Comparative Financial Performance Evaluation of Public and Private Sector Banks using Camels

The banking sector plays a pivotal role in the economy by facilitating financial intermediation, channelling funds from savers to borrowers and supporting economic growth and development. In India, the banking landscape is diverse mix of public sector banks, private sector banks, and cooperative banks, each contributing to the country's financial ecosystem. The evaluation of banks' financial performance is critical for stakeholders, including investors, regulators, policymakers, and bank management, to gauge their overall health and resilience. Traditional financial metrics and models provide valuable insights into banks' performance; however, they may lack the depth and granularity required to assess various aspects comprehensively. In this context, the CAMELS model emerges as a robust framework for evaluating banks' performance across multiple dimensions, including Capital Adequacy, Asset Quality, Management Quality, Earnings Quality, Liquidity Position, and Sensitivity to Market Risk. By employing the CAMELS model, researchers and practitioners can conduct a holistic assessment of banks' strengths, weaknesses, and areas for improvement. The research objectives include assessing the applicability and effectiveness of the CAMELS model, measuring and analyzing the financial performance of selected banks, determining their ranking based on CAMELS ratios, and identifying strategies to enhance their overall performance. Through rigorous analysis and empirical investigation, this study aims to address several research questions pertaining to the effectiveness of the CAMELS model, the specific financial indicators employed, the comparison of financial performances among selected banks, and the identification of key strengths and weaknesses. Additionally, the study formulates hypotheses to test various financial ratios and parameters, providing empirical evidence to support its findings and recommendations.