Comparative Performance Evaluation Of Selected Public And Private Sector Banks: CAMELS Model Approach In Indian Context - A Longitudinal Study

Abstract

The CAMELS model is highly effective, efficient, and accurate as a tool for evaluating performance and anticipating future risks in the banking industry. It focuses on key financial performance indicators, including Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity. The main objective of this study is to compare the performance of private and public sector banks based on CAMELS parameters. The research examines the financial performance of Indian banks from 2011-12 to 2020-21, focusing on two private sector banks (Kotak Mahindra Bank and ICICI Bank) and two public sector banks (State Bank of India and Canara Bank). The study's CAMELS rating results show that Kotak Mahindra Bank, a private sector bank, ranked first overall, followed by ICICI Bank and SBI in second and third place, respectively, with Canara Bank ranking last. Hypothesis testing indicates that there is no significant difference between the performance of public and private sector banks in the Indian banking sector. The study's outcomes are expected to provide valuable insights for regulatory authorities in designing appropriate policies for the banking industry.