Validating the Relevance of CAMEL Model as Predictor of Perceived Financial Performance: An Empirical Study from Banking Sector

Banking industry is the pivot around which the whole economy of a country revolves around. In India, banking industry play a great role and thus is one of the fastest growing industries. The Indian government has introduced various banking reforms, with the latest being the mega mergers of public sector banks. Due to such reforms many changes have been seen in this industry, be it financial or infrastructural. In this context, a study has been done to evaluate the financial performance of PNB, India’s Second largest public sector bank and ICICI, India’s second largest Private Sector Bank for the last 6 years from 2017-2018 to 2022-2023. The CAMEL model, a framework extensively used in the banking industry, is used in this study to perform an extensive comparison of two well-known banks functioning in India's vibrant financial ecosystem. Study is based on primary as well as secondary data collected from the annual reports of respective banks for the above-mentioned period. As per this study, it can be concluded that ICICI being a private player has been performing well in comparison to PNB. These comparison findings have major implications for Indian banking investors, regulators, and policymakers. In conclusion, the financial comparison utilizing the CAMEL model provides a good view on PNB and ICICI's strengths and weaknesses.