FINAL

“ Evaluating Performance of Banks through CAMAL Model- A Case Study on
Corporation Bank”
CHAPTER-1
INTRODUCTION
1.1 INTRODUCTION
1.2 LITERATURE REVIEW
1.3 STATEMENT OF THE PROBLEM
1.4 NEED FOR THE STUDY
1.5 OBJECTIVES OF THE STUDY
1.6 RESEARCH METHODOLOGY
1.7 LIMITATIONS OF THE STUDY
Edurite College of Management Studies, Shivamogga Page 1

Corporation Bank”
CHAPTER - 1
INTRODUCTION
1.1 Introduction
A strong, sustainable and viable banking system plays an important role in the overall
development of an economy. Banking sector has contributed in bringing a revolutionary change
in reforming sector on the path of economic growth. In fact, it is the backbone of the economy
and one of the key indicators to assess the level of development of any country. Performance of
the banking sector is an effective measure and indicator to check the performance of any
economy to a large extent. The banking sector reforms were started in India as a follow up
measure of financial sector reforms and economic liberalization in the country. The banking
sector being the life line of the economy has been given due weightage in the financial sector
reforms. More competitiveness, productivity and efficiency and adherence to international
accounting standards were the basic intentions behind the initiation of reforms in Indian banking
industry.
Banking performance is assessed by implementing a regulatory banking supervision

framework. One of such measures of supervisory regulation is the CAMEL rating system. In
1980s, US supervisory authorities introduced CAMEL rating system as a system of rating the
banks for on-site examinations of banking institutions. It proved to be a beneficial and efficient
tool in response to the financial crunch in 2008 by the U.S. government.
Camel approach is an effective tool to determine the relative financial strength of a bank
and to suggest relevant measures to improve shortcomings of a bank. In India, on the
recommendations of Padmanabham Working Group (1995) committee, RBI adopted this
approach in 1996. At present, two Supervisory Rating Models CAMELS (capital adequacy, asset
quality, management quality, earnings, liquidity and sensitivity to market risk or systems &
control) and CACS (capital, asset quality, compliance and systems & control) are being used in
India for rating of the Indian Commercial Banks and Foreign Banks operating in India
respectively

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Framework of CAMEL Approach
Regulators, analysts and investors have to periodically assess the financial condition of
each bank. Banks are rated on various parameters, based on financial and non-financial
performance. The popularly used assessment goes by the acronym CAMELS, where each letter
refers to a specific category of performance. The components of the CAMELS rating system
comprise of both objective and subjective parameters. The details are based on publicly available
information published at Reserve Bank of India, Indian Banks Association, referred papers and a
book
C-Capital Adequacy: This indicates the bank’s capacity to maintain capital commensurate with
the nature and extent of all types of risks, as also the ability of the bank’s managers to identify,
measure, monitor and control these risks. In accordance with this following ratios are considered:
i. Capital Adequacy Ratio ii. Equity Capital to Total Assets iii. Advances to Total Assets Ratio
iv. Government Securities to Total Investments
A-Asset Quality: This measure reflects the magnitude of credit risk prevailing in the bank due to
its composition and quality of loans, advances, investments and off-balance sheet activities.
Following ratios are considered for the purpose of analysis (i) Net NPAs to Net Advances (ii)
Net NPAs to Total Assets (iii) Total Investments to Total Assets
M-Management Quality: Signaling the ability of the board of directors and senior managers to
identify, measure, monitor and control risks associated with banking. This qualitative measure
uses risk management policies and processes as indicators of sound management. Following
ratios are identified to indicate the quality perspective: (i) Business per employee (ii) Profit per
employee (iii) Total advances to total deposits (iv) Return on Net Worth
E-Earnings: This indicator not only shows the amount of and the trend in earnings but also
analyses the robustness of expected earnings growth in future. For better understanding of above
dynamics, following ratios are considered: (i) Return on Assets (ROA), (ii) Net Interest Margin
(NIM), (iii) Interest income to Total income, (iv) Cost to Income ratio

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L-Liquidity: This measure takes into account the adequacy of the bank’s current and potential
sources of liquidity, including the strength of its fund management practices. To measure this
impact, following ratios are used. (i) Liquid Assets to Demand Deposits (ii) Liquid Assets to
Total Deposits iii. Liquid Assets to Total Assets
1.2 Literature review:
Priya Ponraj and Guruswamy Rajendran (2012): the competitiveness of the Bank between
the selected Indian Bank in terms of financial strength by using the model of camel. The Bank's
financial strength was measured using various financial ratios. Researchers came to the view that
foreign banks are the most competitive compared to banks regarding the ratio of profitability of
the public sector and private sector, returns the ratio and the solvency ratio.
Anita Makkar (2013): a Comparative analysis of the financial performance of Indian

commercial banks. It has adopted the data of sample of 37 (public banks and private sector). She
concluded that using a camel approach there is a significant difference in the adequacy and
quality of assets earning capacity of public and private banks in India, although there is no
significant difference in the management, the situation cash and banks of sensitivity at the risk of
the market of the two different groups.
Dr. Mahun Biswas (2014) evaluation of the performance of the Andhra Bank & Bank of
Maharashtra with camels model: the author selected banks above, based on the location of the
Bank that is Andhra Pradesh and the Maharashtra,. that is the highest populated state and the
States who suffer frequent deaths of farmers due to the repayment of loans taken by them. The
study found that Andhra Bank dominated in the effectiveness of the management and quality of
winner. However, on quality & bank liquidity assets of Maharashtra is considered on Andhra
Bank. The two banks were on the same footing with respect to the adequacy Ratio of Cash.
M Nandhini D Sivasakthi (2015): an analysis of banks selective Indian public sector

approach of camels: in the evaluation of the function of the banks many developed countries
are now following rating in uniforms adopting model camels rating as well as the techniques and
procedures. Camels model contributes to the rating of the overall financial performance of banks

Corporation Bank”
with the help of five parameters. The authors concluded in their study that the ratio of selective
of the public sector, banks are significantly different compared to other banks. They believe that
camels model helps the Bank to examine the safety and soundness of banks and helps reduce the
potential risks that can lead to Bank bankruptcy.
Khaled A Tony and Ghassan Das (2015) Palestinian banks camels analysis using model:
trying to assess performance and financial strength of the Palestinian banks by using the model
of camels by 2015. The model of camels can be used as a tool to classify banks based on the
State of general health, financial situation and operations managers. Banks have been evaluated
on performance in five different areas such as the adequacy of the funds own, asset quality,
Management efficiency, gain and liquidity. Authors have used car to analyze the parameter
matching PNP for the total loans for the analysis of the parameter of quality of assets, ratio of
expenses not to analyze the setting of quality management, ROA and ROE to analyze the total
capacity gains ready and in total deposits ratio to Analyze liquidity management results obtained
from the analysis of the various reports show that the Bank of Palestine is ranked with the total
score of 16 components.
Dr. Geetha Sharma and Amandeep Kaur Arora (June 2016) study of the performance of
Indian banks: camels A model approach: Indian banking system has experienced drastic
changes in the methodology of its operation and the update to the course of the year. In addition
to the promotional role Reserve Bank of India must play a key role in the regulatory policies
governing banks. The authors conducted a study on the economic viability of a sample of 15
banks in India using the model of camels in the period 2014-15. Their study revealed that private
banks are in a better position compared to the public sector banks and concluded that there is a
scope of improvisation in terms of asset quality and management efficiency.
1.3 Statement of the problem:
Nationalized banks are play dominated role in Indian financial system. A strong
sustainable banking in the overall development of an economy. In the recent days nationalized
banks are facing stiff competition from the private sector banks and other foreign banking
institution which is operated in India. Performance analysis is mandatory for banking
professionals to formulation and implementation of various internal and external strategies to
Corporation Bank”
enhance the productivities of banks. There is some valuation model to measure the performance
but one or the other way this model is not performed demerits, in order to measure the overall
performance, the new method is need to bank to improve the bank operation. Hence the study is
undertaken to analyze the CAMEL Model clear picture of the performance and the topic of the
project work is tested.
1.4 Need for the study

The Study of overall financial performance of corporation Bank., will enable us to know
the capital adequacy, asset quality, management efficiency, earnings, liquidity and Sensitivity of
the firm by comparing its past 5 years data. The study reveals the financial performance of the
bank and also its future prospects.
The CAMEL rating knowledge can help do corporation Banks to better understand about
their performance and implementation of required policy to increase the productivity of the
banking operation and the study also helpful to standardization of bank activities. The study also
helps to give positive direction in the area of enhancing the capital adequacy, improving asset
quality and management gaining earning and strengthening liquidity. The present study also
helps to get the base knowledge about banking supervise to bank employees and it can help to
make financial sound.
1.5 Objectives of the study

 To Study and Understand basic concepts of CAMELS Rating System.
 To analyze the financial performance of corporation bank on different parameters of
camel model
 To give recommendation and suggestion for improvement of performance and financial
possession of corporation Bank.
 To study the various aspects of CAMEL Rating System.

Corporation Bank”
1.6 Research methodology:

Research design is the roadmap for carrying out the research activity in the project. The
research work conducted on the basis of Descriptive research. This method is personal approach,
where the information is collected by direct interaction with the office staff and my internal
guide and also from the manuals, broachers and from websites.
This study is mainly based on secondary data. The data required for the study was collect
from annual report and other published document of banks. A study covers a period from 2014-
15 to 2018-19. For analyzing the behavior of the compiled data, various strategies and tools
applied.
TOOLS & TECHNIQUES:
Percentage Analysis
Camels Ratios
Analytical Tools:
To look at the financial soundness of the corporation bank, internationally accepted

CAMEL rating parameters have been applied. CAMEL is an acronym for five parameters
(capital adequacy, assets quality, management soundness, earnings and liquidity). CAMEL rating
is a subjective model which assesses financial strength of a corporation bank, whereas CAMEL
ranking indicates the bank. Ratios and averages have been used for analysis. Averages are
calculated using MS-Excel
The Following ratios are calculated for CAMELS Analysis:
1. Capital Adequacy:
 Capital Adequacy Ratio= tier 1+ tier 2 Capital/ Total risk weighted credit exposure
 Debt Equity Ratio=Total Debt/ Equity total investment
 Government securities to total investment= government securities/Total Investment

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2. Asset Quality:
 Net NPA= Net NPA/ Total loans

 Non-performing loans ratio= (loans + doubtful debt)+(allowance’s for earning asset
losses)/ Total loans
 Total investment to Total Asset ratio= Total Investment/ Total Asset*100
3. Management Efficiency:
 Total Advances to Total deposit ratio=Total Advances/ Total Deposit

 Business per employee = Total income/ Number of employee
 Profit per employee ratio = Net profit/ No. of employee
4. Earning Ability:
 Return on Asset ratio = Net profit/ Total asset

 Operating profit to total asset = Operating profit/ Total asset
 Interest income to total income = Interest income/ Total income
5. Liquidity:
 Liquidity asset to total asset ratio = Liquid asset/ Total asset

 Loans as a percentage of deposit ratio = Loans/ Total deposit
6. Sensitivity:
 Sensitivity market risk ratio = Market price per ordinary equity share/ Earnings per
share*100(in %)
1.7 Limitations of the study
 The data collection is for five years only.

 Only corporation Bank considered to the study due to time constraints.
 The data’s may not adequately represent the issue entirely.

Corporation Bank”
CHAPTER - 2
INDUSTRY PROFILE AND BANK PROFILE
2.1 INTRODUCTION
2.2 ORIGIN OF BANK
2.3 HISTORY OF BANK
2.4 CURRENT TRENDS
2.5 HISTORY
2.6 VISION AND MISSION
2.7 REWARDS
2.8 BOARD OF DIRECTORS
2.9 SWOT ANALYSIS

Corporation Bank”
CHAPTER - 2
INDUSTRY PROFILE AND BANK PROFILE

Introduction
Banking system plays a very important role in the economic development of the country.
Commercial Banks are having loans shares in total Banking operation in our nation. Commercial
Bank is the oldest institution having wide network of business. They keep the wheels of
economy moving progressively by supplying two vitamin ‘M’ that is money for trade commerce
industry and home Banks provide financial assistance to small scale and large-scale industries.
Banks today are the back bone of modern industry. They are assistance part of the society.
Origin of bank
There are different opinion regarding the origin of the term ‘Bank’ according to some it is
derived from Italian word ‘Banca”, ’ Latin word “Bancus” Banks and French word “Basqui”
which means a bench the reason believed this argument is that in olden banking business but
according to some other the work ‘Bank’ which mean ‘common fund raised from a large number
of public’ by clear analysis the latter argument fees to be more realistic and with most people
have accepted the German word Bank to be the origin of Banks.
History of banking
Even in ancient times banking was in existence in one form or another writings of man could
Hindu low maker and Kautilya (the minister of Chandragupta Mourya) contained reference to
Banking. In olden days there were merchant Bankers who carried on Banking beside trading,
money to used people and also safeguard the excess wealth of the people who opposites with
them. Thus merchant Bankers, money lenders and goldsmith are rightly regarded as ancestors of
modern Banking that is joint stock come into existence only after the industrial revolution, when
the thought of industry grew and need for financial was felt.
Indian Banking regulation Act 1949

This act enhanced the strength of Indian Banking system, some of the major points drafted in this
act are discussed below. Section 5(1) (b) of the act defines bounding business as, accepting for

Corporation Bank”
the purpose of lending or investment of deposits of money from public repayable on demand or
otherwise withdraw by cheque, draft order or otherwise.
Function of a Bank
The act has identified various function of a Bank under following two words
 Primary Functions
 Secondary Functions
 Primary Function
a) Acceptance of deposits
b) Granting of advances
c) Discounting the bills of exchange
 Secondary Functions
a) Agency Services
 Collation of cheques on behalf of customers
 Making payment on behalf of customers
 Purchase and sales of security on behalf of customers
 Acting as trustee and executive
b) General utility Services
 Provision of deposit arrangement
 Issues of letter of credit, travellers cheques etc,
 Underwriting of loans raised by government
 Remittance of funds
Evolution of the Indian Banking Industry:
The Indian banking industry has its foundations in the 18th century, and has a varied
evolutionary experience since then, the initial banks in India were primarily traders’ banks
engaged only in financing activities. Banking industry in the pre-independence era developed
with the Presidency Banks, which were transformed into the Imperial Bank of India and
subsequently into the State Bank of India. The initial days of the industry saw a majority private

Corporation Bank”
ownership and a highly volatile work environment. Major studies towards the public ownership
and accountability were made with nationalization in 1969 and 1980 which transformed the face
of banking in India. The industry in recent times has recognized the importance of private and
foreign players in a competitive scenario and has moved towards greater liberalization.
Current Structure
Currently the Indian banking industry has a diverse structure. The present structure of the Indian
banking industry has been analyzed on the basis of its organized status, business as well as
product segmentation.

Corporation Bank”
Organizational Structure
The entire organized banking system comprises of scheduled and non-scheduled banks. Largely,
this segment comprises of the scheduled banks, with the unscheduled ones forming a very small
component. Banking needs of the financially excluded population is catered by other
unorganized entities distinct from banks, such as, moneylenders, pawnbrokers and indigenous
bankers.
Current trends
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised
and well-regulated. The financial and economic conditions in the country are far superior to any
other country in the world. Credit, market and liquidity risk studies suggest that Indian banks are
generally resilient and have withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking models
like payments and small finance banks. RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries with India’s
Immediate Payment Service (IMPS) being the only system at level 5 in the Faster Payments
Innovation Index (FPII).
Market Size
The Indian banking system consists of 27 public sector banks, 21 private sector banks, 49
foreign banks, 56 regional rural banks, 1,562 urban cooperative banks and 94,384 rural
cooperative banks, in addition to cooperative credit institutions. In FY07-18, total lending
increased at a CAGR of 10.94 per cent and total deposits increased at a CAGR of 11.66 per cent.
India’s retail credit market is the fourth largest in the emerging countries. It increased to US$
281 billion on December 2017 from US$ 181 billion on December 2014.

Corporation Bank”
History
Corporation Bank came into being as Canara Banking Corporation (Udupi) Limited, on
12th March, 1906, in the temple town of Udupi, by the pioneering efforts of a group of
visionaries. The Bank started functioning with just Rs.5000/- as its capital and at the end of the
first day, the resources stood at 38 Rupees-13 Annas-2 Pies.
The Founder President Khan Bahadur Haji Abdullah Haji Kasim Saheb Bahadur,
committed to fulfil the long felt banking needs of the people and also to inculcate the habit of
savings, provided the much-needed impetus to founding a financial institution that would bring
about prosperity to the society.
The content of the first Appeal to the public dated 19th February, 1906 speaks volume
about the lofty ideals and ethos behind the foundation. The Founder President Haji Abdullah
declared that:
"The Primary object in forming ‘Corporation’ is not only to cultivate habits of thrift
amongst all classes of people, without distinction of caste or creed, but also habits of co-
operation amongst all classes”.
“This is ‘Swadeshism’ pure and simple and every lover of the country is expected to
come forward and co-operate in achieving this end in view”
The days that followed:
The initial growth was consciously cautious and need based. The first branch of the Bank
was opened at Kundapur in 1923, followed by the second in Mangalore in 1926. The Bank
stepped into the then Coorg State in 1934 by opening its seventh branch at Madikeri. In 1937 the
Bank was included in the second schedule of Reserve Bank of India Act, 1934.

Corporation Bank”
Logo
The Bank's motto "Sarve Janah Sukhino Bhavanthu" in Sanskrit, which means
"Prosperity for All" is well-professed by the Bank in its day-to-day operations.
The Bank's logo has various components, namely Kamadhenu (denoting wish-
fulfillment), Kalpatharu (eternity), Balance (justice for all), Wheel (industrial progress) and
Wheat Grains (agricultural prosperity) which stand for universal prosperity and as a wish-
fulfilling credo. The logo in its present form was incorporated in 1972 when the name of the
Bank was changed from Canara Banking Corporation (Udupi) Ltd. to Corporation Bank Ltd.
Prosperity to All:
In 1939, the Bank’s name changed from Canara Banking Corporation (Udipi) Ltd., to
“Canara Banking Corporation Ltd.,” and strongly put forth its vision with the motto-“ Sarve
Janah Sukhino Bhavantu” which means“Prosperity to All ”
The second change in the name of the Bank occurred in 1972, from ‘Canara Banking
Corporation Ltd.’ to ‘Corporation Bank Limited.’ and finally ‘Corporation Bank’ following its
nationalization on 15th April, 1980.

Corporation Bank”
Shouldering National objectives:
The Bank took on the priorities of nationalization in full stride and emerged successful in
fulfilling the national objectives, while sustaining its performance-oriented culture and profit
augmenting record. Amidst all this, the Bank crossed Rs.1000 crore-deposit mark in the year
1985 and launched into the 1990s with focus on high quality growth by embracing newer
technology.
The end of first phase of Banking sector reforms in India had seen the Bank emerging as
the most innovative and dynamic bank in the public sector, outshining other banks in terms of
asset quality, capital adequacy, operational efficiency, well diversified income base, profitability,
productivity, and strong balance sheet.
The tremendous amount of confidence and loyalty reposed by the public in general and
customers in particular, manifested it self in the overwhelming response to the IPO of the Bank
in the year 1997.
Growing Bigger. Getting Closer.
Presently, the Bank has a network of 2501 fully automated CBS branches, 3169 ATMs
and 4724 Branchless Banking Units across the country. The Bank has Representative Offices at
Dubai and at Hong Kong.
The Bank has extended Branchless Banking units to 4724 villages and has issued Smart
Cards to all account holders in these villages for enabling them to operate their accounts at their
doorsteps through the Business Correspondents appointed by the Bank.
Passionate Performer
From 38 Rupees-13 Annas-2 Pies to a business level of Rs.3,29,300 crore and from a
Networth of Rs.5,000/- to Rs.11,737 crore, the evolution of the Bank from a Nidhi to graduate as
a Premier Public Sector Bank and from the early days of Swadeshism to post-Liberalisation days
has been a corporate success story.

Corporation Bank”
Weathering two world wars, economic depressions, imbibing the latest in technology,
responding to financial reforms and the unique record of uninterrupted posting of profits right
from its inception in 1906, only further strengthened its its commitment to the people.
Corporate Vision
"Emerge as a Model for Inclusive Growth and Innovative Banking Services"
Corporate Mission
To expand our reach to meet the financial needs of people
To provide full range of banking services with innovative products
To continue to adopt modern technology for superior banking experience
To create a rewarding environment for all stakeholders
To continue as a model organisation for transparent and ethical practices
Rewards
 The Bank has bagged SKOCH Order-of-Merit 2019-Silver for qualifying among the top
performing nominations as semi-finalist for Bank’s Mobile Banking Application-“Corp
Ease.” The Bank also won the SKOCH Award-Banking Bronze for the mobile banking
app “Corp Ease.”
 The Bank has bagged three “SKOCH Order-of-Merit 2018 Awards under the following
categories on 22nd December 2018:
i) Financial Inclusion
ii) Road Map to be Best in Insurance Penetration
iii) Implementation of Technology in Forex Operations
 The Bank has bagged the “BEST MSME BANK-WINNER 2018” award during 6th
ASSOCHAM SMEs Excellence Award – 2018 instituted by The Associated Chambers of
Commerce & Industry of India (ASSOCHAM) on 24th October, 2018.
 The Bank has bagged three awards under the Aadhaar Excellence Awards instituted by
Unique Identification Authority of India (UIDAI).

Corporation Bank”
 The Bank has bagged Best Community Development Award at the National CSR
Leadership Congress on 5th September, 2018.
 The Bank has bagged three awards instituted by Chamber of Indian Micro Small &
Medium Enterprises [CIMSME] consistently for the 5th year in a row under the
following categories: I. Best MSME Bank Award - Runner up (Emerging Category). II.
CSR Initiatives & Business Responsibility Award - Winner ( Emerging Category) III.
Best Bank for Promotional Schemes Award - Runner up ( Emerging Category)
 The Bank has bagged “Investor Relations Awards 2018” under category- Best
Expectation Management (Mid Cap) for the FY 2017-18.
 The Bank has bagged “National Payments Excellence Awards 2017” winner in
commercial Banks Category B for excellent performance in RuPay Cards, instituted by
NPCI for Financial year 2017-18.
 The Bank bagged the winner award under Best Social Bank and Joint runner-up award
under Priority Sector Lending for Large Bank class category for 2017 instituted by The
Associated Chambers of Commerce & Industry of India (ASSOCHAM).
 The Bank bagged the “Best SME Lending -2017” award during Fifth ASSOCHAM
SMEs Excellence Award 2017 instituted by The Associated Chambers of Commerce &
Industry of India (ASSOCHAM).
 The Bank has bagged “SKOCH Award for MUDRA Performance - 2017” and “SKOCH
Order-of-Merit Award for A Road Map to be Best in Insurance Penetration” instituted by
SKOCH Group for Financial year 2017-18.
 The Bank bagged the Rajbhasha Kirti Puraskar instituted by Department of Official
Language, Ministry of Home Affairs, Government of India. The Bank was awarded
Second prize under Nationalised Banks category in ‘C’ region for excellent
implementation of Official Language policy of the Govt. of India in its offices and
branches spread across the country.
 The Bank bagged two First Prizes under Annual Best Performance Awards for the SHG-
Bank linkage Programme for Karnataka State for FY 2015-16 and 2016-17 from
NABARD.

Corporation Bank”
 The Bank was awarded the SKOCH Financial Inclusion Award 2017, and SKOCH
Order-Of-Merit Award, 2017 for Financial Inclusion, instituted by SKOCH Group at the
48th SKOCH Summit held in Mumbai on 20th June, 2017.
 The Bank has bagged 2 awards for the year 2016 instituted by Chamber of Indian Micro
Small & Medium Enterprises [CIMSME] under the following categories:
A] Eco-Technology Savvy Bank Award – Winner [Mid-Sized Category]
B] Best MSME Bank Award – Runner-Up (Mid-Sized Category)
 The Bank bagged three Runner up awards under Social Banking Excellence Awards
instituted by the Associated Chambers of Commerce & Industry of India (ASSOCHAM).
The bank bagged the awards for Agriculture Banking, Priority Sector Lending and Best
Social Bank under Large Bank category for 2016.
 The Bank bagged the “Best MSME Bank Award 2016” instituted by The Associated
Chambers of Commerce & Industry of India (ASSOCHAM).
 The Bank has bagged "Excellence Award on Empowering MSMEs 2016".
 The Bank has bagged "SKOCH Achiever Award - 2016" for National SME enablement.
 The Bank bagged ten awards from NABARD for ‘Best Performance under Self Help
Group (SHG)/Joint Liability Group (JLG) Bank Linkage Programme’ in Karnataka state
for the F.Y. 2013-14 & 2014-15.
 The Bank has bagged “MSME Banking Excellence Awards – 2015” instituted by
Chamber of Indian Micro Small & Medium Enterprises [CIMSME]. The Bank has won
under the categories Best MSME Bank Award for Mid-Sized Bank - Winner, CSR &
Business Responsibility Award for Mid-Sized Bank- Runner Up and Best Bank Award
under MUDRA Yojna for Mid-Sized Bank- Runner Up.
 The Bank has bagged Best Social Bank Award-Winner, Best Rural Bank Award-Winner
and Best Bank for participation in Govt. Schemes Award-Winner under mid-sized
category.
 The Bank has bagged National Payments Excellence Awards 2015 insituted by National
Payments Corporation of India (NPCI). The Bank received the winner award jointly with
Indian Bank for Cheque Truncation System under the mid-sized category. The Bank also

Corporation Bank”
received two runner up awards for National Financial switch (NFS) for excellent
performance in acquirer transactions and Immediate Payment Service (IMPS).
 'SKOCH Achiever Award-2015' for National SME enablement.
Journey
Every institution has its start in modest initiatives but what makes it great is the passion
of the people behind it. Carrying the legacy forward with an undaunted commitment to its vision,
the journey of Corporation Bank truly epitomizes this. Started about 111 years ago in 1906, with
an initial capital of just Rs.5000/-, Corporation Bank has recorded Rs. 3,03,185 Crore mark in
business and even far more, with over 9,955 service outlets across the nation, served by
committed and dedicated 19,000 plus Corp Bankers. Proof of which is seen in its enviable track
record in financial performance. We have many reasons to cheer, predominant of them is, being
able to participate in nation building by empowering the rural and urban population alike. Today,
we are proud that we are significant contributors to the growth of the country's economy.
EARLY MOVER
Nationalised in 1980, Corporation Bank was the forerunner when it came to evolving and
adapting to the financial sector reforms. In 1997, it became the Second Public Sector Bank in the
country to enter capital market, the IPO of which was over- subscribed by 13 times. the Bank has
many " firsts " to its credit - Cash Management Services, Gold Banking, m-Commerce, " Online
" approvals for Educational loans, 100% CBS Compliance and more recently, its poineering
efforts to take the technology to the rural masses in remotest villages through low-cost
branchless banking - Business Corresponent model. All of which symbolise Bank's unswerved
commitment to its customers to provide convenience banking.
At Corporation Bank, what motivates us is the passion to excel in banking by maintaining

highest standards of service to our customers, backed by innovative products and services which
makes us one of the leading Public Sector Banks in the country, catering to a wide range of
customers - from individuals to corporate clients..

Corporation Bank”
Board Of Director
NAME DESIGNATION
P V Bharathi Managing Director & CEO
P K Panda Non Executive Director
Chitra Gouri Lal Director
K Srinivasa Murthy Director
Birupaksha Mishra Executive Director
Manish Gupta Director
P K Jain Director
Alok Tiwari Government Nominee Director
SWOT ANALYSIS
Strengths
1. Equal presence in rural and urban areas
2. Strong Financial performance
3. Employee base of over 12,000 people
4.Customised banking solutions
Weaknesses
1. Lack of Pan India presence
2. Less publicity and branding in comparison with leading banks

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Opportunities
1. Innovative products and services
2. Government funding
Threats
1. Economic crisis and volatile markets
2. Changing RBI policy
3. Presence on other banks

Corporation Bank”
CHAPTER-3
THE CAMEL MODEL EXPLAINED
3.1 CAMEL RATING SYSTEM
3.2 CAPITAL ADEQUACY RATIO (CAR)
3.3 ASSET QUALITY
3.4 MANAGEMENT EFFICIENCY
3.5 EARNINGS QUALITY
3.6 LIQUIDITY

Corporation Bank”
CHAPTER-3
CAMEL RATING SYSTEM
This section outlines the explanation as well as fundamentals of the CAMEL rating
system and the five components of the CAMEL rating framework.
What is CAMEL Rating Framework?
The CAMEL Rating Framework is a system of rating for on-site examinations of banking
institutions (Barr et al., 2002). 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 (The United States, Uniform Financial Institutions Rating
System, 1997). It is recognized to be an effective internal supervisory tool for evaluating the
soundness of financial firms especially banks.
Under this system, each banking institution subject to onsite examination is evaluated on
the basis of five (now six) critical dimensions relating to its operations and performance, which
are referred to as the component factors. These are Capital Adequacy, Asset Quality,
Management Efficiency, Earnings Quality and Liquidity. These parameters are used to reflect the
operating performance, financial performance and regulatory compliance of the banking
institutions world over. A sixth component relating to Sensitivity to market risk has been added
to the CAMEL rating in 1996 to make the rating system more risk-focused. Each of the
component factors is rated on a scale of 1 (best) to 5 (worst). A composite rating is assigned
which is taken as the prime indicator of a bank’s current financial condition. The banks rating are
highly confidential, and only exposed to the bank’s senior management for the purpose of
projecting business strategies, and to appropriate supervisory staff (Hirtle and Lopez, 1999). The
CAMEL components completely reflect the safety and soundness of banks (Barr et al., 2002).
RBI has approved this framework for measuring the performance of Indian Commercial banks
(Bodla and Verma, 2006)

Corporation Bank”
CAMEL is basically, a ratio-based model for evaluating the performance of banks.

Various ratios that make the Framework are detailed as follows:
Capital Adequacy:
Capital Adequacy is an important indicator of the financial health of a banking entity.

This indicates the banks capacity to maintain capital commensurate with the nature and extent of
all types of risks, as also the ability of the bank’s managers to identify, measure, monitor and
control these risks. It reflects the overall financial condition of the banks and also the ability of
management to meet the requirement for additional capital. This ratio acts as an indicator of bank
leverage. Capital base of financial institutions facilitates depositors in forming their risk
perception about the organization since Capital Adequacy is very useful for a bank to conserve
and protect stakeholder’s confidence and prevent the bank from bankruptcy. Capital is seen as a
cushion to protect depositors and promote the stability and efficiency of financial system around
the world. It also specifies whether the bank has adequate capital to grip unanticipated losses. It
also acts as a boundary for financial managers to maintain adequate levels of capitalization.
Reserve Bank of India prescribes banks to maintain a minimum Capital to risk-weighted

Assets Ratio (CRAR) of 9 % with regard to credit risk, market risk and operational risk on an
ongoing basis as against 8 % prescribed in Basel documents.
The following ratios measure Capital Adequacy:
Capital Adequacy Ratio (CAR):
Capital adequacy ratio is the ratio which safeguards banks against insolvency, protects
banks against surplus leverages, insolvency and keeps them out of difficulty. It is defined as the
ratio of banks capital in relation to its current liabilities and risk weighted assets. Risk weighted
assets is a measure of amount of banks assets, adjusted for risks. An appropriate level of capital
adequacy confirms that the bank has adequate capital to increase its business, while at the same
time its net worth is enough to absorb any financial slumps without becoming insolvent. It is the
ratio which determines banks capacity to meet the time liabilities and other risks such as credit
risk, market risk, operational risk etc. As per RBI norms, Indian SCBs should have a CAR of 9%
i.e., 1% more than stipulated Basel norms while as per the latest RBI norms, public sector banks

Corporation Bank”
are emphasized to keep this ratio at 12%. It is arrived at by dividing the sum of Tier-1, risk,
operational risk etc. As per RBI norms, Indian SCBs should have a CAR of 9% i.e., 1% more
than stipulated Basel norms while as per the latest RBI norms, public sector banks are
emphasized to keep this ratio at 12%. It is arrived at by dividing the sum of Tier-I, Tier-II and
Tier-III capital by aggregate of risk weighted assets (RWA).
Symbolically,
CAR= (Tier-I + Tier-II + Tier-III)/RWA
Tier-I capital includes equity capital and free reserves.
Tier-II capital comprises of subordinate debt of 5-7 years tenure, revaluation reserves, hybrid
debt capital instruments and undisclosed reserves and cumulative perpetual preference shares.
Tier-III capital comprises of short-term subordinate debt. The higher the CAR, the stronger the
bank.
Debt Equity Ratio (D/E Ratio):
Debt Equity Ratio in banks is a measure of the quantum of banks business that is
financed through the blend of debt and equity. It is a measure of financial leverage of a bank. It
is calculated as the proportion of total 'Outside Liabilities' to Net worth. 'Outside Liabilities'
includes total borrowings, deposits and other liabilities. 'Net Worth' includes equity capital and
reserves and surplus.
Higher ratio indicates less protection for the creditors and depositors in the banking system.
Symbolically,
D/E Ratio = Total Outside Liabilities/ Net Worth
Total Advances to Total Assets Ratio (Tot ADV / Tot ASS Ratio):
This is an important parameter to measure the aggressiveness of banks in lending. This

ratio indicates a bank’s sternness in lending which ultimately results in better profitability. Total

Corporation Bank”
advances also include receivables. The value of Total Assets excludes the revaluation of all the
assets.
Symbolically,
Tot ADV / Tot ASS Ratio = Total Advances/ Total Assets
Government Securities to Total Investment Ratio (G-Sec / Tot INV Ratio):
This ratio indicates the quantum of safe investments in the total investments of the banks
and also measures the risk involved in a bank’s investment. Government Securities, are
commonly, considered as the most safe debt instrument, which, as a result, brings the lowest
return. Since government securities are risk-free, a higher investment in Government Securities
to investment ratio, the lower the risk involved in a bank’s investment. This ratio is calculated by
dividing Government Securities by Total Investments of the bank.
Symbolically,
G-Sec / Tot INV Ratio = Government and State Government securities in India +
Government Securities outside India/ Total Investments
Asset Quality:
Asset Quality reflects the magnitude of credit risk prevailing in the bank due to its
composition and quality of loans, advances, investments and off- balance sheet activities. The
financial soundness of a bank is determined with the quality of assets that the bank possesses.
Asset quality defines the financial health of banks against loss of value in the assets, as asset
weakening, risks the solvency of the financial institutions especially banks. This declining value
of the bank’s assets has a rippling effect, as losses are ultimately written-off against capital,
which eventually affects the earning capability of the bank. With this structure, the asset quality
is measured with respect to the level and robustness of nonperforming assets, sufficiency of
provisions, dispersal of assets etc. The primary dictum behind measuring the assets quality is to
establish the elements of Non-Performing Assets (NPAs) as a percentage of the total assets. This
clearly indicates the quality of advances that the bank has granted to generate interest income.

Corporation Bank”
Thus, assets quality clearly specifies the type of the debtors that banks have in their balance
sheet. The following ratios measure Asset Quality:
Net Non-Performing Assets (NPA) to Net Advances Ratio (NNPA’s/ ADV Ratio):
Net Nonperforming Assets to Net Advances Ratio is a measure of the overall quality of
banks advances. It shows the actual financial burden on the bank. An NPA are those assets for
which interest is overdue for more than three months or ninety days. Net NPAs are calculated by
reducing cumulative balance of provisions outstanding at the end of the period as well as some
other interest adjustments, from gross NPAs. Higher ratio reflects rising bad quality of loans.
Symbolically,
NNPA’s/ ADV Ratio = Net Non-Performing Assets / Net Advances
Gross Non-Performing Assets (GNPA) to Net Advances Ratio (GNPA’s/ ADV Ratio):
Gross Non-Performing Assets (GNPA) to Net Advances Ratio is a measure of the quality
of assets in a situation, where the management has not provided for loss on NPAs. It reflects the
quality of advances made by the bank. Gross NPAs are the sum total of all loan assets that are
classified as NPAs as per RBI guidelines as on Balance Sheet date. The Gross NPAs are
measured as a percentage of Net Advances. A low ratio signifies that the bank has granted sound
loans and proves the good quality of advances.
Symbolically,
GNPA’s/ ADV Ratio = Gross Non-Performing Assets / Net Advances.
Total Investment to Total Assets Ratio (Tot INV / Tot ASS Ratio):
This ratio measures the proportion of total assets of the bank that are locked up in
investments which does not form a part of the core income of the bank, as against providing
advances to the customers. An aggressive bank would have a low investment to asset ratio as a
high ratio signifies that the bank has very conventionally kept a high cover of investment to
safeguard against the risk of Non-Performing Assets. This adversely affects the profitability of

Corporation Bank”
the banks since the interest income generated through investments is much less than interest
income earned through granting advances.
Symbolically,
Tot INV / Tot ASS Ratio = Total Investment / Total Assets.
Management Efficiency:
The Management Efficiency parameters signal the ability of the board of directors and
senior managers to identify, measure, monitor and control risks associates with the bank.
Management Efficiency is an important element of the CAMEL model. The management of the
bank takes crucial decisions depending on its risk perception. It sets vision and goals for the
organization and sees that it achieves them. This parameter is used to evaluate management
efficiency as to assign premium to better quality banks and discount poorly managed ones.
Management efficiency, another vital component of the CAMEL framework, means
management’s adherence to standards and policies, capability to plan and be anticipatory,
leadership, innovativeness and managerial aptitude of the top-level management. This qualitative
measure, although has a streak of subjectivity, yet uses risk management policies and processes
as indicators of sound management practices. The following ratios measure Management
Efficiency:
Total Expenditure to Total Income Ratio (Tot EXP / Tot INC Ratio):
Every banking organization is keen on controlling its expenditure as it is an essential

aspect to enhance the profits for the bank. It is justified that in case of banks, keeping a close
watch on expenditure would enable it to enhance its return to its equity shareholders. A
substantial part of operating expense of banks consists of salaries to employees, technological up
gradations and branch rationalization, especially the new generation banks. Although these
expenses consequence into higher Total Expenditure to Total Income Ratio, in long term they
help the bank in enhancing its return to equity shareholders. It is ideal for banks to have a lower
ratio as it will enhance the profits of the bank and subsequently enhance returns to the
stakeholders. The ratio gives investors a clear view of how efficiently the bank is being run – the
lower it is, the more profitable the bank will be. Changes in the ratio can also highlight potential

Corporation Bank”
problems. If the ratio rises from one period to the next, it means that costs are rising at a higher
rate than income.
Symbolically,
Tot EXP / Tot INC Ratio = Total Expenditure / (Net Interest Income + Non- interest
Income).
Total Advance to Total Deposit Ratio (Tot ADV/Tot DEP Ratio):
The ratio gives the first indication of the health of a bank as this ratio measures the extent
to which a bank's core funds are being used for lending which is its main banking activity.
Advances are necessary to earn profit and service the interest being paid to the deposits. The
ratio measures the efficiency and ability of the bank's management in converting the deposits
available with the bank (excluding other funds like equity capital, etc.) into high earnings
advances. It indicates the quantum of advances a bank has as against the deposits it has
mobilized. A higher ratio indicates more reliance on deposits for lending, whilst a low ratio
signifies less reliance on deposits. The regulator does not provide any standard norm or level for
the ratio but, a very low ratio indicates banks are not making full use of their resources. However
if the ratio is above a certain level, it indicates a pressure on the banks resources with an asset-
liability mismatch leading to unhealthy balance sheet. This is extremely disturbing as apart from
creating unhealthy financial statements it may also hint at capital adequacy issues, forcing banks
to raise more capital. Such a situation is considered extreme as RBI completely ensures on a
regular basis that Indian banks don’t overstretch themselves.
Symbolically,
Tot ADV/Tot DEP Ratio = Total Advances / Total Deposit.
Asset Turnover Ratio (ATR):
Asset Turnover measures how quickly a bank turns over its asset through its income, both
interest incomes as well as non-interest income. It measures the ability of a bank to use its assets
to efficiently generate income. The higher the ratio indicates that the bank is utilizing all its
assets efficiently to generate income.

Corporation Bank”
Symbolically,
ATR = Total Income/ Total Assets.
Diversification Ratio (DIVRSF ratio):
This ratio measures the ability of the bank to generate income other than interest income
from regular banking activities. A large proportion of banks income is generated through its
lending activities, however presently banks have also started enhancing its income by resorting
to 164 activities other than regular banking activities that are called as fee based activities (e.g.
fees and commission, trading gains, forex activities etc.). Today fee based income accounts for a
major portion of a bank's other income. A bank generates higher fee income by acclimatizing
technology for developing innovative products for sustained service levels. Since fee based
income is not any ways related to bank's capital adequacy therefore the potential to generate non-
interest income is enormous. A high ratio indicates increasing proportion of fee-based income.
The ratio is also opinionated by gains on government securities, which fluctuates depending on
interest rate movement in the economy. The explanation of this ratio is subject to some debate.
Few analysts view a high number as a good indicator, since it shows that the bank is not reliant
only on its lending activities to generate earnings. Few Analysts take the opposite view and
express that a high indicates that the bank is dependent on unsteady fee based revenues that are
not predictable for its earnings.
Symbolically,
DIVRSF Ratio= (Total Income - Interest Income) / Total Income.
Profit Per Employee (PPE):
This is an important parameter to measure the efficiency of the banks management as this
ratio measures the company’s profits in relation to number of employees. The ratio indicates the
surplus earned per employee. It specifies the average profit generated per person employed. An
upright management will inspire and stimulate employee to earn more profit for the bank. A high
ratio clearly signifies efficient management.
Symbolically,

Corporation Bank”
PPE= Profits After tax/ Number of Employees.
Business Per Employee (BPE):
Business per employee ratio shows the productivity of employees of the bank and is used
as a tool to measure the efficiency of all the employees of a bank in generating business for the
bank. It indicates how much business each employee is producing for the bank. Business is in
terms of sum of Total Deposits and Total Advances in a particular year of the bank. A high
business per employee ratio means that employees are generating adequate sales or revenue for
the bank which is a clear indicator of efficient and sound management of the bank, while a low
ratio is 165 often a sign of low productivity. A high ratio is good for the bank as it automatically
signifies efficient bank management.
Symbolically,
BPE= Total Income / Number of Employees.
Earnings Quality:
The quality of earnings is a vital parameter that determines the ability of a bank to earn
steadily, going into the future. The quality of earnings represents the sustainability and growth in
future earnings of the bank and the competency of the bank to sustain maintain this quality and
earn steadily. It is an indicator of profitability of banks. The ultimate aim of a bank is to increase
its bottom line and bring profit to the stakeholders.
The parameter gains importance as a substantial part of a bank's income is earned through
fee based activities like investments, treasury operations, and corporate advisory services and so
on. The quality of earnings of the bank will also aid the bank in executing activities like dividend
payment, maintaining adequate level of capital, taking up growth and diversification strategies
and maintaining a competitive attitude.
However apart from the sources of earning, the following dimensions also decide
significantly the financial performance of the banks. i. trend, level, and constancy of earnings, ii.
quality and sources of earnings. iii. Capability to extend capital through retained earnings. iv.

Corporation Bank”
exposure to market risks. v. provisions forcredit losses. Sound earnings performance would
stimulate the confidence of depositors, investors, creditors, and the public at large.
The following ratios measure the Earnings Quality:
Net Profit Margin (NPR):
Net profit margin is an important criterion to measure the earnings quality in banks.
Increasing profits is the best indicator that the bank can pay dividends due to which the share
price will trend upward. Stakeholderslook at net profit margin thoroughly because it signifies the
quality of the bank that is reflected in its ability in converting revenue into profits available for
shareholders. It is explained as percentage of revenue that is residual after all operating expenses,
interest, taxes and preferred stock dividends other than common stock dividend is deducted from
the total income of the bank. A high Net Profit Margin clearly signifies that the bank has stable
and steady earnings.
Symbolically,
NPR = Net profit After Taxes / Total Income.
Return on Equity (ROE):
The return on equity (ROE), also known as return on investment (ROI), is a sound
measure of return, since it is the product of the operating performance, debt- equity management
and asset turnover of the bank. ROE measures how much the shareholders earned for their
investment in the bank. This ratio indicates how profitable a bank is by comparing its net income
to its average shareholders’ equity. If a bank can mobilize deposits at a lower rate and advance
these to customers to generate higher returns than the cost of deposits, it is able to create
additional revenues that accrue to shareholders as increased equity.
The higher the ratio percentage, the more efficient the bank is in earnings and utilizing its
equity base to generate better return is to investors.
Symbolically,

Corporation Bank”
ROE = Net Income / Average Shareholders Equity.
Net Interest Margin (NIM):
Net Interest margin is an important parameter of the performance of banks. It is the

difference between the interest income and the interest expended as a percentage of total assets.
NIM, shows the ability of the bank to keep the interest on deposits low and interest on advance
high. It 167 is an important measure of a bank's core income (income from lending operations).
A higher NIM indicates better earnings as against the total assets.
Symbolically,
NIM = (Interest Income - Interest Expense) / Interest Earning Assets.
Interest Spread (IS):
Interest spread is the difference between yield and cost of borrowing, where yield is the
interest income earned on interest earning assets and cost of borrowing is interest expense
charged on interest bearing liabilities. It clearly indicates the extent to which interest earning
capacity of the bank exceeds or falls short of its interest cost obligations. The larger the spread,
the more profitable the bank is likely to be; the lower the spread, the less profitable the bank.
While the federal funds rate plays a large role in determining the rate at which an institution
lends immediate funds, open market activities ultimately shape the rate spread.
Symbolically,
IS = (Interest Income/ Interest earning assets) - (Interest Expense/ Interest bearing

Liabilities)
Interest Income to Total Income Ratio (INTINC/ Tot INC Ratio) :
Interest income to total income indicates the capability of the bank in generating interest
income from its advances. Interest income is a basic source of revenue for banks. In other words,
this ratio computes the income from lending operations as a percentage of the total income
generated by the bank in a year. Ideally banks would like to have a high ratio as it signifies

Corporation Bank”
regularity in income and represents the income of the bank in the regular course of banking
operations.
Symbolically,
INTINC/ Tot INC Ratio = Interest Income / Total Income.
Liquidity:
Liquidity management in banks has assumed key prominence due to competitive force of
peer banks and the smooth flow of foreign capital in the domestic markets. Every bank should
ensure that it is able to maintain adequate level of liquidity to meet its financial commitments in
a timely manner. In order to fulfill the demands of the customers; the creditors and the
depositors, banks must maintain liquidity in their asset, as the influence of liquidity crisis in
banks can adversely impact their financial performance. Liquidity is an important aspect for any
organization dealing in money and banks rank ahead in the list of institutions that deal with
money and therefore have to maintain that apt balance between profitability and liquidity.
Incapability of banks to manage its short term liquidity liabilities and loan commitments can
undesirably impact the performance of banks by substantially increasing its cost of funds.
Liquidity in banks is managed by an effective mechanism called the Asset and Liability
Management. It reduces maturity mismatches between assets and liabilities to optimize returns.
The following ratios measure Liquidity:
Cash to Deposit Ratio (CD Ratio):
This is an important parameter to measure liquidity as it evaluates the amount of cash that
the bank has from the deposits that it has generated. Cash being liquid of all the assets gives the
complete picture of the liquidity of the bank. Banks need to maintain sound cash to deposit ratio
so as to ensure that large volume of cash is not maintained, as idle cash does not generate any
returns and will subsequently endanger the earnings quality of the bank.
Symbolically,
CD Ratio = Cash / Total Deposits.

Corporation Bank”
Government Securities to Total Asset Ratio (G-Sec /Tot ASS Ratio):
Investment in government securities, whether within the country or outside India are
considered to be the safest investment and therefore the most liquid investment. This ratio
measures the total assets of the bank that are held in government securities. Although a high ratio
signifies sound liquidity of the bank, it affects the earning quality of the bank since government
securities do not 169 give high returns unlike other market investing instruments. Inspite of this,
banks invest in government securities primarily to meet their SLR requirements.
Symbolically,
G-Sec /Tot ASS Ratio = Government and State Government securities in India +
Government Securities outside India/ Total Assets.
Total Investment to Total Deposit Ratio (INV/DEP Ratio):
This ratio measures liquidity available to the depositers of a bank. It measures how liquid the
bank is in meeting its obligation towards the depositors of the bank.
Symbolically,
INV/DEP Ratio = Total Investment / Total Deposits.
Interest Expended to Interest Earned Ratio (INT EXP/ INT EARN Ratio):
This ratio measures interest expense as a percentage of interest income. It measures the
ability of the bank to meet the interest expenditure on deposits from the interest income from
advances. It also shows the apt management of deposits and advances of the bank. If the ratio is
less than 1, the bank is generating enough interest from advances to meet its interest obligations
of deposits which signifies sound liquidity of the bank.
Symbolically,
INT EXP/ INT EARN Ratio = Interest Expenditure / Interest Income.

Corporation Bank”
CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
 TABLE
 GRAPH

“ Evaluating
luating Performance of Banks through CAMAL Model- A Case S
Study on
Corporation Bank”
DATA ANALYSIS AND INTERPRETATION
CAPITAL ADEQUACY:
1) =
Year Capital TRWCE ratio
2014-15 155049.5 1394200.7 11.12
2015-16 15971.23 153916.24 10.38
2016-17 16991.78 150146.75 11.32
2017-18 12134.99 131508.87 9.23
2018-19 13897.3 112956.89 12.30
ratio
15 11.32 12.3
11.12 10.38 9.23
10
0
2014-15 2015-16 2016-17 2017-18 2018-19
ratio
Interpretation:
The table and graph represent the capital adequacy of the bank for a period of 5 years. Capital
adequacy reflects the overall financial condition of the bank. The ratio is minimum in the year
2018-19
19 after that it shows a declining trend until 2017-18.So,it
2017 18.So,it takes a leap and moves to better
position. As of the year 2018-19
19 the bank had improved its capital adequacy ratio.
The highest capital risk adequacy ratio was recorded in the year 2018-19
2018 19 is 12.3%

“ Evaluating
Study on
Corporation Bank”
2) =
&
Year Borrowings Share capital & reserves Ratio
2014-15 104149041 105137059 0.99
2015-16 131121944 113995868 1.15

2016-17 64681735 127499006 0.51
2017-18 221711335 108458520 2.04
2018-19 83942552 165648613 0.51
ratio
2.5 2.04
2
1.5 1.15
0.99
1
0.51 0.51
0.5
0
2014-15 2015-16 2016-17 2017-18 2018-19
ratio
Interpretation:
The table and a graph represent the debt equity ratio for the bank for the period 5 years from
2014-15 to 2018-19.
The ratio is at its minimum in both the year 2016-17

2016 and 2018-19
19 but its position after 2017
2017-18
has been progressive to reach level of 2.04
The highest debt equity ratio was recorded in the year 2017-18 is 2.04%

“ Evaluating
Study on
Corporation Bank”
3) =
Year Total advances Total asset ratio
2014-15 1450660356 2260192645 0.64
2015-16 1403222406 2348667873 0.60
2016-17 1403567938 2479198035 0.57
2017-18 1198688371 2218913054 0.54
2018-19 1212512092 2135778538 0.57
ratio
0.64
0.65 0.6
0.6 0.57 0.57
0.54
0.55
0.5
ratio
0.45
2014-15 2015
2015-16 2016-17 2017-18 2018-19
Interpretation:
The total advances to asset ratio determine the productivity of the assets of a bank. It indicates
how far the assets of a bank have been utilized to provide advances to its customers. A high ratio
indicates an effective utilization of asset and a lower ratio
ratio indicates a low productivity of the
bank.
Total advances to total deposit ratio for a period of 5 years. A high ratio id depicted in the year
2014-15,
15, while the ratio is at its lowest in 2017-18
2017 18 as it is indicated in the graph the annual
growth rate off the bank is shows a drastically fall from 2015-16
2015 to 2017-18

“ Evaluating
Study on
Corporation Bank”
The highest total advances to total asset ratio was recorded in the year 2014-15
2014 15 is 0.64%
ASSET QUALITY:
NET NPA
1)NET NPA to total advances ratio =
NET ADVANCES
Year Net NPA Total advances Ratio
2014-15 4464979400 1450660356 3.08
2015-16 9160139100 1403222406 6.53
2016-17 11692178100 1403567938 8.33
2017-18 14077015800 1198688371 11.74
2018-19 6926038600 1212512092 5.71
ratio
11.74
12
10 8.33
8 6.53
5.71
6
3.08
4
2
0
2014-15 2015
2015-16 2016-17 2017-18 2018-19
ratio
Interpretation:
Above table and graph no represents net NPA ratio for the past 5years from 2014
2014-15 to 2018-19.
The highest net NPA ratio was recorded in the year 2017-18
2017 is 11.74%

“ Evaluating
Study on
Corporation Bank”
2) =
Year Net NPAs Total assets ratios
2014-15 4464979400 2260192645 1.98
2015-16 9160139100 2348667871 3.9
2016-17 11692178100 2479798035 4.72
2017-18 14077015800 2218713054 6.34
2018-19 6926638600 2135778538 3.24
ratios
6.34
7
6 4.72
5 3.9
3.24
4
3 1.98
2
1
0
2014-15 2015
2015-16 2016-17 2017-18 2018-19
ratios
Interpretation:
Net NPA to total asset ratio for a period of 5 years. A high ratio id depicted in the year 2017
2017-18,
while the ratio is at its lowest in 2014-15
2014 15 as it is indicated in the graph the annual growth rate of
the bank is in a good condition up to year 2017-18
2017 18 and a sudden fall in the year 2018
2018-19 is 3.24
The Net NPA total asset ratio

io was recorded in the year 2017-18
2017 is 6.34%

“ Evaluating
Study on
Corporation Bank”
3) =
Year total investment total assets Ratios
2014-15 634311742 2260192645 0.28
2015-16 632774551 2348667873 0.27
2016-17 640961398 2479198035 0.26
2017-18 703497560 2218913054 0.32
2018-19 599791981 2135778538 0.28
ratios
0.4 0.32
0.28 0.27 0.26 0.28
0.3
0.2
0.1
0
2014-15 2015-16 2016-17 2017-18 2018-19
ratios
Interpretation:
Above table and graph represents total investment to total asset ratio for the past 5 years 2014
2014-15
to 2018-19.
A 0.01% decreases than the past year until 2016-17,

2016 17, and the graph shows increase in the year
2017-18
The highest total investment to total asset ratio was recorded in the year 2017-18
2017 18 is 0.32%

“ Evaluating
Study on
Corporation Bank”
MANAGEMENT EFFIVIENCY:
1)TOTAL ADVANCES TO TOTAL DEPOSITS =
YEAR total advances total deposits ratios
2014-15 1450660356 1993428111 0.73
2015-16 1403222406 2051403378 0.68
2016-17 1403567938 2205505451 0.66
2017-18 1198688371 1833159499 0.65
2018-19 1212512092 1845678445 0.66
ratios
0.73
0.74
0.72
0.7 0.68
0.68 0.66 0.66
0.65
0.66
0.64
0.62
0.6
2014-15 2015-16 2016-17 2017-18 2018-19
ratios
Interpretation:
Above table and graph represents total advances to total deposit ratio for the past 5 years 2014
2014-
15 to 2018-19.
The highest total advances to total deposit ratio was recorded in the year 2014-15
2014 15 is 0.73%

“ Evaluating
Study on
Corporation Bank”
2) =
Year Total income total asset ratios
2014-15 210389100 2260192645 0.093
2015-16 211464000 2348667873 0.09
2016-17 225617800 2479198035 0.091
2017-18 199414100 2218913054 0.089
2018-19 174943900 2135778538 0.082
ratios
0.093
0.095 0.09 0.091
0.089
0.09
0.082
0.085
0.08
0.075
2014-15 2015-16 2016-17 2017-18 2018-19
ratios
Interpretation:
Asset turnover ratio for a period of 5 years. A high ratio id depicted in the year 2014
2014-15, while
the ratio is at its lowest in 2018-19
2018 19 as it is indicated in the graph the annual growth rate of the
bank is in an average condition till year 2017-18
18 but a sudden fall in the year 2018
2018-19
The asset turnover ratio was recorded in the year 2014-15

2014 is 0.093%

“ Evaluating
Study on
Corporation Bank”
EARNINGS:
OPERATING PROFIT
1)OPERATING PROFIT TO TOTAL ASSET =
TOTAL ASSET
Year Operating profit Total profit Ratios
2014-15 30274500 2260192645 0.013
2015-16 30950200 2348667873 0.013
2016-17 44395300 2479198035 0.018
2017-18 39504200 2219813054 0.018
2018-19 38944800 2135778538 0.018
ratios
0.018 0.018 0.018

0.02
0.013 0.013
0.015
0.01
0.005
0
2014-15 2015-16 2016-17 2017-18 2018-19
ratios
Interpretation:
Operating profit to total asset ratio for a period of 5 years. A high ratio id depicted in the year
2016-17 to 2018-19,
19, while the ratio is at its lowest in 2014-15
2014 and 2015-16
16 as it is indicated in
the graph the annual growth rate of the bank is in a same condition in 2016-17
2016 17 onwards.
The highest operating profit to total asset ratio was recorded in the year 2016--17 to 2018-19 is
0.018%

“ Evaluating
Study on
Corporation Bank”
2) =
Year Net profit Total asset ratios
2014-15 5842600 2260192645 0.003
2015-16 -5064800 2348667873 -0.002

0.002
2016-17 5612100 2479198035 0.002
2017-18 -40539400
40539400 2219813054 -0.018
0.018
2018-19 -63329800
63329800 2135778538 -0.029
0.029
ratios
0.01 0.003 0.002
0
2014-15 -0.002
2015-16 2016-17 2017-18 2018-19
-0.01
-0.02 -0.018
-0.03 -0.029
ratios
Interpretation:
ROA is an indication of the operational efficiency of the bank. The ROA provides information
about how much profit is generated on average by each unit of asset.
Above table and graph represents return on asset ratio for the past 5 years from 2014
2014-15 to 2018-
19.
The table depicts highest return on asset ratio was recorded in the year 2014-15
2014 15 is 0.003% and
shows declining trend over the subsequent year. This further represents a negative ratio in 2017
2017-
18 and 2018-19
19 as the bank incurred net loss.
The highest ROA ratio was recorded in the year 2014-15

2014 is 0.003%

“ Evaluating
Study on
Corporation Bank”
3) =
Year operating exp operating income Ratios
2014-15 25253600 30274500 0.83
2015-16 28796000 30950200 0.93
2016-17 31017900 44395300 0.7
2017-18 32008800 39504100 0.81
2018-19 34860600 38944600 0.9
ratios
0.93 0.9
1 0.83 0.81
0.8 0.7
0.6
0.4
0.2
0
2014-15 2015
2015-16 2016-17 2017-18 2018-19
ratios
Interpretation:
Above table and graph represents cost to income ratio for the past 5 years 2014-15
15 to 2018
2018-19.
The highest cost to income ratio was recorded in the year 2015-16
2015 is 0.93%
In the year 2014-15

15 cost to income ratio recorded was 0.83%, in 2015-16
2015 16 ratio was 0.93%, in
2016-17
17 ratio was 0.7%, in 2017-18
2017 ratio was 0.81%, and in the year 2018-19
19 ratio was 0.9%

“ Evaluating
Study on
Corporation Bank”
4) =
year Interest income Total income Ratio
2014-15 195564400 210389100 0.93
2015-16 194112400 211464000 0.92
2016-17 194714700 225617800 0.86
2017-18 176283300 199414100 0.88
2018-19 156226300 174947000 0.89
ratios
0.93
0.94 0.92
0.92
0.89
0.9 0.88
0.88 0.86
0.86
0.84
0.82
2014-15 2015-16 2016-17 2017-18 2018-19
ratios
Interpretation:
Above table and graph represents interest income to total income ratio for the past 5 years 2014
2014-
15 to 2018-19.
A high ratio id depicted in the year 2014-115,

2014 115, while the ratio is at its lowest in 2016
2016-17.
The highest interest income to total income ratio was recorded in the year 2014-15
2014 15 is 0.93%

“ Evaluating
Study on
Corporation Bank”
LIQUIDITY:
loans
1) loans as a percentage of deposits ratio =
total deposits
year Advances Deposit Ratio
2014-15 1450660356 1993428111 0.73
2015-16 1403222406 2051403378 0.68
2016-17 1403567938 2205505451 0.64
2017-18 1198688371 1833159499 0.65
2018-19 1212512092 1845678445 0.66
0.73
0.74
0.72
0.7 0.68
0.68 0.66
0.65
0.66 0.64
0.64
0.62
0.6
0.58
2014-15 2015-16 2016-17 2017-18 2018-19
19
Above table and graph represents loans as percentage of deposits ratio for the past 5 years 2014
2014-
15 to 2018-19.
A high ratio id depicted in the year 2014-15,

2014 15, while the ratio is at its lowest in 2016
2016-17.
The highest interest income to total income ratio was recorded

reco in the year 2014-15
15 is 0.
0.73%

Corporation Bank”
CHAPTER-5
FINDINGS, SUGGESTION AND CONCLUSION
5.1 FINDINGS
5.2 SUGGESTION
5.3 CONCLUSION

Corporation Bank”
CHAPTER 5
FINDINGS, SUGGESTIONS AND CONCLUSION
FINDINGS
Capital Adequacy (C)
 The highest Capital Risk Adequacy Ratio was recorded in the year 2018-19 is 12.3%
 The highest Debt Equity Ratio was recorded in the year 2017-18 is 2.04%
 The highest Total Advance to Total Asset Ratio was recorded in the year 2014-15 is 0.64%
ASSET QUALITY – A
 The highest net NPA to total asset Ratio was recorded in the year 2017-18 is 6.34%
 The highest net NPA to total advances Ratio was recorded in the year 2017-18 is 11.74%
 The highest total investment to total asset Ratio was recorded in the year 2017-18 is 0.32%
MANAGEMENT – M
 The highest Total Advance to Total Deposit Ratio was recorded in the year 2014-15 is
0.73%
 The highest asset turnover ratio was recorded in the year 2014-15 is 0.093%
EARNINGS & PROFITABILITY – E
 The highest Return on Asset Ratio was recorded in the year 2014-15 is 0.003%
 The highest operating Profit to total Asset Ratio was recorded in the year 2016-17 to
2018-19 is 0.018%
 The highest Interest Income to Total Income Ratio was recorded in the year 2014-15 is
0.93%
 The highest cost to Income Ratio was recorded in the year 2014-15 is 0.93%
Liquidity – L
 The highest loan as percentage to total deposit Ratio was recorded in the year 2014-15 is
0.73%

Corporation Bank”
Suggestions
1. Need to timely strategies: The present business environment of banking is highly volatile and
uncertain. It is highly competitive and every bank is finding difficult to serve grow, stabilize
and excel in banking business. Further, for better performance management must keep an eye
on the emerging trends in business environment. The proper and timely strategies must be
adopted to improve efficiency of the whole organization.
2. Adopt effective working strategy: Competition is faced from public, private, foreign and
cooperative banks. They have adopted the strategy for effective workings making use of
advance technology and changes in working procedure. No doubt, performance has been
improved, but manpower is not maintained and utilized properly. For improvement in human
resources, special focus should be given on selection, training, motivating career
opportunities for employees etc.
3. Proper utilization of Manpower: Human resource is considered as the most important
resource but today dealing efforts are not found for improvement of competencies and
motivation of employees. It is suggested that in this direction strong steps have to be taken.
4. Providing performance feedback: Performance is one of the management functions are
available on papers but actually these functions are not performed or performed partially. The
effectiveness of performance management is below expectation. Performance management
functions should be assigned to a separate cell Head by HR so that effectiveness of it would
improve. The awareness regarding this should be created further through discussions,
circulars and lectures by experts.
5. Avoiding unequal performance standards: Performance appraisal, planning and methods used
are rightly available on papers. Regular appraisals are not carried out. The improper appraisal
is creating problems for further actions. HR Department should look into these matters and
take the help of experts and implement the performance appraisal strongly. A lot of
irregularities can be overcome.
6. Customer satisfaction: Transactions and other banking formalities rob the precious time of
customers. More time on waiting is involved. Especially management of bank should focus
on prompt response and reduce the waiting time of a customers, when it happens, he feels at
ease and happy. The management should carry out a study the work measurement to cut

Corporation Bank”
down unwanted activities and time taken for performing banking jobs. The reduction in cost
time and efforts should be their objectives.
7. Employees Motivation: Attention paid to customers and interest taken in jobs by employee is
of average level. Management should focus to motivate employees to take more interest in
jobs and proper attention to be given to customers while dealing particularly in public and
cooperative banks. For creating goodwill in the minds of customers, employees of banks
have to play an important role. The focus of management should be there on employee
selection, training, motivation, appraisal and career opportunities.
8. Developing a positive attitude: Motivation, behavior, willingness to shoulder responsibility,
convincing customers, initiative to solve problems and satisfaction are the required qualities
for achieving the positive development. A big gap is found between employee and
management should gear up and especially cooperative and public banks to plan and act
smart to improve these categories.
9. Goal orientation: Employees are the most important resource of any bank. They contribute
more in achieving higher profitability, business, competitive advantage and goodwill of the
banks. Management should treat them as business partners. The mindset of past is not going
to work out in present scenario. They should be discussed, consulted, motivated and
participate to accomplish tasks and meet performance standards.

Corporation Bank”
CONCLUSION
Economic development of any country is mainly influenced by the growth of the banking
industry of that country. Today, modern banks are very useful for the utilization of the resources
of the country. Banks play very important role in the economic life of the nation. The health of
the economy is closely related to the soundness of its banking system. Although banks create no
new wealth but their borrowing, lending and related activities facilitate the process of
production, distribution, exchange and consumption of wealth. In this way they become very
effective partners in the process of economic development. The banks are mobilizing the savings
of the people for the investment purposes. When the savings are encouraged and saving rate
increases. If there would be no banks then a great portion of a capital of the country would
remain idle. At present the Indian financial system consists of public, private, cooperative,
development and foreign banks. Reserve Bank of India is the central controlling authority of all
banks in India. The current study has been conducted to examine the economic sustainability of
CORPORATION BANK using CAMEL model during the period 2015-2019. The main
objectives of this research study is to understand the concept of performance management,
appraisal, productivity. Further to find out the practices adopted, difficulties faced in
implementation of performance management functions, productivity measurement and suggest
ways for further improvement in performance and productivity of bank employees. Management
should ensure that important matters having significant bearing on the proper functioning and
working of the banks such as mobilization of deposits targets, advance specially priority sector
advance, liquid assets, investment, over dues and recoveries etc... It should be reviewed
periodically in order to achieve better functioning. The banks should effectively made use the
information and computer technology for giving a better service to the customers and to face the
threats, pressures and competition of the foreign banks. The grievances of the customers should
be solved as early as possible.

Corporation Bank”
REFERENCE
 www.moneycontrol.com
 www.corpbank.com
 www.mbaskool.com
 www.yourarticlelibrary.com
 Performance Evaluation of Commercial Banks Through Camel Approach “ Comparative
Study of selected Public, Private banks working in India”- Kaushal Bhatt 2016.

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“ Evaluating Performance of Banks through CAMAL Model- A Case Study on

1.2 LITERATURE REVIEW

1.3 STATEMENT OF THE PROBLEM

1.4 NEED FOR THE STUDY

1.5 OBJECTIVES OF THE STUDY

1.6 RESEARCH METHODOLOGY

1.7 LIMITATIONS OF THE STUDY

Edurite College of Management Studies, Shivamogga Page 1

Banking performance is assessed by implementing a regulatory banking supervision

Edurite College of Management Studies, Shivamogga Page 2

Framework of CAMEL Approach

Edurite College of Management Studies, Shivamogga Page 3

1.2 Literature review:

Anita Makkar (2013): a Comparative analysis of the financial performance of Indian

M Nandhini D Sivasakthi (2015): an analysis of banks selective Indian public sector

Edurite College of Management Studies, Shivamogga Page 4

1.3 Statement of the problem:

1.4 Need for the study

1.5 Objectives of the study

Edurite College of Management Studies, Shivamogga Page 6

1.6 Research methodology:

TOOLS & TECHNIQUES:

To look at the financial soundness of the corporation bank, internationally accepted

The Following ratios are calculated for CAMELS Analysis:

Edurite College of Management Studies, Shivamogga Page 7

 Net NPA= Net NPA/ Total loans

 Total Advances to Total deposit ratio=Total Advances/ Total Deposit

 Return on Asset ratio = Net profit/ Total asset

 Liquidity asset to total asset ratio = Liquid asset/ Total asset

1.7 Limitations of the study

 The data collection is for five years only.

Edurite College of Management Studies, Shivamogga Page 8

Edurite College of Management Studies, Shivamogga Page 9

INDUSTRY PROFILE AND BANK PROFILE

Indian Banking regulation Act 1949

Edurite College of Management Studies, Shivamogga Page 10

Evolution of the Indian Banking Industry:

Edurite College of Management Studies, Shivamogga Page 11

Edurite College of Management Studies, Shivamogga Page 12

Edurite College of Management Studies, Shivamogga Page 13

The days that followed:

Edurite College of Management Studies, Shivamogga Page 14

Edurite College of Management Studies, Shivamogga Page 15

Shouldering National objectives:

Growing Bigger. Getting Closer.

Edurite College of Management Studies, Shivamogga Page 16

"Emerge as a Model for Inclusive Growth and Innovative Banking Services"

To expand our reach to meet the financial needs of people

To provide full range of banking services with innovative products

To continue to adopt modern technology for superior banking experience

To create a rewarding environment for all stakeholders

To continue as a model organisation for transparent and ethical practices

Edurite College of Management Studies, Shivamogga Page 17

Edurite College of Management Studies, Shivamogga Page 18

Edurite College of Management Studies, Shivamogga Page 19

At Corporation Bank, what motivates us is the passion to excel in banking by maintaining

Edurite College of Management Studies, Shivamogga Page 20

P V Bharathi Managing Director & CEO

P K Panda Non Executive Director

Chitra Gouri Lal Director