Analysis of Financial Parameters of Private Sector Banks in India through the Application of AHP Technique

The development of any nation largely depends on its growing economy and sound financial system. In a developing country like India a proficient and effective banking system is considered as the backbone of the economy. The role of private sector banks in strengthening the economy has also increased in last two decades. The present paper aims at identifying some large sized private sector banks in India and rank them on the basis of their capital adequacy, profitability, asset quality and management efficiency through the technique of analytic hierarchy process (AHP). The study identified four large sized private sector banks namely ICICI, HDFC, Axis and Kotak Mahindra bank on the basis of their market capitalization value as on March 31, 2016. The banks were assigned ranking for each selected criteria and hence the overall ranking was done using AHP model. To facilitate the analysis, capital adequacy was taken as the most important criteria to assess the performance of banks followed by profitability, asset quality and management efficiency. ICICI bank was ranked first for capital adequacy and management efficiency and HDFC bank performed best for profitability and asset quality. All these criterion were combined to get the overall ranking of banks and ICICI bank was rated as the best private sector bank followed by HDFC, Kotak Mahindra and Axis bank. It was also observed in the study that Kotak Mahindra bank faced a radical decline in its position in comparison to last years after its merger with ING Vyasya bank.