Evaluating Performance of a Service Cooperative Bank: An Application of Camel Model

The economic importance of banks in the developing countries may be viewed as promoting capital formation, encouraging innovation, monetization, influencing economic activity, and act as facilitators of monetary policy. Performance evaluation of the banking sector is an effective measure and indicator to check the soundness of economic activities of an economy. In the present study, an attempt was made to evaluate the performance and financial soundness of a Service Cooperative Bank using the CAMEL approach. In every line of business, the performance of each bank is appraised in financial perspectives and by ranking them. By analyzing the 10-year data, it was found that The Service Co-operative Bank, Ranni was making a improvement in its capital adequacy ratio over the previous years. Though the bank needs to improve in effective utilization of assets and in terms of profitability, it was found to be upfront in its management ability. Furthermore, the liquidity position of the bank needs to be improved as it can have an immediate impact on its functioning, if left unwarranted. Thus, the overall performance of the bank was found to be efficient in terms of capital adequacy and management, but the bank needs to catch up on the other three parameters of CAMEL rating.