Financial Analysis of Small Finance Banks in India through CAMEL Rating

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Dr. Monali Ray, Dr. Rinkoo Shantnu


Banking performance is assessed by implementing a regulatory banking supervision framework. CAMEL rating system is used to evaluate the overall performance of the banks and to determine their strengths and weaknesses. Small finance banks are a result of RBI’s efforts to promote niche banking. These are the financial institutions which provide basic banking service of acceptance of deposits and lending. The aim behind these to provide financial inclusion to sections of the economy such as small business units, small and marginal farmers, micro and small industries and unorganised sector entities which are not being served by other banks in unbanked and under-banked regions.

Purpose: This paper attempts to apply the CAMEL rating on ten small finance banks in India. The overall financial performance of these banks has been assessed.

Design and methodology: The study is based on secondary data based on annual reports of these small finance banks for the financial year 2019-20. Descriptive analysis was done through ranking in each of the parameters of CAMEL rating. The inferential analysis was done through ANOVA test and was further analysed through Post hoc test (Bonferroni method).

Findings: The findings of the study are that there is a difference in financial performance of the small finance banks in India. The best performer and worst performer was also assessed.

Practical implications: The study is relevant to understand the financial performance of the small finance banks in India. This research paper will provide a helping hand to the researchers for further studies in the small finance banks in India.

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