Evaluation Performance of New Private Sector Banks:An Applicaton of Camel Model

In this study CAMEL rating system has been adopted for measuring overall health and financial status of new private sector Banks. The CAMEL rating system provides a means to categorize Banks, based on the overall health, financial status and measurement of financial, managerial, operational and complying performance. Under CAMEL rating system, Banks are rated based on the performance in five areas namely, Capital adequacy (C), Assets Quality (A), Management Efficiency (M), Earnings Quality (E) and Liquidity (L). From the analysis, it can be concluded that the new Private sector Banks have succeeded in maintaining capital adequacy ratio at higher level than the prescribed level (i.e. more than 12 percent) during the study period. The asset quality ratios have registered a declining trend. Thus it indicates for improvement in the asset quality position of new Private sector banks during the periods. The management efficiency ratio has registered trend during the study period. This shows the average earning per employee ratio of Rs.9.574 lac per employee. The earning quality measured in terms of ratio of operating profit to average working fund and net profit to average assets shows that Private Banks have outperformed new Private sector banks during the study period. The liquidity ratio indicated better liquidity position of new Private sector banks during the study period.