Page 41 - Banking Finance October 2015

ARTICLE

0.71 to 1.04 over a period under observation. Best and wise
portfolio selection will yield better returns. But in case of
SBI, it is restricted by RBI's and Central Government policies.

CAMEL Model:-

RBI has introduced a rating methodology technique to
judge the financial viability of banks is known as CAMEL
(Capital adequacy, Asset Quality, Management
performance, Earning performance, Liquidity) Model.
CAMEL model also can be used by making use of the publicly
available accounting data. The operational and financial
performance of SBI is reflected through CAMEL model.

Table. 4. CAMEL MODEL

Operational and Effect on in Mean CAMEL MODEL
Financial indicators
Improvement Value The components of CAMEL model depicts in the following
figures;
SBI's Performance
Fig.1 Capital adequacy Ratio
1. Capital Adequacy Decrease 13.3
Ratio
a) CRAR

2. Asset Quality Ratio

a) ROA Decrease 0.9
1.81
b) NPA to Net advance Increase

3. Management

Performance Ratio

a) Business per Increase 72

employee 122
142
b) Profit per employee Increase

c) Operating cost to Increase

total income

4. Earning Performance

Ratio

a) ROE Decrease 14.08
10.2
b) Net Profit Margin Decrease 2.9

c) Spread to Total Increase 2.94

assets

d) Net interest margin Increase

5. Liquidity Management Increase 80.6
Ratio Decrease 82.9
a) CD Ratio
b) Investment to Total
Deposit

BANKING FINANCE | OCTOBER | 2015 | 41

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