation of fundamental reforms in the
banking sector in 1992.The banking reform package was based on the
recommendations proposed by the Narasimham Committee Report (1991) that
advocated a move to a more market oriented banking system, which would operate in
an environment of prudential regulation and transparent accounting. One of the
primary motives behind this drive was to introduce an element of market discipline
into the regulatory process that would reinforce the supervisory effort of the Reserve
Bank of India (RBI). Market discipline, especially in the financial liberalization
phase, reinforces regulatory and supervisory efforts and provides a strong incentive to
banks to conduct their business in a prudent and efficient manner and to maintain
adequate capital as a cushion against risk exposures. Recognizing that the success of
economic reforms was contingent on the success of financial sector reform as well,
the government initiated a fundamental banking sector reform package in
1992.Banking sector, the world over, is known for the adoption of multidimensional
strategies from time to time with varying degrees of success. Banks are very
important for the smooth functioning of financial markets as they serve as repositories
of vital financial information and can potentially alleviate the problems created by
information asymmetries. From a central bank’s perspective, such high-quality
disclosures help the early detection of problems faced by banks in the market and
reduce the severity of market disruptions. Consequently, the RBI as part and parcel of
the financial sector deregulation, attempted to enhance the transparency of the annual
reports of Indian banks by, among other things, introducing stricter income
recognition and asset classification rules, enhancing the capital adequacy norms, and
by requiring a number of additional disclosures sought by investors to make better
cash flow and risk assessments. During the pre-economic reforms period, commercial
banks & development financial institutions were functioning distinctly, the former
specializing in short & medium term financing, while the latter on long term lending
& project financing. Commercial banks were accessing short term low cost funds thru
savings investments like current accounts, savings bank accounts & short duration
fixed deposits, besides collection float. Development Financial Institutions (DFIs) on
the other hand, were essentially depending on budget allocations for long term

lending at a concessionary rate of interest. The scenario has changed radically during
the post reforms period, with the resolve of the government not to fund the DFIs
through budget allocations. DFIs like IDBI, IFCI &ICICI had posted dismal financial
results. Infect, their very viability has become a question mark. Now, they have taken
the route of reverse merger with IDBI bank &ICICI bank thus converting them into
the universal banking system.
BASEL II ACCORD
Bank capital framework sponsored by the world's central banks designed to
promote uniformity, make regulatory capital more risk sensitive, and promote
enhanced risk management among large, internationally active banking organizations.
The International Capital Accord, as it is called, will be fully effective by January
2008 for banks active in international markets. Other banks can choose to "opt in," or
they can continue to follow the minimum capital guidelines in the original Basel
Accord, finalized in 1988. The revised accord (Basel II) completely overhauls the
1988 Basel Accord and is based on three mutually supporting concepts, or "pillars,"
of capital adequacy. The first of these pillars is an explicitly defined regulatory capital
requirement, a minimum capital-to-asset ratio equal to at least 8% of risk-weighted
assets. Second, bank supervisory agencies, such as the Comptroller of the Currency,
have authority to adjust capital levels for individual banks above the 8% minimum
when necessary. The third supporting pillar calls upon market discipline to
supplement reviews by banking agencies. Basel II is the second of the Basel Accords,
which are recommendations on banking laws and regulations issued by the Basel
Committee on Banking Supervision. The purpose of Basel II, which was initially
published in June 2004, is to create an international standard that banking regulators
can use when creating regulations about how much capital banks need to put aside to
guard against the types of financial and operational risks banks face. Advocates of
Basel II believe that such an international standard can help protect the international
financial system from the types of problems that might arise should a major bank or a
series of banks collapse. In practice, Basel II attempts to accomplish this by setting up
rigorous risk and capital management requirements designed to ensure that a bank
holds capital reserves appropriate to the risk the bank exposes itself to through its
lending and investment practices. Generally speaking, these rules mean that the

greater risk to which the bank is exposed, the greater the amount of capital the bank
needs to hold to safeguard its solvency and overall economic stability.
1. Ensuring that capital allocation is more risk sensitive;
2. Separating operational risk from credit risk, and quantifying both;
3. Attempting to align economic and regulatory capital more closely to reduce the
scope for regulatory arbitrage.
Basel II has largely left unchanged the question of how to actually define bank
capital, which diverges from accounting equity in important respects. The Basel I
definition, as modified up to the present, remains in place. The Accord in operation
Basel II uses a "three pillars" concept – (1) minimum capital requirements
(addressing risk), (2) supervisory review and (3) market discipline – to promote
greater stability in the financial system.
The Three Pillars of Basel II
The Basel I accord dealt with only parts of each of these pillars. For example:
with respect to the first Basel II pillar, only one risk, credit risk, was dealt with in a
simple manner while market risk was an afterthought; operational risk was not dealt
with at all.
The First Pillar
The first pillar deals with maintenance of regulatory capital calculated for
three major components of risk that a bank faces: credit risk, operational risk and
market risk. Other risks are not considered fully quantifiable at this stage. The credit
risk component can be calculated in three different ways of varying degree of
sophistication, namely standardized approach, Foundation IRB and Advanced IRB.
IRB stands for "Internal Rating-Based Approach". For operational risk, there are three
different approaches – basic indicator approach or BIA, standardized approach or
TSA, and advanced measurement approach or AMA. For market risk the preferred
approach is VAR (value at risk). As the Basel 2 recommendations are phased in by
the banking industry it will move from standardized requirements to more refined and
specific requirements that have been developed for each risk category by each

individual bank. The upside for banks that do develop their own bespoke risk
measurement systems is that they will be rewarded with potentially lower risk capital
requirements. In future there will be closer links between the concepts of economic
profit and regulatory capital. Credit Risk can be calculated by using one of three
approaches1. Standardized Approach 2. Foundation IRB (Internal Ratings Based)
Approach 3. Advanced IRB Approach The standardized approach sets out specific
risk weights for certain types of credit risk. The standard risk weight categories are
used under Basel 1 and are 0% for short term government bonds, 20% for exposures
to OECD Banks, 50% for residential mortgages and 100% weighting on commercial
loans. A new 150% rating comes in for borrowers with poor credit ratings. The
minimum capital requirement( the percentage of risk weighted assets to be held as
capital) remains at 8%. For those Banks that decide to adopt the standardized ratings
approach they will be forced to rely on the ratings generated by external agencies.
Certain Banks are developing the IRB approach as a result.
The Second Pillar
The second pillar deals with the regulatory response to the first pillar, giving
regulators much improved 'tools' over those available to them under Basel I. It also
provides a framework for dealing with all the other risks a bank may face, such as
systemic risk, pension risk, concentration risk, strategic risk, reputation risk, liquidity
risk and legal risk, which the accord combines under the title of residual risk. It gives
banks a power to review their risk management system.
The Third Pillar
The third pillar greatly increases the disclosures that the bank must make. This
is designed to allow the market to have a better picture of the overall risk position of
the bank and to allow the counterparties of the bank to price and deal appropriately.
The new Basel Accord has its foundation on three mutually reinforcing pillars that
allow banks and bank supervisors to evaluate properly the various risks that banks
face and realign regulatory capital more closely with underlying risks. The first pillar
is compatible with the credit risk, market risk and operational risk. The regulatory

capital will be focused on these three risks. The second pillar gives the bank
responsibility to exercise the best ways to manage the risk specific to that bank.
Concurrently, it also casts responsibility on the supervisors to review and validate
banks’ risk measurement models. The third pillar on market discipline is used to
leverage the influence that other market players can bring. This is aimed at improving
the transparency in banks and improves reporting.
CAMEL RATING
CAMEL is a rating system generally used by the government policy circle,
regulating bodies regulating commercial banks, that is, central banks and non-
governmental policy research centers for the purpose of assessing the soundness of a
savings association or a bank. As regards to the background of introducing CAMEL,
it was originally adopted by the regulators of North American Commercial banks and
it covers five areas of performance, namely, Capital Adequacy, Asset quality,
Management quality, Earning ability and Liquidity. In the early 1970s; federal
Schedule Bank
in India
Schedule
Commercial
Banks
Public Sector
Banks
Nationalised
Banks
State Banks & its
Associates
Private Sector
Banks
Old Private
Banks
New Private
Banks
Foreign Banks in
India
Regional Rural
Banks
Schedule Co-
operative Bank
Scheduled Urban
Co-operative
Banks
Scheduled State
Co-operatives
Banks

regulators of the US developed CAMEL rating system to appraise the performance of
the Commercial banks. Later in1979, the uniform financial institution’s rating system
was adopted to provide federal regulatory agencies with a framework for rating
financial condition and individual banks (Siems and Barr,1998).Since then, the
application of CAMEL has spread up dramatically in respect of examining the
financial strengths of one of the basic constituents of money market i.e. commercial
banks. In this connection, Piyu rightly observed:“Currently, financial ratios are often
used to measure the overall soundness of a bank and the quality of bank management.
Thus, bank regulators may use financial ratios to help evaluate a bank’s performance
as part of CAMEL rating system”
Fundamentals of the CAMEL rating system and the five components. This
framework follows both U.S. regulation and AIA’ CAMEL Approach to Bank
Analysis. The Uniform Financial Institution Rating system, commonly referred to the
acronym CAMEL rating, was adopted by the Federal Financial Institution
Examination Council on November 13 1979, and then adopted by the National Credit
Union Administration in October 1987. It has proven to be an effective internal
supervisory tool for evaluating the soundness of a financial firm, on the basis of
identifying those institutions requiring special attention or concern. CAMEL rating
has become a concise and indispensable tool for examiners and regulators”. This
rating ensures a bank’s healthy conditions by reviewing different aspects of a bank
based on variety of information sources such as financial statement, funding sources,
macroeconomic data, budget and cash flow. The bank’s CAMEL rating is highly
confidential, and only exposed to the bank’s senior management for the purpose of
projecting the business strategies, and to appropriate supervisory staff. Its rating is
never made publicly available, even on a lagged basis. The CAMEL rating system is
based upon an evaluation of five critical elements of a credit union's operations:
Capital Adequacy, Asset Quality, Management, Earnings and Asset/Liability
Management. This rating system is designed to take into account and reflect all
significant financial and operational factors examiners assess in their evaluation of a
credit union's performance. Credit unions are rated using a combination of financial
ratios and examiner judgment. Since the composite CAMEL rating is an indicator of
the viability of a credit union, it is important that examiners rate credit unions based
on their performance in absolute terms rather than against peer averages or

predetermined benchmarks. The examiner must use professional judgment and
consider both qualitative and quantitative factors when analyzing a credit union's
performance. Since numbers are often lagging indicators of a credit union's condition,
the examiner must also conduct a qualitative analysis of current and projected
operations when assigning CAMEL ratings. Although the CAMEL composite rating
should normally bear a close relationship to the component ratings, the examiner
should not derive the composite rating solely by computing an arithmetic average of
the component ratings. Following are general definitions the examiner should use for
assigning the credit union's CAMEL composite rating:
NEED OF CAMEL RATING SYSTEM IN BANKS
In 1979, the bank regulatory agencies created the Uniform Financial
Institutions Rating System (UFIRS). Under the original UFIRS a bank was assigned
ratings based on performance in five areas: the adequacy of Capital, the quality of
Assets, the capability of Management, the quality and level of Earnings and the
adequacy of Liquidity. Bank supervisors assigned a 1 through 5 rating for each of
these components and a composite rating for the bank. This 1 through 5 composite
rating was known primarily by the acronym CAMEL.A bank that received a CAMEL
of 1 was considered sound in every respect and generally had component ratings of 1
or 2 while a bank with a CAMEL of 5 exhibited unsafe and unsound practices or
conditions, critically deficient performance and was of the greatest supervisory
concern. While the CAMEL rating normally bore close relation to the five component
ratings, it was not the result of averaging those five grades. Rather, supervisors
consider each institution's specific situation when weighing component ratings and,
more generally, review all relevant factors when assigning ratings. CAMEL ratings
reflect the excellent banking conditions and performance over the last several years.
There is a need for bank employees to have sufficient knowledge of the rating system,
in order to guide the banking growth rate in the positive direction. Lack of knowledge
among employees regarding banking performance indicators affects banks negatively
as these are the basis for any banking action. CAMEL is an acronym for five
components of bank safety and soundness:

Capital adequacy
Asset quality
Management quality
Earning ability
Liquidity
C: Capital adequacy  DEBT - EQUITY RATIO
 ADVANCE TO ASSETS RATIO
 G-SECURITIES TO INVESTMENT RATIO
A: Asset quality  GROSS NPA TO NET ADVANCE RATIO
 NET NPA TO NET ADVANCE RATIO
 TOTAL INVESTMENT TO TOTAL ASSETS RATIO
 NET NPA TO TOTAL ASSETS RATIO
M:Management quality  CREDIT DEPOSIT RATIO
 BUSINESS PER EMPLOYEES RATIO
 PROFIT PER EMPLOYEES RATIO
 BUSINESS PER BRANCH RATIO
 GROSS PROFIT PER EMPLOYEES RATIO
E: Earning ability  NET INTEREST MARGIN TO TOTAL ASSETS
RATIO
 INTEREST INCOME TO TOTAL INCOME RATIO
 NON -INTEREST TO TOTAL INCOME RATIO
L: Liquidity  LIQUID ASSETS TO TOTAL ASSETS RATIO
 G- SECURITIES TO TOTAL ASSETS RATIO
 LIQUID ASSETS TO DEMAND DEPOSITS RATIO
 LIQUID ASSETS TO TOTAL DEPOSITS RATIO
 RETURN ON NET WORTH RATIO
CAMEL MODEL
CAPITAL ADEQUACY:
Capital adequacy is the capital expected to maintain balance with the risks
exposure of the financial institution such as credit risk, market risk and operational
risk, in order to absorb the potential losses and protect the financial institution‘s
debt holder. “Meeting statutory minimum capital requirement is the key factor in

deciding the capital adequacy, and maintaining an adequate level of capital is a
critical element” the ratio are Capital Adequacy ratio.
Capital base of financial institutions facilitates depositors in forming their risk
perception about the institutions. Also, it is the key parameter for financial managers
to maintain adequate levels of capitalization. Moreover, besides absorbing
unanticipated shocks, it signals that the institution will continue to honor its
obligations. The most widely used indicator of capital adequacy is capital to risk-
weighted assets ratio (CRWA). According to Bank Supervision Regulation
Committee (The Basle Committee) of Bank for International Settlements, a minimum
8 percent CRWA is required. Capital adequacy ultimately determines how well
financial institutions can cope with shocks to their balance sheets. Thus, it is useful to
track capital-adequacy ratios that take into account the most important financial
risks—foreign exchange, credit, and interest rate risks—by assigning risk weightings
to the institution’s assets. Capital cushions fluctuations in earnings so that credit
unions can continue to operate in periods of loss or negligible earnings. It also
provides a measure of reassurance to the members that the organization will continue
to provide financial services. It serves to support growth as a free source of funds and
provides protection against insolvency. While meeting statutory capital requirements
is a key factor in determining capital adequacy, the credit union’s operations and risk
position may warrant additional capital beyond the statutory requirements.
Maintaining an adequate level of capital is a critical element. Determining the
adequacy of a credit union's capital begins with a qualitative evaluation of critical
variables that directly bear on the institution's overall financial condition.
 DEBT - EQUITY RATIO:-
Debt – Equity ratio also known as external – internal equity ratio is calculated to
measure the relative claims of outsider and the owners against the firm’s assets. It
indicates the degree of leverage of a bank and how much of the bank business is
financed through debt and how much through equity. This ratio includes outsiders
fund as total liabilities a shareholder funds as net assets. Higher ratio indicates less
protection for the creditors and depositors in the banking system.
Debt-equity ratio = Outsiders’ fund / Shareholder fund *100

 ADVANCE TO ASSETS RATIO:-
All banks was to recognize and take credit for interest accrued on all
loans, overdraft it while closing books for an accounting year. Advance is
broadly classified into ‘Advance in India’ and ‘Advance outside India’. Total advance
also include receivable. An asset includes fixed assets and other assets and excluding
the revaluation of all the assets. Higher the ratio is preferred to analyses the
aggressiveness in lending.
Advance to asset ratio = Total advances / Total assets * 100
 G- SECURITIES TO INVESTMENT RATIO:-
Investments include securities of the central and state Government and other
trustee securities including treasury bills of the Central State Government.
While Government securities stand first in the order of safety, investments in
commercial securities yield higher earnings to the banks. It indicates a bank
strategy as high profit - high risk or low profit - low risk. It also gives a view to the
availability of alternative investment opportunity. Since government securities are risk
–free, the higher the G-sec to investment ratio, the lower the risk involved in a bank’s
investments.
G-Securities to total investment ratio = G-Securities / Total investment *100
ASSET QUALITY:
A most important asset category is the loan portfolio; the greatest risk facing
the bank is the risk of loan losses derived from the delinquent loans. The credit
analyst should carry out the asset quality assessment by performing the credit risk
management and evaluating the quality of loan portfolio using trend analysis and peer
comparison. Measuring the asset quality is difficult because it is mostly derived from
the analyst’s subjectivity. Asset quality determines the robustness of financial
institutions against loss of value in the assets. Popular indicators include
nonperforming loans to advances, loan default to total advances, and recoveries to
loan default ratios. In most emerging markets, banking sector assets comprise well
over 80 per cent of total financial sector assets, whereas these figures are much lower

in the developed economies. One of the indicators for asset quality is the ratio of non-
performing loans to total loans (GNPA). The gross non-performing loans to gross
advances ratio is more indicative of the quality of credit decisions made by bankers.
Higher GNPA is indicative of poor credit decision-making. The ratio is Gross Non-
performing Assets, Net Non-performing Assets, and Net Non-performing Assets to
Total Advances Ratio of banks.
NPA: Non-Performing Assets
Advances are classified into performing and non-performing advances (NPAs)
as per RBI guidelines. NPAs are further classified into sub-standard, doubtful and loss
assets based on the criteria stipulated by RBI. An NPA is a loan or an advance
where:1.Interest and/or installment of principal remains overdue for a period of more
than90 days in respect of a term loan.2.The account remains "out-of-order'' in respect
of an Overdraft or Cash Credit(OD/CC).3.The bill remains overdue for a period of
more than 90 days in case of bills purchased and discounted.4.A loan granted for short
duration crops will be treated as an NPA if the installments of principal or interest
thereon remain overdue for two crop seasons.5.A loan granted for long duration crops
will be treated as an NPA if the installments of principal or interest thereon remain
overdue for one crop season. The Bank classifies an account as an NPA only if the
interest imposed during any quarter is not fully repaid within 90 days from the end of
the relevant quarter. This is a key to the stability of the banking sector.
 GROSS NPA TO NET ADVANCE RATIO:-
A Non-performing asset (NPA) is defined as credit facility in respect
of which the interest and / or installment of principal has remained ‘past due’
for a specified period of time. A classification used by financial institutions
that refer to loans that are in jeopardy of default. Once the borrower has
failed to make interest or principal payments for 90 days the loan is considered
to be a non-performing asset or “non-performing loan”. Gross NPA is the amount
which is outstanding in the books, regardless of any interest recorded and debited.
The lower the ratio better is the quality of advance. This ratio can be calculated by
dividing gross non-performing asset to net advance.
Gross NPA to Net Advance Ratio = Gross NPA / Net Advance * 100

 NET NPA TO NET ADVANCE RATIO:-
Net NPA is Gross NPA less interest debited to borrow account and not recovered
or recognized as income. The assets of the Banks which don’t perform (means don’t
bring any return) are called Non Performing Assets. This ratio is the most standard
measure of asset quality. In this, net non -performing assets are measured as a
percentage of net advance. The lower the ratio better is the quality of advance.
Net NPA to Net Advance Ratio = Net NPA/ Net Advance *100
 TOTAL INVESTMENT TO TOTAL ASSET RATIO:-
Banking investments among individual investors are increasing and a basic
CAMEL rating knowledge can help them gain better understanding about their
investment on their own rather than seeking the investment agencies. This ratio is
used as tool to measure the percentage of total assets locked up in the investments
which by conventional definition does not form part of the core income of the bank. A
higher ratio means that the bank has conservatively kept a high cushion of investment
to guard against NPA’s. However, this affects its profitability adversely.
Total investment to total asset ratio = Total investment / Total asset *100
 NET NPA TO TOTAL ASSETS RATIO:-
The ratio indicates the efficiency of the bank is assessing credit risk and to an
extent, recovering the debts. Total assets considered are net of revaluation reserves
Lower the ratio better is the performance of the bank. This ratio can be calculated by
dividing net NPA to total assets of the bank.
Net NPA to Total Assets Ratio = Net NPA / Total Assets * 100
MANAGEMENT QUALITY:
Management quality is basically the capability of the board of directors and
management, to identify, measure, and control the risks of an institution‘s activities
and to ensure the safe, sound, and efficient operation in compliance with applicable
laws and regulations Uniform Financial Institutions Rating System suggests that
management is considered to be the single most important element in the CAMEL

rating system because it plays a substantial role in a bank’s success; however, it is
subject to measure as the asset quality examination. The ratio is Total Investments to
Total Assets Ratio, Total Advances to Total Deposits Ratio, Sales per Employee, and
Profit after Tax per Employee of banks.
 CREDIT DEPOSIT RATIO:-
It is the ratio of how much a bank lends out of the deposits it has mobilized.
It indicates how much of a bank's core funds are being used for lending, the main
banking activity. A higher ratio indicates more reliance on deposits for lending. A
ratio of 60% in this respect is considered to be desirable norms.
Credit deposit ratio = Total advance/ Total deposits * 100
 BUSINESS PER EMPLOYEES RATIO:-
Business per employee’s ratio shows productivity of human forces of the
bank. It is used as tool to measure the efficiency of all the employees of a bank in
generating business for the bank. Higher the ratio better it is for the bank. This ratio
can be calculated by dividing total business by total number of employees.
Business employee ratio = Total Business / Total no. of employees *100
 PROFIT PER EMPLOYEES RATIO:-
Profit is the main indicator to determine the financial soundness of an
enterprise. It represents the revenue in excess of expenditure. This ratio show that
surplus earned per employees. The higher the ratio, the higher is the efficiency of the
management. The ratio can be calculated by dividing profit eared after tax to total
number of employees in the bank.
Profit per employees ratio = Profit after Tax / Total no of Employees * 100
 BUSINESS PER BRANCH RATIO:-
Banks total business contribution both deposits and advances. Financial viability
of the banks is ascertained based on the volume of their business. The ratio indicates
the productivity of different branches of the bank. It is used as tool to measure the
efficiency of all the branches of a bank in generating business for the bank. Higher the
ratio better is the efficiency of the bank.

Business per Branch ratio = Total Business / Total no of Branches * 100
 GROSS PROFIT PER EMPLOYEES RATIO:-
Gross profit per employee’s ratio shows the surplus earned before tax per
employees. The higher the ratio, the higher is the efficiency of the management. This
ratio can be calculated by dividing gross profit earned to total a number of employees
of the bank.
Gross profit per employees ratio = Gross profit / Total no of employees *
100
EARNINGS AND PROFITABILITY:
The rating reflects not only the quantity and trend in earning, but also the factors
that may affect the sustainability of earnings. Inadequate management may result in
loan losses and in return require higher loan allowance or pose high level of market
risks. The future performance in earning should be given equal or greater value than
past and present performance. A consistent profit not only builds the public
confidence in the bank but absorbs loan losses and provides sufficient provisions. It is
also necessary for a balanced financial structure and helps provide shareholder
reward. Thus consistently healthy earnings are essential to the sustainability of
banking institutions. Profitability ratios measure the ability of a company to generate
profits from revenue and assets. The ratio is Return on Net Worth, Operating Profit to
Average Working Fund Ratio, and Profit after Tax to Total Assets Ratio of banks.
 NET INTEREST MARGIN TO TOTAL ASSSETS RATIO:-
Net interest margin (NIM) is a measure of the difference between the interest
income generated by banks or other financial institutions and the amount of interest
paid out to their lenders (for example, deposits), relative to the amount of their
(interest-earning) assets. It is similar to the gross margin of non-financial companies.
It is usually expressed as a percentage of what the financial institution earns on loans
in a time period and other assets minus the interest paid on borrowed funds divided by
the average amount of the assets on which it earned income in that time period.
Net interest margin to total assets ratio = Net Interest Margin / Total Assets *
100
 INTEREST INCOME TO TOTAL INCOME RATIO:-

Bank’s interest income comes from various types of loans and advances granted
to individual and institutional borrowers. It is a basic source of revenue for bank. The
ratio shows the ability of the bank to interest on deposits low and interest on advance
high. It is an important measure of a bank core income. A higher spread indicates the
better earning given to total assets.
Interest to Total Income Ratio = Interest / Total Income * 100
 NON -INTEREST TO TOTAL INCOME RATIO:-
Fee based income accounts for major portion of bank other incomes. The bank
generates higher fee income through innovative products and adapting the technology
for sustained service levels. The higher ratio of non-interest income to total income
indicates the increasing portion of fee based income. This ratio measures the income
from operation other than lending as a percentage of total income.
Non- Interest to Total Income Ratio = Non- Interest / Total Income * 100
LIQUIDITY:
Liquidity sources compared to present and future needs, and availability of
assets readily convertible to cask without undue loss. The fund management practices
should ensure an institution is able to maintain a level of liquidity sufficient to meet
its financial obligations in a timely manner; and capable of quickly liquidating assets
with minimal loss. “The liquidity expresses the degree to which a bank is capable of
fulfilling its respective obligations”. An adequate liquidity position refers to a
situation, where institution can obtain sufficient funds, either by increasing liabilities
or by converting its assets quickly at a reasonable cost. It is, therefore, generally
assessed in terms of overall assets and liability management, as mismatching gives
rise to liquidity risk. In general, banks with a larger volume of liquid assets are
perceived safe, since these assets would allow banks to meet unexpected withdrawals.
The ratio is Government Securities to Total Investments Ratio and Government
Securities to Total Assets Ratio of banks.
 LIQUID ASSETS TO TOTAL ASSETS RATIO:-
Liquid assets to total assets ratio indicates the overall liquidity position of the
bank. This ratio is calculated by dividing liquid assets by the bank to total assets of
the bank.

Liquid Assets to Total Assets ratio = Liquid Assets / Total Assets *100
 G- SECURITIES TO TOTAL ASSETS RATIO:-
Government securities are liquid and safe investments. This ratio measure the
government securities as a securities as a proportion of total assets. Banks invest in
Government securities primarily to meet their statutory liquidity rate requirements
which are around 25% of net demand and time liabilities. This ratio measure the risk
involved in the asses held by the bank.
G-Securities to Total Assets Ratio = G-Securities / Total Assets * 100
 LIQUID ASSETS TO DEMAND DEPOSITS RATIO:-
The ratio measures the ability of a bank to meet the demand from deposits in a
particular year. Demand deposits offer high liquidity to the depositor and hence bank
has to invest these assets in a highly liquid form. This ratio can be calculated by
dividing liquid assets held by the bank to demand deposits of the bank.
Liquid Assets to Demand Deposits ratio = Liquid Assets / Demand Deposits *
100
 LIQUID ASSETS TO TOTAL DEPOSITS RATIO:-
The ratio measures the liquidity available to the depositors of a bank. It indicated
the capacity of the bank to pay out the deposits when claimed by the depositors. The
ratio can be calculates by dividing liquid assets held by the bank to total of deposits
that bank is liable to pay out to its depositors.
Liquid Assets to Total Deposits Ratio = Liquid Assets / Total Deposits * 100
 RETURN ON NET WORTH RATIO:-
The ratio is of the most important ratios used for measuring the overall efficiency.
It reveals how well the resources of a firm are being utilized. Higher the ratio, better
are the result. The ratio can be calculated by dividing net profit earned by the bank to
net worth of the ratio.
Return on Net worth Ratio = Net Profit / Net worth * 100
ARITHMETIC MEAN

Arithmetic mean is commonly called as average .Mean or Average is defined
as the sum of all the given elements divided by the total num
Mean = sum of elements / number of elements = a1+a2+a3+.....+an/n
CORRELATION
Pearson's correlation coefficient between two variables is defined as the
covariance of the two variables divided by the product of their
The form of the definition involves a "product moment", that is, the mean (the first
moment about the origin) of the product of the mean
hence the modifier product
when applied to a sample is commonly represented by the letter
to as the sample correlation coefficient
We can obtain a formula for
variances based on a sample
STANDARD DEVIATION
The standard deviation is a numerical value used to indicate how widely
individuals in a group vary. If individual observations vary greatly from the group
mean, the standard deviation is big; and vice versa. It is important to distinguish
between the standard deviation of a population and the standard deviation of a sample.
They have different notation, and they are computed differently. The standard
deviation of a population is denoted by σ and the standard deviation of a sample, by
The standard deviation of a population is defined by the following formula:
where σ is the population standard deviation, X is the population mean, X
the ith element from the population, and N is the number of elements in the
population.
as the sum of all the given elements divided by the total number of elements.
of the two variables divided by the product of their standard deviations
bout the origin) of the product of the mean-adjusted random variables;
product-moment in the name. Pearson's correlation coefficient
when applied to a sample is commonly represented by the letter r and may be referred
rrelation coefficient or the sample Pearson correlation coefficient
We can obtain a formula for r by substituting estimates of the covariance and
mple into the formula above. That formula for r is:
STANDARD DEVIATION
dard deviation of a population and the standard deviation of a sample.
deviation of a population is denoted by σ and the standard deviation of a sample, by
ion of a population is defined by the following formula:
σ = √ [ Σ ( Xi - X )2
/ N ]
where σ is the population standard deviation, X is the population mean, X
th element from the population, and N is the number of elements in the
ber of elements.
standard deviations.
adjusted random variables;
Pearson's correlation coefficient
and may be referred
sample Pearson correlation coefficient.
by substituting estimates of the covariance and
is:
dard deviation of a population and the standard deviation of a sample.
deviation of a population is denoted by σ and the standard deviation of a sample, by s.
ion of a population is defined by the following formula:
where σ is the population standard deviation, X is the population mean, Xi is
th element from the population, and N is the number of elements in the

The standard deviation of a sample is defined by slightly different formula:
s = √ [ Σ ( xi - x )2
/ ( n - 1 ) ]
where s is the sample standard deviation, x is the sample mean, xi is the ith
element from the sample, and n is the number of elements in the sample. Using this
equation, the standard deviation of the sample is an unbiased estimate of the standard
deviation of the population. And finally, the standard deviation is equal to the square
root of the variance.

A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT BANK

A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT BANK

Recommended

Recommended

More Related Content

Similar to A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT BANK

Similar to A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT BANK (20)

More from Andrea Porter

More from Andrea Porter (20)

Recently uploaded

Recently uploaded (20)

A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT BANK