Assessment of financial soundness of private and public sector banks in India

The present study attempts to analyze the financial soundness of selected 13 private and 23 public sector banks in India for the period of 2007-2016. Bankometer Model has been used to analyze the results. Capital Assets Ratio, Equity Assets Ratio, Capital Adequacy Ratio, Non-Performing Loans to Loans Ratio, Cost to Income Ratio and Loan to Assets Ratio are the determinants of Bankometer model. As per empirical results, all private and public sector banks are financially sound. ICICI bank and State bank of India are utmost financially strong banks. ICICI bank and State bank of India have highest capital assets ratio. Kotak Mahindra bank and Indian bank have highest equity assets ratio. Yes bank and Bank of Baroda have highest capital adequacy ratio. ICICI bank and Bank of Baroda have lowest non- performing loans to loans ratio. The results show that cost to income ratio of all private and public banks is more than 40 % which shows the inefficiency of the banks. As per the results loan to assets ratio is more than 65 % for the City Union bank, State bank of Mysore, State bank of Bikaner & Jaipur, Andhra bank and Syndicate bank which is not good.