CAPITAL ADEQUACY OF PRIVATE SECTOR INDIAN BANKS: AN ANALYSIS

ABSTRACT

In the present study, an attempt is made to analyze the present position of capital adequacy of selected private sector Indian banks. First section includes a brief review of some of the earlier studies. Second section covers the scope, objectives, hypothesis and research methodology. In third section, an attempt is made to analyze the capital adequacy of selected banks namely ICICI Banking Corporation Ltd (ICICI), Indusind Bank Ltd (Indusind), AXIS Bank Ltd (AXIS) and HDFC Bank Ltd (HDFC) in India by using CAMEL Model ratios for a period of 2000-01 to 2010-11. Fourth section covers the conclusion and limitations of the study. To achieve the objectives of the study, the use is made of secondary data collected mainly from Report on Trends and Progress of Banking in India, Performance Highlights of Private Banks in India, various journals such RBI Bulletin, IBA Bulletin, etc. To test the statistical significance of the results, one-way ANOVA technique has been used. The results of the study reveal that there is no significant difference in the capital adequacy ratio and the ratio of government securities to total investments in the selected banks; therefore, null hypothesis is accepted. On the other hand, a significant difference is found in the ratio of advances to total assets, government securities to total investments and debt-equity ratio in the selected banks; therefore, null hypothesis is rejected.

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