Minor Project Report

On

“The Analysis of Financial Performance of State Bank of India

Using CAMEL Approach”

Submitted Toward the Partial Fulfillment of the Requirement for

the Award of the Degree of

Bachelors of Commerce

Under the Guidance of

Kapil Ajay Panjwani
Assistant Professor
Submitted To Submitted By
Dr. Shiva Manoj Name : Amrita Kumari
Associate Professor Class : B.Com VI
Lal Bahadur Shastri Girls Roll No. : 2111952010002
College of Management Batch : 2021-24
Lal Bahadur Shastri Girls College of Management
University of Lucknow

1
 LAL BAHADUR SHASTRI GIRLS COLLEGE OF MANAGEMENT

CERTIFICATE

This is to certify that Ms. Amrita Kumari student of B. Com VI Semester

has done her minor project under my guidance as a part of B. Com
programme of Lucknow University. She did a good job.

Date:___________

Signature :
Kapil Ajay Panjwani

2
 ACKNOWLEDGEMENT
I would want to convey my heartfelt gratitude to Mr. Kapil Panjwani my mentor, for his
invaluable advice and assistance in completing my project on the topic “A Performance
Financial Analysis of STATE BANK OF INDIA using CAMEL approach”. He was there to
assist me every step of the way and enabled me to accomplish my task effectively. I would
also like to thank all of the other supporting personnel who assisted me by supplying the
equipment that was essential and vital, without which I would not have been able to perform
efficiently on this project.

Amrita Kumari

3
 DECLARATION

I am AMRITA KUMARI B.COM 6TH semester student at LAL BAHADUR SHASTRI

GIRLS COLLEGE OF MANAGEMENT, BAJARANG BIHAR, LUCKNOW hereby declare
that this project report entitled with “ANALYSIS OF FINANCIAL PERFORMANCE OF
STATE BANK OF INDIA USING CAMEL APPROACH” is submitted to ‘LUCKNOW
UNIVERSITY’ complete fulfillment for the requirement of the award of the degree of
BACHELOR OF COMMERCE (B.COM), the project is benefited work prepared by me
under the guidance of Mr. Kapil Ajay Panjwani. The findings and suggestions of this report
are based on the information find by me during the study period.
To the best of my knowledge and belief, the matter presented in this report has not been
submitted previously in part or full to any university for the award of any degree.

Amrita Kumari

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 Content

S.No. Topic Page

No.

1. Chapter – I: Introduction – Bank 6-33

2. Chapter – II :Literature Review 34-35

3. Chapter – III : Objectives of study 36

4. Chapter – IV : Research and Methodology 37-54

5. Findings & Discussion 55-56

6. Conclusion 57-58

7. References 59

8. Annexure 60

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CHAPTER:I

Introduction

Bank

As a financial services provider, banks provide a safe place to store your cash. As such, they
play a vital role in the economy by providing essential services both to consumers and
businesses. The economy relies heavily on banks. Bank definition goes to a financial
institution authorized to accept deposits and provide credits.

History of Indian Banking Industry:

In India, as early as the Vedic period, Banking is most crude from existed. The book Manu
contains references regarding deposits, pledges, policy of loans and rate of interests. The
banking in those days largely meant money lending. The complicated modern banking
mechanisms were not known to them.
During the days of the East India Company, it was the turn of the agency houses to carry on
the banking business. After that different banks were established. Formation of and
declination of Indian banks with the passages of time is as follow.1786-The General Bank of
India was first joint Stock bank to be established. The others, which followed, were Bank of
Hindustan and the Bengal Bank. The Bank of Hindustan is reported to have continued till
1906 while the other two failed in the meantime. In the first half of the 19th century the East
India Company established three banks. The Bank of Bengal in 1809, the Bank of Bombay in
1840 and the Bank of Madras in 1843.These three banks were amalgamated in 1920 and a
new bank, the Imperial Bank of India was established on 27 January 1921. With the passing
of the State Bank of India Act in 1955, the undertaking of the Imperial Bank of India was
taken over by the newly constituted State Bank of India. The Reserve Bank, which is the
Central Bank, was created in 1935 by passing Reserve Bank of India Act, 1934.Originally, a
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shareholder’s bank, it was nationalized in 1948. It is entrusted with all the powers and
functions, which modern central banks have: Some of these are derived from the RBI Act,
1934.

When it was passed in 1949, it was known as the Banking Companies Act as it was
applicable only to joint stock banking companies. RBI had undertaken an exercise to merge
weak banks to strong banks and the total number of banks thus reduced from 566 in 1951 to
85 in 1969 with the objectives of reaching out to masses and meeting the credit needs of all
sections of people, the government nationalized 14 large banks in 1969 followed by another 6
banks in 1980.This period saw enormous growth in the number of branches and the banks’
branch network became wide enough to reach the weakest sections of the society in a vast
country like India.

Functions of banks
 Primary Functions
 Accepting Deposits: Collecting the public funds, providing safety to the savings, and
giving interest on the savings are the basic but the most important functions of
commercial banks. There are some different types of deposits that are accepted by the
banks:
 Saving Deposits
 Fixed Deposits
 Current Deposits
 Recurring Deposits
 Granting of Loans and Advances: After accepting the public deposits, banks grant loans
and advances to businesses and individuals and charge a higher interest rate on the
amount. The bank earns money from the surplus of interest on loans over interest on
deposits. The banks provide the following sorts of loans and advances:
 Cash Credits
 Bank Overdraft
 Loans
 Discounting the Bill of Exchange

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 Secondary Functions
 Agency Functions: The banks perform the following functions as the agent of the
customers:
 Collecting money from the cheques.
 Collecting salary, dividend, pension, and other periodic collections.
 Transferring of funds
Banks manage the customers' portfolio of credits and debits of account and purchase and sell
of the shares and debentures.
Other than this, the bank also serves as a trustee, advisor, executor, administrator, etc.
 Utility Functions: The banks' utility functions include:
 Providing lockers facility for the safety of important papers and other valuable things.
 Underwriting of debentures and shares.
 Using traveler's cheque, letters of credit, etc.
 Dealing in foreign exchange.
 Programs for social welfare
Types of banks

Banks are classified into classified into four categories –

 Commercial Banks
 Small Finance Banks
 Payments Banks

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  Co-operative Banks

 Central Bank: The central bank works at the highest position in controlling the financial
system of a country. In India, this role of regulating the entire financial sector is played
by the Reserve Bank of India (RBI). Some of its functions are:

 Issuing currency
 Guiding all the other banks
 Implementing the monetary policies in the country
 Supervising the country's financial system

 Cooperative Banks: The cooperative banks work under the control and regulation of
the state government's act. Their main motive is to providing short-term credit to the
farmers at a low rate of interest. Their main aim is social welfare. They have three
levels:

 State Level -State Co-operative Banks

 District Level - District Cooperative Banks
 Village Level - Primary Agriculture Co-operative Banks

 Regional Rural Banks (RRB): These banks work for the welfare of the rural and
agricultural sector by providing them concessional credit. They are owned under the

9
 Regional Rural Bank Act, 1976. An RRB can have its branches maximum in three
districts. Examples of these banks include:

 J&K Grameen Bank,

 Purvanchal Bank,
 UtkalGramin Bank,
 Nagaland Rural Bank, etc.

 Local Area Banks (LAB): These banks were introduced in 1996 and are controlled by the
private sector. As a result, their primary goal is to make money. These institutions are
governed by the Companies Act of 1956. These banks are of four types:

 Coastal
 Capital
 Krishna Bhima Samruddhi
 Subhadra Local Area Bank Ltd.

 Specialized Banks: These banks are only for some particular purposes. They include:

 NABARD (National Bank for Agricultural and Rural Development)

 SIDBI (Small Industries Development Bank of India)
 EXIM (Export and Import) Bank

 Small Finance Banks: Small farmers, micro businesses, and unorganized elements of
society are served by these institutions to give loans and financial help to them. The
central government controls these banks. They include:

 AU Small Finance Bank,

 Northeast Small Finance Bank,
 Utkarsh Small Bank,
 Capital Small Finance Bank, etc.

 Payments Banks: These are a newly introduced form of the bank in India. The maximum
limit of deposits in these banks is Rs. 1, 00,000. The depositor of these banks can't opt
for credit cards and loans. But online banking and debit cards are available. Examples of
these banks include:

 Airtel Payments Bank

 JioPayments Bank
 Paytm Payments Bank
 NSDL Payments Bank

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 Commercial Banks
The term “commercial bank” refers to a financial institution that accepts deposits, offers
checking account services, makes various loans, and offers basic financial products like
certificates of deposit (CDs) and savings accounts to individuals and small businesses. A
commercial bank is where most people do their banking.
These banks are regulated under the Banking Companies Act of 1956. The main motive of
commercial banks is to earn a profit. Their prime source of funds is public deposits. These
banks are divided into:
 Private Sector Banks: With a controlling shareholding in these banks, the government
owns them. For example, State Bank of India, Allahabad Bank, Bank of Baroda, Indian
Bank, etc.
 Public Sector Banks: These banks are owned by individuals, groups of individuals, or
private organizations with the majority stakes. For example, Axis Bank, ICICI Bank,
HDFC Bank, Kotak Mahindra Bank, etc.

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 Foreign Sector Banks: The banks which are based in other countries but have branches in
India are termed as foreign banks. For example, CITI Bank, United Overseas Bank,
Deutsche Bank, National Australia Bank, etc.

State Bank of India

History of State Bank of India The State Bank of India is in over a hundred nations
and operates internationally. The financial institution's headquarters are in Mumbai, an
Indian city. The Bank of Calcutta, India's first commercial bank, was established in 1806
and renamed the State Bank of India (SBI). After receiving its royal charter, the Bank of
Bengal underwent a rebranding process and gained a new name after three years of existence.
When it was established in 1840, the Bank of Bombay was the first financial institution to
be designated as a presidential bank. The second presidential bank to be established was the
Bank of Madras, founded in 1843. The Bank of Bombay was the first and most prolonged of
the three banks founded by the provincial government and business partners. It was the bank's
lengthy history that made it unique (Hashim, Faisal, Khan, & Humanities, 2022). The
Imperial Bank of India (IBI) was established in 1921 to merge the country's presidential
banks. Since its founding, IBI has come a long way and is now widely considered India's
most successful commercial bank. A single company owned IBI, but the Indian government
and Reserve Bank of India gave the impression that it was held by two firms in 1955.
(founded in 1935). It was chosen to name the bank "the State Bank of India" to provide the
appearance of a single owner rather than the phony dual ownership. The State Bank of India
has made great efforts since the government took control of it to encourage the growth of
rural businesses and microcredit programs, both of which have been tremendously helpful
to the Indian economy. These initiatives have persisted even after the government took
control of the bank. It has also given loans to the government and given money to businesses
in the agricultural and industrial sectors.

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State Bank of India (SBI) a Fortune 500 company, is an Indian Multinational, Public Sector
Banking and Financial services statutory body headquartered in Mumbai. The rich heritage
and legacy of over 200 years, accredits SBI as the most trusted Bank by Indians through
generations.
ABOUT COMPANY
SBI, the largest Indian Bank with 1/4th market share, serves over 48 crore customers through
its vast network of over 22,405 branches, 65,627 ATMs/ADWMs, 76,089 BC outlets, with an
undeterred focus on innovation, and customer centricity, which stems from the core values of
the Bank - Service, Transparency, Ethics, Politeness and Sustainability. The Bank has
successfully diversified businesses through its various subsidiaries i.e. SBI General Insurance,
SBI Life Insurance, SBI Mutual Fund, SBI Card, etc. It has spread its presence globally and
operates across time zones through 235 offices in 29 foreign countries. Growing with times,
SBI continues to redefine banking in India, as it aims to offer responsible and sustainable
Banking solutions.
VISION, MISSION, VALUES

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Evolution Of SBI
The origin of the State Bank of India goes back to the first decade of the nineteenth century
with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later
the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A
unique institution, it was the first joint-stock bank of British India sponsored by the
Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1
July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern
banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into existence either as a
result of the compulsions of imperial finance or by the felt needs of local European
commerce and were not imposed from outside in an arbitrary manner to modernize India's
economy. Their evolution was, however, shaped by ideas culled from similar developments
in Europe and England, and was influenced by changes occurring in the structure of both the
local trading environment and those in the relations of the Indian economy to the economy of
Europe and the global economic framework.

Awards
 SBI honoured with India’s Best Annual Report Awards-2022 by Free Press Journal.
 SBI honoured with three Gold Awards at ET Human Capital Awards
o HR Leader of the Year - Large Scale Organisations
o Excellence in Business Continuity Planning & Management
o Most Valuable Employer During COVID-19
 SBI won two Awards from NASSCOM -DSCI
o Best Security Operations Centre of the Year
o Cyber Security Awareness
 Gold & Silver awards in The ET HR World Future Skill Awards
 SBI awarded “Issuer of the Year - Private Placement” at the 5th National Summit &
Awards on Corporate Bond Market 2022 by ASSOCHAM
 SBI won Gold category in Public Sector Bank in Outlook Money Awards 2022.

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Shri Dinesh Kumar Khara, Chairman Shri C.S. Setty Managing Director

Shri Ashwini Kumar Tewari Managing Director Shri Alok Kumar Choudhary Managing
Director

Shri Vinay M Tonse Managing Director Dr Vivek Joshi Director

15
Shri Ajay Kumar Director CA Ketan S Vikamsey Director

Shri Mrugank M Paranjape Director Shri Rajesh Kumar Dubey Director

CA Dharmendra Singh Shekhawat CA Prafulla P Chhajed Director

Director

16
 Smt. Swati Gupta Director

BOARD OF DIRECTORS

S.No. Name Designation Under Section of SBI Act, 1955

1. Shri Dinesh Kumar khare Chairman 19(a)

2. Shri C.S. Setty Managing Director 19(b)
3. Shri Ashwin Kumar Tewari Managing Director 19(b)
4. Shri Alok Kumar Chaudhary Managing Director 19(b)

5. Shri Vinay M Tonse Managing Director 19(b)

6. CA Ketan S Vekamsey Directors 19(c)
7. Shri Mrugank M Paranjape Directors 19(c)
8. Shri Rajesh Kumar Dubey Directors 19(c)
9. CA Dharmendra Singh Shekhawat Directors 19(c)

10 CA Prafulla P Chhajed Directors 19(d)

11. Smt. Swati Gupta Directors 19(d)

12. Dr. Vivek Joshi Directors 19(e)

13. Shri Ajay Kumar Directors 19(f)

Subsidiaries/Joint Ventures
1.SBI LIFE INSURANCE COMPANY LIMITED (SBI-LIFE)
SBI Life Insurance , one of the most trusted life insurance companies in India, was
incorporated in October 2000 and was registered with the Insurance Regulatory and

17
Development Authority of India (IRDAI) in March 2001. Serving millions of families across
India, SBI Life’s diverse range of products caters to individuals as well as group customers
through Protection, Pension, Savings and Health solutions. Driven by ‘Customer-First’
approach, SBI Life places great emphasis on maintaining world class operating efficiency
and providing hassle-free claim settlement experience to its customers by following high
ethical standards of service. Additionally, SBI Life is committed to enhance digital
experiences for its customers, distributors, and employees alike.
2.SBI GENERAL INSURANCE COMPANY LIMITED (SBI GENERAL)
SBI General is one of the fastest growing private general insurance companies, with the
strong parentage of SBI. We, at SBI General Insurance, are committed to carry forward the
legacy of trust and security and have a vision to become the most trusted general insurer for a
transforming India. Ever since our establishment in 2009, our growth has been exponential in
various aspects. We have expanded our presence from 17 branches in 2011 to over 139
branches pan-India. Till date, we have served over 10 crores customers. We have been
awarded ‘Insurer of the Year’ in the non-life category at FICCI Insurance Industry Awards,
for two consecutive years in 2020 & 2021. In 2022, recognized as the 'Best General Insurance
Company of the Year' at the 'Third Emerging Asia Insurance Awards' organized by the
'Indian Chamber of Commerce'.We have a robust multi-distribution model encompassing
Bancassurance, Agency, Broking, Retail Direct Channels and Digital tie-ups. The widespread
network of distributors like 22000 plus SBI branches, Agents, other financial alliances,
OEMs, and multiple digital partners enable us to extend our reach to the pocketed remote
areas of India. We offer a bouquet of products spread across various lines of businesses that
cater to customers across all segments like Retail, Corporate, SME and Rural, ensuring
accessibility via i.e., digital as well as physical modes.
SBI General Insurance reported a 11% growth in Gross Written Premium (GWP) in FY
2021-22 and the GWP stood at INR 9260 crore. With the increasing need of health insurance,
we have a very channelized strategy for health insurance business, which has reflected in
50% growth in health insurance GWP for the FY2021-22.
3.SBI CARDS AND PAYMENT SERVICES LIMITED (SBICPSL)
SBI Cards and Payment Services Limited (SBICPSL) is a subsidiary of State Bank of India.
SBI Cards and Payment Services Limited (“SBI Card”) is a non-banking financial company
and is India’s largest pure play credit card issuer with a base of over 15.5 million cards in
force, as of December 2022. SBI Card offers extensive credit card portfolio to individual
cardholders and corporate clients which includes lifestyle, rewards, travel & fuel, and
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banking partnership cards along with corporate cards, covering all major cardholders’
segments in terms of income profile and lifestyle. The company has diversified customer
acquisition network that enables it to engage prospective customers across multiple channels.
4.SBI FUNDS MANAGEMENT LIMITED(SBIFML)
With 35 years of rich experience in fund management, we at SBI Funds Management Ltd.
(SBIFML) bring forward our expertise by consistently delivering value to our investors. We
have a strong and proud lineage that traces back to the State Bank of India (SBI) - India's
largest bank. We are a Joint Venture between SBI and AMUNDI (France), one of the world's
leading fund management companies. Our aim is to offer diversified asset management
solutions and help our varied base of investors achieve their financial goals.
5.SBI CAPITAL MARKETS LIMITED ( SBICAPS)
SBICAPS is India’s leading investment banker, offering a bouquet of investment banking and
corporate advisory services to diversified clients across three product groups - Project
Advisory and Structured Finance, Equity Capital Markets and Debt Capital Markets. These
services include Project Advisory, Loan Syndication, Structured Debt Placement, Mergers
and Acquisitions, Private Equity, Restructuring Advisory, ESG Advisory,
Stressed Assets Resolution, IPO, FPO, Rights Issues, Debt, Hybrid Capital raising, InvIT
advisory, REIT advisory and COC advisory (Committee of Creditors).
6. SBICAP Securities Ltd (SSL)
SSL, a wholly owned subsidiary of SBI Capital Markets Ltd, is the retail broking arm of the
SBI Group. SSL offers its customers a variety of products and services to choose from – such
as Equity, Derivatives, Mutual Funds, Insurance Products, Corporate FDs etc. through state
of art trading platform on mobile app, website and through dealer terminal. SSL is also a
captive sourcing arm of the State Bank of India for sourcing Home Loan and Auto Loan
business.
7. SBICAP Ventures Limited (SVL)
SVL is SBI’s Asset Management Arm handling alternate investments and one of India’s
fastest growing asset managers in this space. Set up in year 2005, SVL is a wholly owned
subsidiary of SBI Capital Markets Limited. SVL currently manages 3 Alternate Investment
Funds (AIF) with aggregate committed capital of INR 17,500 crores. SVL has a successful
track record of investing pan-India in stressed residential real estate and MSME sector
including renewable energy, waste management and climate related investments. SVL is also
fund manager to three Fund of Funds with target corpus of INR 15,000 crores with principal
focus on MSME sector. Major global investment partners of SVL includes Foreign and
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Commonwealth Development Organization (FCDO) of UK Government, European
Investment Bank (EIB) and Japan International Cooperation Agency (JICA).
8. SBICAP TRUSTEE COMPANY LIMITED (STCL)
STCL is a wholly owned subsidiary of SBI Capital Markets Limited (SBICAP) which in turn
is a wholly owned subsidiary of State Bank of India (SBI). STCL is registered with Securities
and Exchange Board of India (SEBI) to act as a Debenture Trustee. It offers a whole bouquet
of services viz. Security Trusteeship, Debenture Trusteeship, Alternate Investment Fund
Trusteeship, Share Pledge Trusteeship, Escrow Trusteeship, Facilitator for the execution of
Will, Safe Keeper, Virtual Data Room Services, Facility Agent, etc
It is guided by the principle of Long-Term Relationship, Fairness & Transparency in all
transactions and Customer Delight. Customer Satisfaction is our main motto which is
achieved with Professional Competence and leveraging digital technology.
9. SBI SG GLOBAL SECURITIES SERVICES PRIVATE LIMITED (SBI-SG)
SBI-SG, a joint venture between State Bank of India (SBI) and Société Générale (SG) with
65% holding by SBI. The Company was set up to offer high quality custodial and fund
accounting services to domestic and foreign institutional investors supplemented by the
bouquet of premier banking services of SBI. SBI- SG commenced commercial operations in
2010. It is among the top 5 Custodians and among the top 2 in Fund Accounting services in
India. SBISG is ISO 9001 : ISO 27001 certified and has been acclaimed for its services. SBI-
SG has also won the coveted Award in Global Custodian Mutual Fund Administration
Survey 2022 and has been recognized as Category Outperformer & Global Outperformer at
Agent Banks in Emerging Markets (ABEM) 2022, for Custody services.
10.SBI DFHI LIMITED (SBI DFHI)
SBI DFHI Limited is one of the largest standalone Primary Dealers (PD) with a pan India
presence. As a Primary Dealer (PD) it is mandated to support the book building process in
primary auctions and provide depth and liquidity to secondary markets in G-Sec. Besides
Government securities, it also deals in money market instruments, non-G-Sec debt
instruments, amongst others. As a PD, its business activities are regulated by RBI.
11. SBI Payment Services Pvt Ltd. (SBI Payments)
SBI Payment Services Pvt. Ltd. (SBI Payments) SBI became the first public sector bank to
form an exclusive Joint Venture i.e., SBI Payments for merchant acquiring business and
holds 74% stake in the company. SBI Payments is one of the largest acquirers of the country
with presence across more than 5000 centers PAN India. The objective is to create a state-of-
the-art acceptance ecosystem in all geographies of the country and enable the merchants to
20
accept payments digitally through various form factors such as PoS, Bharat QR, BHIM-
Aadhaar, NETC, Soft PoS etc.
12. SBI GLOBAL FACTORS LIMITED (SBIGFL)
SBIGFL is a leading provider of factoring services for domestic and international trade. It is a
wholly owned subsidiary of State Bank of India. The Company’s services are especially
suitable for MSME clients for freeing up resources locked in book debts. The Company is
actively participating in bidding on the TReDS platforms. By virtue of its membership of
Factors Chain International (FCI), the Company can ameliorate credit risk from export
receivables under the 2-factor model.
13. SBIPENSION FUNDS PRIVATE LIMITED
SBIPFPL has been appointed as the Pension Fund Manager (PFM) along with 9 (Nine) others
to manage the pension corpus under National Pension System (NPS). SBIPFPL is one of the
3 (three) PFMs appointed by the Pension Fund Regulatory & Development Authority
(PFRDA) for management of Pension Funds under the NPS for Central Government (except
Armed Forces) and State Government employees and one of the 10 (Ten) PFMs appointed
for management of Pension Funds under the Private Sector.
14. STATE BANK OPERATIONS SUPPORT SERVICES PVT. LTD. (SBOSS)
State Bank Operations Support Services Pvt Ltd (SBOSS) is a wholly owned subsidiary of
SBI set up in July 2022 , for providing operations support services at RUSU branches of SBI.
The company has its Registered Office at New Delhi. The company has developed a robust
Pan India “High Tech”, “High Touch” and “Low Cost” model for providing
multidimensional support to operations in Agri & SME segments. It has adopted appropriate
technologies to provide doorstep services to customers / borrowers of the Bank in RUSU
areas. It facilitates greater Financial Inclusion through appropriate credit linkages for meeting
our national development goals.

SBI Services
Doorstep Banking (DSB) Services
The following Doorstep Banking Services are available at select branches w.e.f. 05.01.2018
 Cash pickup.
 Cash delivery.
 Cheque pickup
 Cheque requisition Slip pickup.

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 Form 15H pickup.
 Delivery of Drafts.
 Delivery of Term Deposit Advice Delivery of Term Deposit Advice.
 Life Certificate Pickup.
 KYC documents pickup.
Salient Features of the Scheme:
 Registration done at the Home Branch.
 Requests for Doorstep Banking Services should be made only at the Home Branch till
such time development at Contact Centre is completed.
 The amount of cash withdrawal and cash deposit is restricted to Rs 20,000/-per
transaction per day.
 Service charges per visit for Non-financial transactions is Rs 60/+GST and Rs100+GST
for financial transactions.
 Withdrawal will be permitted using cheque / withdrawal form with Passbook.
 The service delivery would be completed on best effort basis.
Eligibility
 Senior Citizens of more than 70 years of age and differently abled or infirm Persons
(Having medically certified chronic illness or disability) including those who are visually
impaired.
 Fully KYC compliant account holders.
 Valid Mobile Number should be registered with the account.
 Single account holders and Joint Account Holders with Either or Survivor/ Former or
Survivor.
 Not available for:
 Accounts operated jointly.
 Minor Accounts.
 Accounts of Non-Personal nature.
 Customers having registered address within a radius of 5 KMs from the Home Branch.
 Doorstep Terms & Conditions
Salient Features of DSB Services
 Application form and T&C for Registration
 Declaration cum Undertaking cum self Certification by Customer

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 PUBLIC SECTOR V/S PRIVATE SECTOR BANKS

Basis Public Sector Bank Private Sector Bank

Meaning The banks whose majority of stakes are held by The banks whose stakes are held by private
the state or central government are known as companies or maybe by an individual are
Public Sector Banks. known as Private Sector Banks.
Governing Public sector banks are formed by passing an act Private sector banks are registered under the
Act or Law
in the parliament. Indian Companies Act.
Controlling Public sector banks are controlled by the Private sector banks are controlled by
Authority
government. companies or an individual.
Shareholding More than 50% of the shareholding of public The majority shareholding of private sector
Pattern
sector banks lies with the government (state or banks lies with private companies or
central). individuals.
No. of Banks There are 12 public sector banks in India. There are 21 private sector banks in India.
Regulatory The Reserve Bank of India issues rules, The Reserve Bank of India issues rules,
Body
regulations, guidelines, and directions for the regulations, guidelines, and directions for the
public sector banks under the Reserve Bank of private sector banks
India Act, 1934.
Customer The customer base of public sector banks is high The customer base of private sector banks is
Base
comparatively low.
Interest Rate In public sector banks, the interest rate on In private sector banks, the interest rate on
savings is less and the interest rate on loans is savings is high; however, the interest rate on
high loans is low.
Job Security There is high job security in public sector banks. There is less job security in private sector
banks.
Trustworthy Public Sector Banks are more trustworthy than Private sector banks are less trustworthy.
private sector banks as they are governed by the
government.
Share in Private sector banks hold only 19.7% of the
Banking
Public Sector banks hold 72.9% of the total total market share in India’s banking system
Industry
market share in India’s banking system.

Foreign Public sector banks allow 20% Foreign Direct Private sector banks allow 74% Foreign

23
Direct Investment Direct Investment only if there is no change
Investment
in the control and management. Besides,
according to RBI regulations, a single
organisation or an individual cannot invest
more than 10% stake in a bank.
Pension Pension is provided to public sector bank No concept of pension is there for private
employees. sector bank employees.
Example Public sector banks include State Bank of India, Private sector banks include ICICI Bank,
Union Bank of India, Indian Bank, and Punjab HDFC Bank, Axis Bank, and Karnataka
National Bank. Bank.

Camel Approach
CAMEL is a widely used approach to analyze a bank. In this context, a bank is an entity that
primarily takes deposits and makes loans. “CAMELS” has six components which include:
Capital adequacy, Asset quality, Management capabilities, Earnings sufficiency, Liquidity
position, and Sensitivity to market risk.
An analyst using this approach to examine a bank undertakes analysis and assigns a
numerical rating of 1 through 5 to each component. A rating of 1 is the best rating. It shows
the best practices in risk management and performance and generating the least concern for
regulators. In contrast, a rating of 5 is the worst rating. It shows the weakest performance and
risk management practices. Besides, it generates the highest degree of regulatory concern.
The analyst then constructs a composite rating for the entire bank from the component ratings.
Here are the components of the rating:

1.Capital Adequacy
Capital adequacy is a vital requirement for banks to have adequate capital so that potential
losses can be absorbed without making the bank become financially weak or insolvent. It
represents the overall financial position of the bank. Capital adequacy is expressed in terms
of the proportion of the bank’s assets funded with capital. Generally,
Capital adequacy=Equity Capital/Total assets
These assets are adjusted based on their risk, with riskier assets requiring a higher weighting.
Cash has a risk weighting of zero, whereas corporate loans have a risk weighting of 100%.

24
Loans on high volatility commercial real estate and loans that are 90 days past due have a
weighting higher than 100%.

A bank’s capital is classified into hierarchical tiers, with the most vital tier as Common
Equity Tier 1 Capital. This is the most loss-absorbing form of capital because it is permanent
and places shareholders’ funds at risk of loss in the event of insolvency. It includes common
stock, retained earnings, accumulated other comprehensive income and adjustments such as
deduction of intangible assets, and deferred tax assets.
On the other hand, Tier 2 Capital includes instruments that are subordinate to depositors and
general creditors of the bank. Also, these instruments have an original minimum maturity and
meet specific other requirements. The minimum capital requirements outlined in Basel III are
as follows:
 Minimum Common Tier 1 Capital of 4.5% of RWAs.
 Minimum total Tier 1 Capital of 6.0% of RWAs.
 Minimum total Capital (Tier 1 Capital plus Tier 2 Capital) of 8.0% of RWAs.

25
a) Capital to Risk-weighted Assets Ratio (CRAR)
This ratio ensures that banks can hold a reasonable amount of losses occurring during
operations and to ascertain the bank’s loss-bearing capacity. Higher CRAR is indicative of
stronger banks and more protection to investors. CRAR is computed by dividing Tier I and
Tier II capital with Weighted Risk Assets.

26
b) Debt-Equity Ratio
The debt-equity ratio indicates the degree of a bank’s leverage. It expresses the
proportion of debt and equity in the total fund structure of the bank. It is computed by
dividing the total borrowings of the bank by shareholders’ equity. Shareholders’
equity, in this case, encompasses equity share capital and reserves, and surpluses. A
higher ratio indicates that the depositors and creditors are less protected and vice
versa.

c) Government Securities to Total Investments Ratio

This ratio reflects the risk associated with the bank’s investments. It is equal to the
investment in government securities divided by the total investment of banks. Government
securities are risk-free debt instruments, which means that they are the most secure. The
higher the investment in government securities, the lower the risk, and vice versa.

2. Asset Quality
The quality of assets is a significant aspect to assess the degree of the financial strength of a
bank. Asset quality applies to the amount of existing and potential credit risk associated with
the bank’s financial assets. Loans and investments in securities issued by other entities form
the bank assets. The asset quality for loans, which are the significant bank assets, depends on
the borrowers’ creditworthiness and the corresponding adequacy of adjustments for expected
loan losses. Loans are measured at amortized cost and are reported on the balance sheet net of
allowances for loan losses.
In contrast, the accounting treatment for investments in securities differs between IFRS and
US GAAP. Under IFRS, financial assets are classified into three categories depending on the
company’s business model for managing the asset and on the contractual cash flows of the

27
asset. The three categories are: (1) measured at amortized cost (2) measured at fair value
through other comprehensive income (FVOCI) and (3) measured at fair value through profit
and loss (FVTPL).
On the other hand, US GAAP requires all equity investments to be measured at their fair
value. Banks then recognize the changes in the fair value of these investments in net income.
However, this does not apply to equity investments accounted for under the equity method or
those resulting in the consolidation of the investee.
When determining the total amount of bank loans in the bank’s balance sheet, two line items
are vital: loans and advances to banks and loans and advances to customers. Additionally,
reverse repurchase agreements are a form of a collateralized loan made by a bank to a client.
In a repurchase agreement, a bank client, who is the borrower, sells a financial asset to the
bank, which is the lender and commits to repurchase the financial asset for a fixed price at a
future date. The interest on borrowing is the difference between the selling price and the
higher purchase price.
Note: The principal purpose of measuring the quality of the assets is to establish the
composition of non-performing assets (NPAs) as a percentage of the total assets. The primary
concern of all commercial banks is to keep the amount of non-performing loans as low as
possible. This owes to the fact that high non-performing loans affect the profitability of the
bank.
Typically;
Asset quality=Non-performing loans/Total loans

3. Management Capabilities
Management capability is another crucial constituent of the CAMELS model that guarantees
the growth and endurance of a bank. Active management involves identifying and exploiting
appropriate profit opportunities while managing risk. These risks may include credit risk,
market risk, operating risk, legal risks, and other risks. Indicators of management
effectiveness include internal sound controls, transparent management communication, and
financial reporting quality. The following ratios are required to assess management efficiency:

a) Total Advances to the Total Benefits

This ratio indicates the efficiency of the bank’s management in the utilization of the deposits
(including receivables) available into advances with maximum returns. Savings deposits,

28
demand deposits, term deposits, and deposits of other banks are included in total deposits.
The higher the ratio, the better it is, and vice versa.

b) Business Per- Employee

This ratio indicates the efficiency and productivity of the bank’s human resources. It is
calculated by dividing the total business by the total number of employees. A higher ratio is a
good indication and vice versa.

c) Return on Advances
This ratio reflects the association between interest income and total advances issued by the
bank. Higher return on advances results in more returns earned on advances. A higher ratio of
return on advances indicates higher productivity and profitability of funds and vice versa.

4. Earnings
All companies’ earnings should be of high quality and upward trading. Earnings are
considered high quality if they are adequate, i.e., providing a rate of return above the cost of
capital as well as sustainable. Also, earnings should ideally be derived from recurring sources.
Banks use estimates in valuing investment securities that must be measured at fair value.
Estimates used in the valuation of these securities may lead to biased earnings. Both IFRS
and US GAAP use the concept of a fair value hierarchy based on the types of inputs used in
determining the fair value of financial assets and liabilities. There are three “levels” of the
fair value hierarchy:
Level 1 inputs are the quoted prices of identical financial assets or liabilities in the active
markets. In determining the fair value of financial assets and liabilities, level 2 inputs are vital.
They include quoted prices for identical financial assets in the active and inactive markets
and observable data. Observable data include interest rates, yield curves, credit spreads, and
implied volatility. Finally, level 3 inputs are unobservant and hence subjective. For example,
fair value may be derived from models like an option-pricing model which employs an
unobservant and subjective estimate of the instrument’s market volatility. It can also be based
on estimated future cash flows discounted at an estimated discount rate.
In practice, banks usually use the fair value hierarchy to label their assets. For example, level
2 securities are those whose value was determined using level 2 inputs. Besides, they can use
the hierarchy to label their valuation methodology. For example, level 2 methodology is
defined as one that uses level 2 inputs.

29
Similar to other companies, the quality of a bank’s earnings is affected by other subjective
estimates like goodwill impairment, recognition of deferred tax assets, and recognition of
contingent liabilities.
Concerning a bank’s sustainability, it is crucial to examine the composition of the bank’s
earnings. For a typical bank, significant sources of earnings are (1) net interest income (2)
service income, and (3) trading income. Trading income is typically the most volatile.
Therefore, a higher proportion of net interest income and service income is typically more
sustainable than trading income. Furthermore, lower volatility within net interest income is
desirable: Highly volatile net interest income could indicate excessive interest rate risk
exposure.

5.Liquidity Position
As previously mentioned, banks have systemic importance. Deposits constitute the primary
component of a bank’s current liabilities. In most banks, deposits are insured by the
government insurers up to a certain amount; thus, liquidity is a crucial focus of regulators.
This is in that the failure of a bank to fulfill its liability obligations can lead to the collapse of
the entire economy.
The Basel III framework introduced two minimum liquidity standards after the sudden
illiquidity accompanying the financial crisis of 2008, which include:
a) The Liquidity Coverage Ratio (LCR)
The liquidity coverage ratio is expressed as the minimum percentage of a bank’s expected
cash outflows that must be held in highly liquid assets. It is computed as:
LCR= Highly liquid assets/ Expected cash outflow
Highly liquid assets are those that are immediately convertible into cash, while expected cash
flows are the estimated one-month liquidity needs in a stress scenario. A lower LCR implies
higher liquidity risk and vice versa. The standard recommends a minimum LCR of 100%.
b) The Net Stable Funding Ratio (NSFR)
NSFR is expressed as the minimum percentage of a bank’s required stable funding that
should be extracted from available stable funding. It is calculated as:
NSFR= Available stable funding/ Required stable funding
It measures the liquidity of funding sources relative to the liquidity needs of the assets.
Available stable funding (ASF) is a function of the composition and maturity distribution of a
bank’s funding sources (i.e., capital, deposits, and other liabilities), whereas required stable
funding is a function of the composition and maturity distribution of the bank’s asset base.

30
Available stable funding is determined based on an ASF factor that is assigned to each
funding source, as shown in the table that follows:

ASF Funding Component

Factor
100% Regulatory capital minus Tier 2 instruments maturing in less than a year.
Other capital instruments and liabilities with a maturity greater than or equal to
one year.
95% Stable demand deposits and term deposits with a maturity of less than one
year from retail and small business customers.
90% Less stable demand deposits and term deposits with maturity less than
one year from retail and small business customers.
50% Less stable demand deposits and term deposits with maturity less than
one year from retail and small business customers.
0% All other liabilities.

NSFR relates the liquidity needs of a bank’s assets to the liquidity provided by the bank’s
liabilities (i.e., funding sources). Longer-dated liabilities are considered more stable and
hence suitable to fund assets with longer maturities (e.g., long-term loans). Moreover,
deposits from retail and small business clients are considered more stable than deposits from
corporate clients. A lower NSFR implies a higher liquidity risk and vice versa. Finally, the
standards recommend a minimum NSFR of 100%.
Basel III also recommends other liquidity monitoring metrics, which include the
concentration of funding and maturity mismatch. Relatively concentrated funding indicates a
bank’s reliance on relatively few funding sources. This poses a problem when the sources
withdraw funding, resulting in increased liquidity risk for the bank.
Maturity mismatch occurs when the asset maturities differ significantly from the maturity of
the liabilities (funding sources). The higher the mismatch, the higher the liquidity risk for the
bank. For example, sometimes banks try to maximize the spread between lending and
borrowing rates by borrowing at low, short-term rates and lending at higher, longer-term rates.
This mismatch in assets and liabilities exposes the bank to liquidity risk if it is unable to roll
over its borrowings at reasonable rates. The higher the maturity mismatch between
assets/liabilities, the higher the liquidity risk.

31
6. Sensitivity to Market Risk
Interest rate risk is the key market risk that impacts a bank’s earnings. A bank’s interest rate
risk is the result of differences in maturity, rates, and repricing frequency between the bank’s
assets and its liabilities. The differences in rates, maturity, and repricing frequency between
the bank’s assets and liabilities expose the bank to interest rate risk. An increase in interest
rates would increase the bank’s net interest income. This would occur because banks have
more assets than liabilities. However, in reality, the terms of a bank’s assets and liabilities
differ.
Banks adjust their balance sheets following opportunities presented in the market at any
given time. For example, central banks reduced the short-term interest rates following the
2008 financial crisis allowing banks to borrow at lower rates. Various banks increased their
duration risk to exploit this interest rate scenario.
The effect of a change in the shape of the yield curve is different from bank to bank,
depending on the differences in the composition of their assets and liabilities. Banks usually
disclose exposure to a wide variety of market and non-market risks in the MD&A section of
their annual reports.
The value at risk (VaR) is another tool that banks use to measure and monitor market risk.
VaR is a way to estimate the amount of potential loss based on simulations that incorporate
historical pricing information.

Limitations of the CAMELS Approach

Previously, we mentioned that an analyst using the CAMELS approach to examine a bank
undertakes analysis and assigns a numerical rating of 1 through 5 to each component. A
rating of 1 is the best rating. It shows the best practices in risk management and performance
and generating the least concern for regulators. In contrast, a rating of 5 is the worst rating. It
shows the weakest performance and risk management practices and generating the highest
degree of regulatory concern.
The CAMELS approach is prone to indeterminacy, subjectivity, and inconsistency. There are
situations where the analysis of the bank accounting records cannot determine the appropriate
score to assign, for example, an average or below-average score. It is relatively easy to spot
the good and bad indicators, not so the in-betweens. This is a problem of indeterminacy.
However, when the bank analyst is forced to make a judgment, this is exposed to subjectivity.
Besides, different analysts have differing levels of expectations and perspectives. In

32
conclusion, the CAMELS approach has failed to recognize weaknesses in banks before a
crisis.

33
CHAPTER:II

Literature Review
In order to evaluate the financial performance of banking and financial sector the researchers,
academicians and policy makers have investigated several studies in different perspectives
and in different time periods. Bodla and Verma (2006) recommended that such types of
rating would help the Reserve Bank of India to identify the banks whose performance needs
special supervisory attention. The main attempt of CAMEL system is to find out problems
which are faced by the banks themselves and catch up the comparative analysis of the
performance of various banks. Hirtle and Lopez (1999) stressed that 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. CAMEL is
an acronym for five components of bank safety and soundness: capital adequacy, asset
quality, management quality, earning ability, liquidity. A study conducted by Lace and
Stephen (2001) showed that there is definitely a relationship between bank efficiency scores
and financial ratios used to proxy a bank's CAMEL rating. Barretal. (2002) viewed that
“CAMEL rating criteria has become a concise and indispensable tool for examiners and
regulators”. This rating criterion 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. Said and Saucier (2003) used CAMEL
rating methodology to evaluate the liquidity, solvency and efficiency of Japanese Banks, the
study evaluated capital adequacy, assets and management quality, earnings ability and
liquidity position. Similarly a study by Sarker (2005) in Bangladesh examined the CAMEL
model for regulation and supervision of Islamic banks by the central bank. This study enabled
the regulators and supervisors to get a Shariah benchmark to supervise and inspect Islamic
banks and Islamic financial institutions from an Islamic perspective. In India Prasuna (2004)
analyzed the performance of Indian banks by adopting the CAMEL Model. The study
concluded that the competition was tough and consumers benefited from better services
quality, innovative products and better bargains. Similarly Kapil (2005) investigated the
relationship between the CAMEL ratings and the bank stock performance. The viability of
the banks was analyzed on the basis of the offsite supervisory exam model—CAMEL model.
In a similar way Satish, Jutur and Surender (2005) concluded that the Indian banking system
looks sound and Information Technology will help the banking system grow in strength in

34
future. On the other hand Singh and Kohli (2006) undertook SWOT analysis of 20 old and 10
new private sector banks. These banks have also been ranked on the basis of financial data
for the years 2003-2005 and the performance was evaluated by using CAMEL model.
Similarly Gupta and Kaur (2008) conducted the study with the main objective to assess the
performance of Indian Private Sector Banks on the basis of Camel Model and gave rating to
top five and bottom five banks. A study on regional rural banks Reddy, Maheshwara and
Prasad (2011) discussed the financial performance of selected regional rural banks during
post reorganization period. The study adopted CAMEL model to examine the overall
performance of Andhra Pragathi Grameena Bank and Sapthagiri Grameena Bank. Similarly a
study on State Bank Group by Siva and Natarajan (2011) empirically tested the applicability
of CAMEL norms and its consequential impact on the performance of SBI Groups. The study
concluded that annual CAMEL scanning helps the commercial bank to diagnose its financial
health and alert the bank to take preventive steps for its sustainability.

35
CHAPTER:III

OBJECTIVES of STUDY

 To apply the ratios used in CAMELS Analysis System for the assessment of overall
performance of State Bank of India.

36
CHAPTER:IV

RESEARCH METHODOLOGY
Data used in the present study of SBI consist of yearly data collected from reliable secondary
data sources from 2018 to 2023.
The methodology of the study includes:
 Information Source
 Research Design
 Tools used for analysis
 Duration of data assessment study
 Information Source
This study is based on secondary data. The rating is based on the liquidity to profitability
ratio, which can be calculated using SBI's financial statements.
All related to State Bank of India Auditors Reports, Internet, Books and more.
 Research Design
This study uses a descriptive research design. Research design involves collecting data from
secondary sources. Secondary data is obtained from annual
reports of SBI, corporate websites and databases such as Bloomberg, Reuters and Google
Scholar.
 Duration of data assessment study
The training is for 5 years (2018-2023) at SBI Bank.
Factors for giving scores: CAMELS - is an abbreviation for the following elements on which
supervisory agencies base their ratings. Additionally, the CAMELS method utilizes a one to
five scales of composite ratings based on rising order of managerial concern. Each
factor is given the following weight.
C - Capital Adequacy 20%
A - Asset Quality 20%
M - Management 25%
E - Earnings 15%
L - Liquidity 10%
S - Sensitivity to Financial (Market) Risks 10%

37
 CAMEL Framework Table - 1
CAMEL Formulae Weightage
C : Capital  Capital Adequacy Ratio = Tier1+Tier2 / Risk 20%
Adequacy weighted assets
 Debt Equity Ratio = Total outsiders liability /
Net worth
A : Asset quality  Net NPAs to Net Advances Ratio = Net Non- 20%
performing assets / Net advances
 Total Investments to Total asset Ratio = Total
Investment / Total assets
M : Management  Business per Employee = Total Business / Total 25%
Efficiency no. of Employee
 Profit per Employee = Profit after tax / Total no.
of Employees
 Credit Deposit Ratio = Total Advances / Total
deposits * 100
 Return on net worth = Net Profit / Net worth *
100
E : Earning  Operating Profit to Average Working Funds = 15%
Quality Operating profit / Average Working Funds
 Net profit to Average Assets Ratio = Net profit /
Average Assets
L : Liquidity  Liquid Assets to Total Assets Ratio = Liquid 10%
Assets / Total Assets
 Liquid Assets to Total Deposits Ratio = Liquid
Assets / Total Deposits
S : Sensitivity to  Doubtful debts / Loans 10%
financial
(market) risks

38
39
DATA ANALYSIS OF CAMELS
Table I : Analysis of Capital Adequacy Ratio
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23

CARA 12.85 13.13 13.82 13.85 14.68

Figure : 1 Analysis of Capital Adequacy Ratio

Table 1 and Fig 1 depicts the following points -

 As the above graph shows the increase in the Capital Adequacy Ratio for the past 5 years.
 In the year 2018-19 it was 12.85 and increased in previous year to 14.68 improving by 85
bps(basis points) yoy(year over year).
 Thus increase in Capital Adequacy Ratio is good as it indicates that the bank is in better
position.

40
 Table II: Analysis of NPA
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23

NPA 3.01 2.23 1.50 1.02 0.67

Figure : 2 Analysis of Net NPA to Net Advances

Table 2 and Fig 2 depicts the following points -

 As the above graph shows an decrease in Net Non performing assets to Net Advances for
past 5 years.
 In the year2018-19 it was 3.01 but started decreases in recent year and in 2022-23 is
decreases to 0.67.
 Thus, decrease in Non performing assets shows good, as it shows good profitability
overall.

41
 Table III: Analysis of Return on Assets
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23

RonA 0.02 0.38 0.48 0.67 0.96

Figure : 3 Analysis of Return on Assets

Table 3 and Fig 3 depicts the following points -

 As the above graph shows in increase in Return on assets in past five years.
 In the year 2018-19 it was 0.02 but it has increased in recent year and it is 0.96 in 2022-
23.
 Thus increase in Return on assets shows asset efficiency which is good for bank.

42
 Table IV: Analysis of Return on Net Worth (%)
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23
RonNW 0.39 6.95 8.86 12.33 16.75

Figure : 4 Analysis of Return on Net Worth

Table 4 and Fig 4 depicts the following points -

 As the above graph shows increase in Return on Net Worth in past 5 years.
 In the year 2018-19 it was 0.39 but in recent year it has increase to 16.75 in 2022-23.
 Thus increase in Return on Net Worth is shows good financial health of the bank.

43
 Table V: Analysis of Credit Deposit Ratio (%)
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23

CDR 75.73 71.73 66.53 67.47 72.31

Figure : 5 Analysis of Credit Deposit Ratio

Table 5 and Fig 5 depicts the following points -

 As the above graph shows fluctuation in the Credit deposit Ratio as it is increasing and
decreasing in past 5 years.
 In the year 2018-19 it was 75.73 but now it has decreases to 72.31 in the year 2022-23.
 Thus decrease in Credit deposit ratio suggests the relatively poor credit growth which is
not good for the bank.

44
 Table VI: Analysis of Debt Equity Ratio
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23

DER 1.76 1.33 1.57 1.47 1.45

Figure : 6 Analysis of Debt Equity Ratio

Table 6 and Fig 6 depicts the following points -

 As the above graph shows the decrease in Debt Equity Ratio in past 5 years.
 In the year 2018-19 it was 1.76 but in recent years it has decreases to 1.45 in the year
2022-23.
 Thus decreases of Debt equity ratio means the bank has more assets than liabilities which
is good sign.

45
 Table VII: Analysis of Net Interest to Funds Ratio (%)
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23

NIF 2.78 2.97 3.04 3.12 3.37

Figure : 7 Analysis of Net Interest to Funds Ratio

Table 7 and Fig 7 depicts the following points -

 As the above graph shows the increases in the Net interest to funds ratio in past 5 years.
 In the year 2018-19 it was 2.78 but it has increase in recent year and it is 3.37 in the year
2022-23.
 Thus increase in the Net interest to funds ratio indicates a bank is bringing more money
on interest which is good.

46
 Table VIII: Analysis of Return on Equity (%)
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23
RonE 0.48 7.74 9.94 13.92 19.43

Figure : 8 Analysis of Return on Equity

Table 8 and Fig 8 depicts the following points -

 As the above graph shows increase in Return on Equity in past 5 years.

 In the year 2018-19 it was 0.48 but it has increased to 19.43 in the year 2022-23.
 Thus increases in Return on Equity means the better the company is at converting its
equity financing into profits which is good.

47
 Table IX: Analysis of Current Ratio
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23

CR 0.91 0.93 0.94 0.90 0.89

Figure : 9 Analysis of Current Ratio

Table 9 and Fig 9 depicts the following points -

 As the graph shows the decrease in Current Ratio for the past 5 years.
 In the year 2018-19 it was 0.91 but now it has decrease to 0.89 in year 2022-23.
 Thus decrease in Current ratio is not good sign for bank.

48
 Table X: Analysis of Quick Ratio
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23

QR 0.907 0.888 0.943 0.864 0

Figure : 10 Analysis of Quick Ratio

Table 10 and Fig 10 depicts the following points -

 As the above graph shows decrease in Quick ratio in past 5 years.

 In the year 2018-19 it was 0.907 but it has decreases to 0 in the year 2022-23.
 Thus decreases in Quick ratio does not shows too much inventory which is not good.

49
 Table XI: Analysis Gross Non Performing Asset
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23
NPA 8.00 6.00 5.00 4.00 2.78

Figure 11 : Analysis of Gross NPA

Table 11 and Fig 11 depicts the following points -

 As the above graph shows decrease in Gross NPA in past 5 years.

 In the year 2018-19 it was 8.00 but it has decreases to 2.78 in the year 2022-23.
 Thus decreases in Gross NPA indicates that bank is in good condition.

50
 Table XII : Analysis of Return on Capital Employed (ROCE)
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23
ROCE 0.00 1.79 1.64 1.42 1.59

Figure 12 : Analysis of Return on Capital Employed (ROCE)

Table 12 and Fig 12 depicts the following points -

 As the above graph shows increase in ROCE in past 5 years.

 In the year 2018-19 it was 0.00 but it has increases to 1.59 in the year 2022-23.
 Thus increase in ROCE indicates good and favourable condition of bank.

51
 Table XIII : Analysis of Business per Employee Ratio
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23
BeP 3.21 1.79 1.31 0.81 0.56

Figure 13 : Analysis of Business per Employee

Table 13 and Fig 13 depicts the following points -

 As the above graph shows increase in ROCE in past 5 years.

 In the year 2018-19 it was 0.00 but it has increases to 1.59 in the year 2022-23.
 Thus increase in ROCE indicates good and favourable condition of bank.

52
 Table XIV : Analysis of Interest Spread Ratio
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23
ISR 6.65 6.45 6.59 7.06 6.62

Figure 14 : Analysis of Business per Employee

Table 14 and Fig 14 depicts the following points -

 As the above graph shows decrease in Interest Spread Ratio in past 5 years.
 In the year 2018-19 it was 6.65 but it has decrease to 6.62 in the year 2022-23.
 Thus decrease in ISR is not good for banks.

53
 Table XV : Analysis of Percentage change in Net Profit
Ratio 2018-19 2019-20 2020-21 2021-22 2022-23
% change in -162.45 -113.17 1580.31 40.88 55.19
net profit

Figure 15 : Analysis of Percentage change in Net Profit

Table 15 and Fig 15 depicts the following points -

 As the above graph shows increase in Percentage change in net profit in past 5 years.
 In the year 2018-19 it was -162.45 but it has increases to 55.19 in the year 2022-23.
 Thus increase in Percentage change in net profit is regarded as good margin for banks.

54
 FINDING & DISCUSSION

 The study shows increase in the Capital Adequacy Ratio which indicates that the bank
is in a better position to deal with unexpected losses due to availability
 The study shows decrease in Net Non performing assets to net advances which is
necessary for banks to increase their profitability.
 The study shows increase in Return on Assets which indicates the higher the ROA
number, the better because the bank is able to earn more money with a smaller
investment.
 The study shows increase in Return on Net worth which implies that the bank has
excellent management for increasing shareholder returns.
 The study shows decrease in Credit Deposit Ratio which mean the high the CD ratio
would mean strong demand for credit in an environment of relatively slower deposit
growth.
 The study shows decrease in Debt Equity Ratio which indicates that the business’s
operations are largely financed by equity and shareholder funding.
 The study shows increase in Net Interest to Funds Ratio which indicates a bank is
bringing in more money on the interest it earns on loan than it is paying out in interest
on bank deposits.
 The study shows increase in Return on Equity which indicates the bank is good at
generating shareholder value because it knows how to reinvest its earnings wisely, so
as to increase productivity and profits.
 The study shows decrease in Current Ratio it means bank will have a difficult time
paying your immediate debts and liabilities.
 The study shows decrease in Quick Ratio which means the bank will struggle with
paying debt, as the result of building up too much inventory.
 The study shows decrease in Gross Non Performing asset means reduction lead to
good health of bank.
 The study shows increase in Return on Capital employed indicates more effective use
of capital.
 The study shows decrease in Business per Employee Ratio which is not good as
higher the ratio, better it is.

55
  The study shows decrease in the Interest Spread Ratio which is indicative of a more
efficient financial system.
 The study shows increase in Percentage change in Net Profit means bank is able to
effectively control its costs and/or provide goods or services at a price significantly
higher than its costs.

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 CONCLUSION

Capital Adequacy:
SBI maintained a robust capital adequacy ratio throughout the period, indicating a strong
financial foundation and ability to absorb potential losses. Despite economic fluctuations and
regulatory changes, SBI's capital base remained solid, ensuring stability and confidence
among stakeholders.
Asset Quality:
The bank effectively managed asset quality, as evidenced by consistently low non-performing
asset (NPA) levels. SBI's proactive risk management strategies and stringent loan assessment
processes helped mitigate credit risks, contributing to sustained asset quality over the years.
Management Quality:
SBI exhibited strong management quality, characterized by prudent decision-making,
effective governance, and strategic planning. The bank's leadership demonstrated agility in
responding to market dynamics, implementing innovative initiatives, and optimizing
operational efficiency.
Earnings Strength:
SBI delivered commendable earnings performance, achieving consistent profitability despite
challenging economic conditions and competitive pressures. The bank's diversified revenue
streams, cost optimization measures, and prudent investment strategies supported sustained
earnings growth and enhanced shareholder value.
Liquidity Position:
SBI maintained a healthy liquidity position throughout the period, ensuring the ability to meet
short-term obligations and funding requirements. The bank's robust liquidity management
framework and access to diverse funding sources bolstered confidence in its ability to
withstand liquidity shocks and maintain financial stability.
Overall Assessment:
The State Bank of India's financial performance from 2018 to 2023 reflects its resilience,
sound risk management practices, and strategic focus on long-term value creation. Despite
operating in a dynamic and challenging environment, SBI demonstrated stability, profitability,
and adaptability, positioning itself as a leading player in the banking sector.

57
 Limitations of Study

 The accuracy and reliability of the study depends on the correctness of secondary data
collected.
 There are lots of qualitative factors that affects the performance of the bank which is out
of scope of this study.
 The study is confined only to the selected and restricted indicators and the study is
confined only for a period of five years.
 As the analysis is entirely based on secondary data, it has its drawbacks, firms can
cheat and window dress their financial statements.
 Ratio analysis metrics do not necessarily represent future performance of the
Company, as data keep changing every year.
 Where the bank operations are confidential, various information could not be obtained.
 The study is for academic purpose hence it has few limitations.
 The non-availability of related information regarding in detail.

58
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ANNEXURE

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