A STUDY ON PERFORMANCE ANALYSIS OF UNION BANK

OF INDIA USING CAMEL MODEL

By

SHIREEN FATHIMA S
(REG. NO. 211418631137)

Of

PANIMALAR ENGINEERING COLLEGE

PROJECT REPORT

Submitted to the

FACULTY OF MANAGEMENT STUDIES

In partial fulfillment of the

requirements for the award of the
degree

of

MASTER OF BUSINESS ADMINISTRATION

MAY-2020
 PANIMALAR ENGINEERING COLLEGE
(A CHRISTIAN MINORITY INSTITUTION)
JAISAKTHI EDUCATIONAL TRUST
BANGALORE TRUNK ROAD
VARADARAJAPURAM,
NASARATHPETTAI, POONAMALLEE,
CHENNAI - 600 123

DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE

This is to certify that this project report titled “A STUDY ON PERFORMANCE

ANALYISIS OF UNION BANK OF INDIA USING CAMEL MODEL” is the bonafide
work of SHIREEN FATHIMA S who carried out the research under my supervision.
Certified further, that to the best of my knowledge the work reported herein does not form
part of any other project report or dissertation on the basis of which a degree or award was
conferred on earlier occasion on this or any other candidate.

Internal Guide Head of the Department

Internal Examiner External Examiner

 ACKNOWLEDGEMENT

I would like to express my sincere gratitude to Our Chairman Dr. JEPPIAAR M.A.,
B.L., Ph.D., for providing excellent environment and infrastructure and for his valuable support
throughout the course of study.

I express my deep sense of gratitude and thanks to Our Secretary and Correspondent
Dr. P.CHINNADURAI M.A., Ph.D., and I express my sincere thanks to Our Directors Mrs. C.
VIJAYA RAJESWARI, Mr. C.SAKTHIKUMAR, M.E., M.Phil.,

and Mrs. SARANYASREE SAKTHIKUMAR, B.E. I also express my gratitude to the Principal
Dr. K.MANI M.E., Ph.D. for providing all the required facilities for the successful completion of
this project work.

I take this opportunity to express my gratitude to the Dean & Head of the Department of
Management studies, Dr. V.MAHALAKSHMI M.L., M.B.A., Ph.D., for providing me an
opportunity and Assistant Professor DR., S.SATHEESH KUMAR MBA., Ph.D., who has given
me guidance to do this project work.

This project would not been successful without the help of branch head Mr.G.BUJJI
BABU Union Bank of India. I extend my sincere thanks to other Staffs who have helped me with
their support for the completion of my project.

SHIREEN FATHIMA S

1
 TABLE OF CONTENT

S.NO CONTENTS PAGE NO

Abstract 3
List of tables 4

list of charts 5
List of Abbreviations 6
I. INTRODUCTION
Chapter -1 1.1 – Introduction 7
1.2 - Industry profile 8-19
1.3 - Company profile 20-30
II. DEVELOPMENT OF MAIN THEME
1.4 – Objectives 31
1.5 – Needs 32
1.6 – Scope 33
1.7 – Limitations 34
Chapter – 2 Review of literature 35-39
III. DATA ANALYSIS AND INTERPRETATION
Chapter -3 Research methodology 40-47
Chapter -4 Data analysis and Interpretation 48-67
Chapter -5 5.1- Findings 68
5.2 – Suggestions 69
5.3 – Conclusion 70
Appendix 71-76
Bibliography 77

2
 ABSTRACT
The Indian banking sector is the backbone of the Indian economy. Due to drastic changes in
technology, the RBI has improved its quality in supervision of other banks. Banks now, follow the
uniform financial rating system, CAMEL model for evaluating the performance. Competition has
affected adversely the bottom line performances of the banks. It is therefore critical to evaluate the
performance of banks operating in India in order to study sturdiness of the banks in the face of
competition. CAMEL evaluation is based on five parameters: Capital Adequacy, Asset Quality,
Management Efficiency, Earning Capacity and Liquidity position of the banks. UBI is a government-
owned public sector banks; offering credit and financial facilities for the development of the fledging
Indian banking industry. In this study the financial performance of UBI using CAMEL model has
been analysed. Based on the analysis, it is advisable to improve the Asset quality and management
efficiency of the bank. The bank has to maintain adequate liquidity and earning capacity to achieve
stable growth and to maximize its profits.

KEYWORDS: UBI, CAMEL Model, Capital Adequacy, Asset Quality, Management Efficiency,
Earning Capacity, Liquidity.

3
 LIST OF TABLES

S.NO TITLE PAGE NO

4.1.1 Table showing Capital Adequacy Ratio 48
4.1.2 Table showing Debt Equity Ratio 49
4.1.3 Table showing Total Advances to Total Assets Ratio 50
4.1.4 Table showing Government Securities to Total Investment Ratio 51
4.2.1 Table showing Gross Non-Performing Assets to Net Advances Ratio 52
4.2.2 Table showing Net Non-Performing Asset to Net Advances Ratio 53
4.2.3 Table showing Total Investment to Total Assets Ratio 54
4.2.4 Table showing Total NPA to Total Assets ratio 55
4.3.1 Table showing Total Advances to Total Deposits Ratio 56
4.3.2 Table showing Business Per Employee Ratio 57
4.3.3 Table showing Profit Per Employee Ratio 58
4.3.4 Table showing Asset Turnover Ratio 59
4.4.1 Table showing Interest Income to Total Income Ratio 60
4.4.2 Table showing Net Interest spread to Total Asset Ratio 61
4.4.3 Table showing Net profit Margin Ratio 62
4.4.4 Table showing Return on Equity Ratio 63
4.5.1 Table showing Liquid Assets to Total Deposits 64
4.5.2 Table showing Government Securities to Total Deposit Ratio 65
4.5.3 Table showing Liquid Assets to Total Deposits Ratio 66
4.5.4 Table showing Liquid Assets to Demand Deposit Ratio 67

4
 LIST OF CHARTS

S.NO TITLE PAGE NO

4.1.1 Chart showing Capital Adequacy Ratio 48
4.1.2 Chart showing Debt Equity Ratio 49
4.1.3 Chart showing Total Advances to Total Assets Ratio 50
4.1.4 Chart showing Government Securities to Total Investment Ratio 51
4.2.1 Chart showing Gross Non-Performing Assets to Net Advances Ratio 52
4.2.2 Chart showing Net Non-Performing Asset to Net Advances Ratio 53
4.2.3 Chart showing Total Investment to Total Assets Ratio 54
4.2.4 Chart showing Total NPA to Total Assets Ratio 55
4.3.1 Chart showing otal Advances to Total Deposits Ratio 56
4.3.2 Chart showing Business Per Employee Ratio 57
4.3.3 Chart showing Profit Per Employee Ratio 58
4.3.4 Chart showing Asset Turnover Ratio 59
4.4.1 Chart showing Interest Income to Total Income Ratio 60
4.4.2 Chart showing Net Interest spread to Total Asset Ratio 61
4.4.3 Chart showing Net profit Margin Ratio 62
4.4.4 Chart showing Return on Equity Ratio 63
4.5.1 Chart showing Liquid Assets to Total Deposits 64
4.5.2 Chart showing Government Securities to Total Deposit Ratio 65
4.5.3 Chart showing Liquid Assets to Total Deposits Ratio 66
4.5.4 Chart showing Liquid Assets to Demand Deposit Ratio 67

5
 LIST OF ABBREVIATIONS

IRR - Interest rate of Return

NIM - Net Interest Margin

CAR - Capital Adequacy Ratio

RWA - Risk Weighted Assets

D/E - Debt- Equity

NPA - Non-performing Assets

GNPA - Gross Non-performing Asset

NNPA - Net Non-performing Asset

ATR – Asset Turnover Ratio

PPE – Profit Per Employee

BPE – Business Per Employee

NPR – Net Profit Margin

ROE – Return On Equity

DIVRSF – Diversification

G-SEC – Government Securities

INT EXP – Interest expenditure

INT INC – Interest Income

RBI – Reserve Bank of India

UBI – Union Bank of India.

6
 CHAPTER 1

1.1 INTRODUCTION

The Banking sector today is one of the most promising and fast growing sectors in India
contributing to the Indian economy. The word ―Bank‖ can be traced back to the GERMEN word
―BANCK‖ and ITALIAN word ―BANCO‖ which means ―heap the money‖. The Indian banking
sector comprise of 27 public sector banks, 23 banks operating in private sector and 50 foreign banks.
Out of public sector banks 19 are nationalized. It is observed that the public sector banks have
remained unchanged in terms of number over the last decades. In 1980s, CAMEL rating/CEL rating
system was first introduced by U.S. supervisory authorities as a system of rating for on-site
examinations of banking institutions. Under this system, each banking institution subject to on-site
examination is evaluated on the basis of five critical dimensions relating to its operations and
performance, which are referred to as the component factors. These are Capital, Asset Quality,
Management, Earnings, Liquidity and sensitivity used to reflect the financial performance, financial
condition and operating soundness of the banking institution. This sector is the backbone of
industrial development and is one of the healthiest performers seeing tremendous competitiveness,
growth, efficiency, profitability and soundness. Banks are financial institutions that accept savings
of the public and grants loans and advances to business, industry and society at large. Initially the
public sector banks dominated the banking sector, since liberalization of Indian economy in 1990
paved way to new private sector banks and allowed the entry of foreign banks to increase their
branches in the banking sector, this lead to stiff competition in the sector and resulted in complex and
uncertainty in the banking sector. With the increased competition and the emphatic on profitability,
the public sector banks are now moving towards on economic-oriented model departing from the
social approach followed for decades. Today restructuring of public sector banks and the emergence
of new banks in the private sector and cooperative sector as well as the increased competition from
foreign banks have improved professionalism in the banking sector. Financing facilitates the flow of
goods and services and the activities of the government. It also provides a great portion of the
medium of exchange to the country. A sound and efficient banking system is considered to be of
paramount importance for the growth of the economy as a whole. Banks and its monetary
mechanism plays a significant and crucial role by contributing in economic planning such as laying
down of specific goals and allocating particular amount of money that constitute the economic policy
of the government. A strong and resilient banking system is the foundation for sustainable economic
growth. Performance of the banking sector is an effective measure and indicator to check the
performance of any economy to a large extent.

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 1.2 INDUSTRY PROFILE
1.2.1 HISTORY OF BANKING INDUSTRY:

The first bank in India, called The General Bank of India was established in the year 1786.
The East India Company established The Bank of Bengal/Calcutta (1809), Bank of Bombay (1840)
and Bank of Madras (1843). The next bank was Bank of Hindustan which was established in 1870.
These three individual units (Bank of Calcutta, Bank of Bombay, and Bank of Madras) were called
as Presidency Banks. Allahabad Bank which was established in 1865 was for the first time
completely run by Indians. Punjab National Bank Ltd. was set up in 1894 with headquarters at
Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara
Bank, Indian Bank, and Bank of Mysore were set up. In 1921, all presidency banks were
amalgamated to form the Imperial Bank of India which was run by European Shareholders. After
that the Reserve Bank of India was established in April 1935. At the time of first phase the growth of
banking sector was very slow. Between 1913 and 1948 there were approximately 1100 small banks
in India. To streamline the functioning and activities of commercial banks, the Government of India
came up with the Banking Companies Act, 1949 which was later changed to Banking Regulation Act
1949 as per amending Act of 1965 (Act No.23 of 1965). Reserve Bank of India was vested with
extensive powers for the supervision of banking in India as a Central Banking Authority. After
independence, Government has taken most important steps in regard of Indian Banking Sector
reforms. In 1955, the Imperial Bank of India was nationalized and was given the name "State Bank
of India", to act as the principal agent of RBI and to handle banking transactions all over the country.
It was established under State Bank of India Act, 1955. Seven banks forming subsidiary of State
Bank of India was nationalized in 1960. On 19th July, 1969, major process of nationalization was
carried out. At the same time 14 major Indian commercial banks of the country were nationalized. In
1980, another six banks were nationalized, and thus raising the number of nationalized banks to 20.
Seven more banks were nationalized with deposits over 200 Crores. Till the year 1980 approximately
80% of the banking segment in India was under government‘s ownership. On the suggestions of
Narsimhan Committee, the Banking Regulation Act was amended in 1993 and thus the 26 gates for
the new private sector banks were opened.

The following are the major steps taken by the Government of India to Regulate Banking institutions
in the country:-

1949: Enactment of Banking Regulation Act.

1955: Nationalisation of State Bank of India.

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1959: Nationalization of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalisation of 14 major Banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalisation of seven banks with deposits over 200 Crores.

NATIONALISATION: By the 1960s, the Indian banking industry has become an important tool to
facilitate the development of the Indian economy. At the same time, it has emerged as a large
employer, and a debate has ensured about the possibility to nationalise the banking industry. Indira
Gandhi, the-then Prime Minister of India expressed the intention of the Government of India (GOI)
in the annual conference of the All India Congress Meeting the GOI issued an ordinance and
nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969.
Jayaprakash Narayan, a national leader of India, described the step as a "Masterstroke of political
sagacity" Within two weeks of the issue of the ordinance, the Parliament passed the Banking
Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval
on 9 August, 1969. A second step of nationalisation of 6 more commercial banks followed in 1980.
The stated reason for the nationalisation was to give the government more control of credit delivery.
With the second step of nationalisation, the GOI controlled around 91% of the banking business in
India. Later on, in the year 1993, the government merged New 27 Bank of India with Punjab
National Bank. It was the only merger between nationalised banks and resulted in the reduction of
the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks
grew at a pace of around 4%, closer to the average growth rate of the Indian economy. The
nationalised banks were credited by some; including Home minister P. Chidambaram, to have helped
the Indian economy withstand the global financial crisis of 2007-2009.

LIBERALISATION: There are two areas of competitions which banking industry is facing
internationally and nationally. In the early 1990s, the then Narsimha Rao government embarked on a
policy of liberalisation, licensing a small number of private banks. In the pre-liberalization era,
Indian banks could grow in a closed economy but the banking sector opened up for private
competition. It is possible that private banks could become dominant players even within India.
These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the
first of such new generation banks to be set up), which later amalgamated with Oriental Bank of

9
Commerce, Axis Bank (earlier as UTI Bank), ICICI Bank and HDFC Bank. This move along with
the rapid growth in the economy of India revolutionized the banking sector in India which has seen
rapid growth with strong contribution from all the three sectors of banks, namely, government banks,
private banks and foreign banks. The new policy shook the banking sector in India completely. Use
of ATM cards, Internet Banking, Phone Banking, Mobile Banking are the new innovative channels
of banking which are being widely used as they result in saving both time and money which are two
essential things that everyone is short of and is running to catch hold of them. Moreover private
sector banks are aligning its infrastructures, marketing quality and technology to build deep
commitment in building consumer and retail banking. The main focus of these banks is on innovative
range of services or products. The Reserve Bank of India is an autonomous body, with minimal
pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage
volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the
Indian economy expected to be strong for quite some time-especially in its services sector-the
demand for banking services, especially retail banking, mortgages and investment services are
expected to be strong.

1.2.2. CLASSIFICATION OF BANKING INDUSTRY IN INDIA:

Indian banking industry has been divided into two parts, organized and unorganized sectors.
The organized sector consists of Reserve Bank of India, Commercial Banks and Co-operative Banks,
and Specialized Financial Institutions (IDBI, ICICI, IFC etc.). The unorganized sector, which is not
homogeneous, is largely made up of money lenders and indigenous bankers. An outline of the Indian
Banking structure may be presented as follows:

RESERVE BANK OF INDIA: The reserve bank of India is a central bank and was established in
April 1, 1935 in accordance with the provisions of reserve bank of India act 1934. The central office
of RBI is located at Mumbai since inception. Though originally the reserve bank of India was
privately owned, since nationalization in 1949, RBI is fully owned by the Government of India. It
was inaugurated with share capital of Rs.5 Crores divided into shares of Rs.100 each fully paid up.
RBI is governed by a central board (headed by a governor) appointed by the central government of
India. RBI has 22 regional offices across India. The reserve bank of India was nationalized in the
year 1949. The RBI Act 1934 was commenced on April 1, 1935. The Act, 1934 provides the
statutory basis of the functioning of the bank. The bank was constituted for the need of following: -
To regulate the issues of banknotes. - To maintain reserves with a view to securing monetary
stability - To operate the credit and currency system of the country to its advantage.

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FUNCTIONS OF RBI AS A CENTRAL BANK OF INDIA ARE EXPLAINED BRIEFLY AS
FOLLOWS:

Bank of Issue: The RBI formulates, implements, and monitors the monitory policy. Its main
objective is maintaining price stability and ensuring adequate flow of credit to productive sector.

Regulator-Supervisor of the financial system: RBI prescribes broad parameters of banking

operations within which the country‘s banking and financial system functions. Their main objective
is to maintain public confidence in the system, protect depositor‘s interest and provide cost effective
banking services to the public.

Manager of exchange control: The manager of exchange control department manages the foreign
exchange, according to the foreign exchange management act, 1999. The manager‘s main objective
is to facilitate external trade and payment and promote orderly development and maintenance of
foreign exchange market in India.

Issuer of currency: A person who works as an issuer, issues and exchanges or destroys the currency
and coins that are not fit for circulation. His main objective is to give the public adequate quantity of
supplies of currency notes and coins and in good quality.

Developmental role: The RBI performs the wide range of promotional functions to support national
objectives such as contests, coupons maintaining good public relations and many more.

Related functions: There are also some of the related functions to the above mentioned main
functions. They are such as; banker to the government, banker to banks etc.

Banker to government performs merchant banking function for the central and the state
governments; also acts as their banker.

Banker to banks maintains banking accounts to all scheduled banks.

Controller of Credit: RBI performs the following tasks:

• It holds the cash reserves of all the scheduled banks.

• It controls the credit operations of banks through quantitative and qualitative controls.

• It controls the banking system through the system of licensing, inspection and calling for
information.

• It acts as the lender of the last resort by providing rediscount facilities to scheduled banks.

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Supervisory Functions: In addition to its traditional central banking functions, the Reserve Bank
performs certain non-monetary functions of the nature of supervision of banks and promotion of
sound banking in India.

Indian Scheduled Commercial Banks: The commercial banking structure in India consists of
scheduled commercial banks, and unscheduled banks.

Scheduled Banks: Scheduled Banks in India constitute those banks which have been included in the
second schedule of RBI act 1934. RBI in turn includes only those banks in this schedule which
satisfy the criteria laid down vide section 42(6a) of the Act. ―Scheduled banks in India‖ means the
State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary
bank as defined in the s State Bank of India (subsidiary banks) Act, 1959 (38 of 1959), a
corresponding new bank constituted under section 3 of the Banking companies (Acquisition and
Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the
Second Schedule to the Reserve bank of India Act, 1934 (2 of 1934), but does not include a co-
operative bank‖. For the purpose of assessment of performance of banks, the Reserve Bank of India
categories those banks as public sector banks, old private sector banks, new private sector banks and
foreign banks, i.e. private sector, public sector, and foreign banks come under the umbrella of
scheduled commercial banks.

Commercial Banks: Commercial banks may be defined as, any banking organisation that deals with
the deposits and loans of business organisations. Commercial banks issue bank checks and drafts, as
well as accept money on term deposits. Commercial banks 32 also act as moneylenders, by way of
instalment loans and overdrafts. Commercial banks also allow for a variety of deposit accounts, such
as checking, savings, and time deposit. These institutions are run to make a profit and owned by a
group of individuals.

Public Sector Banks: The Public sector banks are those where government holdings are more than
50% while nationalized banks are those banks which were nationalized in 1969 and 1980. Thus all
nationalized banks are public sector banks. Thus in total 27 PSB's are there Examples of public
sector banks are: SBI, Bank of India, Canara Bank, etc.

Private Sector Banks: These are banks majority of share capital of the bank is held by private
individuals. These banks are registered as companies with limited liability. ―Private banks" can also
refer to non-government owned banks in general, in contrast to government-owned (or nationalized)
banks, which were prevalent in communist, socialist and some social democratic states in the 20th
century. Private bank‘s as a form of organisation should also not be confused with "Private Banks"

12
that offer financial services to high net worth individuals and others. Private banks are banks that are
not incorporated. A private bank is owned by either an individual or a general partner(s) with limited
partner(s). In any such case, the creditors can look to both the "entirety of the bank's assets" as well
as the entirety of the sole-proprietor's/general-partners' assets. These are the major players in the
banking sector as well as in expansion of the business activities India. Reserve Bank of India (RBI)
came in picture in 1935 and became the centre of every other bank taking away all the
responsibilities and functions of Imperial bank. The share of the private bank branches stayed nearly
same between 1980 and 2000. Then from early 1990‘s, RBI's liberalization policy came in picture
and with this the government gave licenses to a few private banks, which came to be known as new
private sector banks. Examples of private sector banks are: ICICI Bank, Axis bank, HDFC, etc.

Foreign Banks: These banks are registered and have their headquarters in a foreign country but
operate their branches in our country. Now, foreign banks in India are permitted to set up local
subsidiaries. The policy conveys that foreign banks in India may not acquire Indian ones (except for
weak banks identified by the RBI, on its terms) and their Indian subsidiaries will not be able to open
branches freely. Foreign banks have brought latest technology and latest banking practices in India.
Government has come up with a road map for expansion of foreign banks in India. Examples of
foreign banks in India are: HSBC, Citibank, Standard Chartered Bank, JP Morgan Chase Bank etc.

Regional Rural Bank: The government of India set up Regional Rural Banks (RRBs) on October 2,
1975. The banks provide credit to the weaker sections of the rural areas, particularly the small and
marginal farmers, agricultural labourers, and small entrepreneurs. Initially, five RRBs were set up on
October 2, 1975 which was sponsored by Syndicate Bank, State Bank of India, Punjab National
Bank, United Commercial Bank and United Bank of India. The total authorized capital was fixed at
Rs.1 Crore which has since been raised to Rs.5 Crores. There are several concessions enjoyed by the
RRBs by Reserve Bank of India such as lower interest rates and refinancing facilities from
NABARD like lower cash ratio, lower statutory liquidity ratio, lower rate of interest on loans taken
from sponsoring banks, managerial and staff assistance from the sponsoring bank and reimbursement
of the expenses on staff training. The RRBs are under the control of NABARD. NABARD has the
responsibility of laying down the policies for the RRBs, to oversee their operations, provide
refinance facilities, to monitor their performance and to attend their problems.

Co-operative Banks: Co-operative banks are small-sized units organized in the cooperative sector
which operate both in urban and non-urban centres. These banks are traditionally centred-around
communities, localities and work place groups and they essentially lend to small borrowers and
businesses. A co-operative bank is a financial entity which belongs to its members, who are at the

13
same time the owners and the 34 customers of their bank. Co-operative banks are often created by
persons belonging to the same local or professional community or sharing a common interest. Co-
operative banks generally provide their members with a wide range of banking and financial services
(loans, deposits, banking accounts, etc.).They provide limited banking products and are specialists in
agriculture-related products. Cooperative banks are the primary financiers of agricultural activities,
some small-scale industries and self-employed workers. Co-operative banks function on the basis of
"no profit no-loss". Anyonya Co-operative Bank Limited (ACBL) is the first co-operative bank in
India located in the city of Vadodara in Gujarat.

Primary credit societies: These are formed in small locality like a small town or a village. The
members using this bank usually know each other and the chances of committing fraud are minimal.

Central cooperative banks: These banks have their members who belong to the same district. They
function as other commercial banks and provide loans to their members. They act as a link between
the state cooperative banks and the primary credit societies.

State cooperative banks: these banks have a presence in all the states of the country and have their
presence throughout the state

1.2.3 SERVICES PROVIDED BY BANKING ORGANISATIONS:

Banking Regulation Act in India, 1949 defines banking as ―Accepting‖ for the purpose of
lending or investment of deposits of money from the public, repayable on demand and withdraw able
by cheques, drafts, orders etc. as per the above definition a bank essentially performs the following
functions:-

• Accepting Deposits or savings functions from customers or public by providing bank

account, current account, fixed deposit account, recurring accounts etc.

• The payment transactions like lending money to the public. Bank provides an effective
credit delivery system for loanable transactions.

• Provide the facility of transferring of money from one place to another place. For
performing this operation, bank issues demand drafts, banker‘s cheques, money orders etc. for
transferring the money. Bank also provides the facility of Telegraphic transfer or tele- cash orders for
quick transfer of money.

• A bank performs a trustworthy business for various purposes.

14
 • A bank also provides the safe custody facility to the money and valuables of the general
public. Bank offers various types of deposit schemes for security of money. For keeping valuables
bank provides locker facility. The lockers are small compartments with dual locking system built
into strong cupboards. These are stored in the bank‘s strong room and are fully secured.

• Banks act on behalf of the Govt. to accept its tax and non-tax receipt. Most of the
government disbursements like pension payments and tax refunds also take place through banks.
There are several types of banks, which differ in the number of services they provide and the
clientele (Customers) they serve. Although some of the differences between these types of banks
have lessened as they have begun to expand the range of products and services they offer, there are
still key distinguishing traits. These banks are as follows:

Commercial banks, which dominate this industry, offer a full range of services for individuals,
businesses, and governments. These banks come in a wide range of sizes, from large global banks to
regional and community banks.

Global banks are involved in international lending and foreign currency trading, in addition to the
more typical banking services.

Regional banks have numerous branches and automated teller machine (ATM) locations throughout
a multi-state area that provide banking services to individuals. Banks have become more oriented
toward marketing and sales. As a result, employees need to know about all types of products and
services offered by banks.

Community banks are based locally and offer more personal attention, which many individuals and
small businesses prefer. In recent years, online banks—which provide all services entirely over the
Internet—have entered the market, with some success. However, many traditional banks have also
expanded to offer online banking, and some formerly Internet-only banks are opting to open
branches.

Savings banks and savings and loan associations, sometimes called thrift institutions, are the second
largest group of depository institutions. They were first established as community-based institutions
to finance mortgages for people to buy homes and still cater mostly to the savings and lending needs
of individuals.

Credit unions are another kind of depository institution. Most credit unions are formed by people
with a common bond, such as those who work for the same company or belong to the same labour

15
union or church. Members pool their savings and, when they need money, they may borrow from the
credit union, often at a lower interest rate than that demanded by other financial institutions.

Federal Reserve banks are Government agencies that perform many financial services for the
Government. Their chief responsibilities are to regulate the banking industry and to help implement
our Nation‘s monetary policy so our economy can run more efficiently by controlling the Nation‘s
money supply—the total quantity of money in the country, including cash and bank deposits. For
example, during slower periods of economic activity, the Federal Reserve may purchase government
securities from commercial banks, giving them more money to lend, thus expanding the economy.
Federal Reserve banks also perform a variety of services for other banks. For example, they may
make emergency loans to banks that are short of cash, and clear checks that are drawn and paid out
by different banks.

The money banks lend, comes primarily from deposits in checking and savings accounts,
certificates of deposit, money market accounts, and other deposit accounts that consumers and
businesses set up with the bank. These deposits often earn interest for their owners, and accounts that
offer checking, provide owners with an easy method for making payments safely without using cash.
Deposits in many banks are insured by the Federal Deposit Insurance Corporation, which guarantees
that depositors will get their money back, up to a stated limit, if a bank should fail.

1.2.4 FUNCTIONS OF BANKS:

A. Primary Functions of Banks: The primary functions of a bank are also known as banking
functions. They are the main functions of a bank. These primary functions of banks are explained
below.

1. Accepting Deposits: The bank collects deposits from the public. These deposits can be of
different types, such as: - a. saves Deposits, b. Fixed Deposits, c. Current Deposits, d. Recurring
Deposits.

 Saving Deposits: This type of deposits encourages saving habit among the public. The rate of
interest is low. Withdrawals of deposits are allowed subject to certain restrictions. This
account is suitable to salary and wage earners. This account can be opened in single name or
in joint names.
 Fixed Deposits: Lump sum amount is deposited at one time for a specific period. Higher rate
of interest is paid, which varies with the period of deposit. Withdrawals are not allowed
before the expiry of the period. Those who have surplus funds go for fixed deposit.

16
 Current Deposits: This type of account is operated by businessmen. Withdrawals are freely
allowed. No interest is paid. In fact, there are service charges. The account holders can get the
benefit of overdraft facility.
 Recurring Deposits: This type of account is operated by salaried persons and petty traders. A
certain sum of money is periodically deposited into the bank. Withdrawals are permitted only
after the expiry of certain period. A higher rate of interest is paid.

2. Granting of Loans and Advances: The bank advances loans to the business community and
other members of the public. The rate charged is higher than what it pays on deposits. The
difference in the interest rates (lending rate and the deposit rate) is its profit. The types of bank
loans and advances are: - a. Overdraft b. Cash Credits c. Loans d. Discounting of bill of exchange

 Overdraft: This type of advances is given to current account holders. No separate account is
maintained. All entries are made in the current account. A certain amount is sanctioned as
overdrafts which can be withdrawn within a certain period of time say three months or so.
Interest is charged on actual amount withdrawn. An overdraft facility is granted against a
collateral security. It is sanctioned to businessman and firms.
 Cash Credits: The client is allowed cash credit up to a specific limit fixed in advance. It can
be given to current account holders as well as to others who do not have an account with
bank. Separate cash credit account is maintained. Interest is charged on the amount
withdrawn in excess of limit. The cash credit is given against the security of tangible assets
and / or guarantees. The advance is given for a longer period and a larger amount of loan is
sanctioned than that of overdraft.
 Loans: It is normally for short term say a period of one year or medium term say a period of
five years. Now-a-days, banks do lend money for long term. Repayment of money can be in
the form of instalments spread over a period of time or in a lump sum amount. Interest is
charged on the actual amount sanctioned, whether withdrawn or not. The rate of interest 40
may be slightly lower than what is charged on overdrafts and cash credits. Loans are
normally secured against tangible assets of the company.
 Discounting of Bill of Exchange: The bank can advance money by discounting or by
purchasing bills of exchange both domestic and foreign bills. The bank pays the bill amount
to the drawer or the beneficiary of the bill by deducting usual discount charges. On maturity,
the bill is presented to the drawee or acceptor of the bill and the amount is collected.

17
B. Secondary Functions of Banks: The bank performs a number of secondary functions, also
called as non-banking functions. These important secondary functions of banks are explained
below.

1. Agency Functions: The bank acts as an agent of its customers. The bank performs a number
of agency functions which includes :- a. Transfer of Funds b. Collection of Cheques c. Periodic
Payments d. Portfolio Management e. Periodic Collections f. Other Agency Functions

a. Transfer of Funds: The bank transfer funds from one branch to another or from one place to
another.

b. Collection of Cheques: The bank collects the money of the cheques through clearing section of
its customers. The bank also collects money of the bills of exchange.

c. Periodic Payments: On standing instructions of the client, the bank makes periodic payments in
respect of electricity bills, rent, etc.

d. Portfolio Management: The banks also undertake to purchase and sell the shares and
debentures on behalf of the clients and accordingly debits or credits the account. This facility is
called portfolio management.

e. Periodic Collections: The bank collects salary, pension, dividend and such other periodic
collections on behalf of the client.

f. Other Agency Functions: They act as trustees, executors, advisers and administrators on behalf
of its clients. They act as representatives of clients to deal with other banks and institutions.

2. General Utility Functions: The bank also performs general utility functions, such as: - a.
Issue of Drafts, Letter of Credits, etc. b. Locker Facility c. Underwriting of Shares d. Dealing in
Foreign Exchange e. Project Reports f. Social Welfare Programmes g. Other Utility Functions

a. Issue of Drafts and Letter of Credits: Banks issue drafts for transferring money from one place
to another. It also issues letter of credit, especially in case of, import trade. It also issues
travellers' cheques.

b. Locker Facility: The bank provides a locker facility for the safe custody of valuable
documents, gold ornaments and other valuables.

c. Underwriting of Shares: The bank underwrites shares and debentures through its merchant
banking division.

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d. Dealing in Foreign Exchange: The commercial banks are allowed by RBI to deal in foreign
exchange.

e. Project Reports: The bank may also undertake to prepare project reports on behalf of its
clients.

f. Social Welfare Programmes: It undertakes social welfare programmes, such as adult literacy
programmes, public welfare campaigns, etc.

g. Other Utility Functions It acts as a referee to financial standing of customers. It collects

creditworthiness information about clients of its customers. It provides market information to its
customers, etc. It provides travellers' cheque facility.

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 1.3 COMPANY PROFILE
UNION BANK OF INDIA: A PROFILE
Introduction:
Union Bank of India completed 91 eventful years of service. Over these years, the bank cares
for the common man. The bank was originally incorporated in Mumbai as ―The Union Bank of India
Limited‖ under the Companies Act 1913, on November 11, 1919. After Nationalization, the name of
the bank was changed to ―Union Bank of India‖. The Head Office of the bank is situated at 239,
Vidhan Bahavan Marg, Nariman point, Mumbai. The bank is a public sector unit, with 60.85% share
capital held by the Government of India and the rest 39.15% of share capital is held by institutions,
individuals and others. The Father of the Nation Mahatma Gandhi opened this bank in 1921. The
bank‘s vision should be a shared vision, i.e. the staff at all levels should actively involve in the
transformation process. Union Bank of India from the beginning had reached Himalayan heights,
now ranked third among the nationalized banks. Its branches spread all over the country and serving
more than 26 million customers. Union Bank of India has come a long way, fostering India‘s dreams.
For over nine decades, Bank always put the customer before all else and made him the centre of our
universe. The bank has the habit of making profits consistently for the last 91 years. On the
technology front the bank has taken early initiatives and 100% of its branches are computerized.
Over the years, Union Bank of India have earned the reputation of being techno-savvy bank and is
one of the front runners amongst public sector bank in the field of technology. It is one of the pioneer
banks, which launched Core Banking Solution in 2002. Total business of the bank as on 31-3-2010 is
2, 89,355 crore, around 2805 branches, 2500 ATMs, 27,772 employees, and 55 regional offices. The
business of the bank is principally divided into three main areas: Corporate Financial Services, Retail
Financial Services and Agricultural Financial Services. Many innovative products are developed
using the technological plat - form. With its prudent management and good governance, banks non-
performing assets were comparatively lower. In the post-reforms period i.e. from 1993 to 1996, the
bank had doubled itself in size. The first safe deposit vault was formally opened on 22 April 1939.
The bank worked with Export Credit Guarantee Corporation of India in encouraging the exporters to
insure themselves against buyers default or exchange difficulties in the buyer‘s country. Union Bank
of India was one of the earliest bank to obtain and operate whole turnover export finance guarantee
from ECGC. The bank had several strengths such as a strong branch network evenly distributed, an
extremely good work culture with a fairly standard of customer services and a history of effective
execution of projects.
Union Bank of India is one in top three nationalized banks in India, with global presence.
> A financial supermarket, with leadership in identified spaces.
> A bank where customers come first.

20
> A top creator of shareholder wealth through focus on profitable growth.
> A young organization leveraging its experienced workforce.
> The most trusted brand, admired by all stakeholders.
> A socially responsible organization known for best corporate governance.
The Union Bank of India is the first bank to implement CBS at RRBs. CBS was implemented at two
branches of Kashi Gomti, Samyukt Grameen Bank and one branch of Reva Siddhi Grameen Bank. In
this initiative, the bank is providing implementation, training and hand holding support to the RRBs.
Bank is pioneer in extending high-tech products to customers at metro and rural centers. UBI
prepared its first business plan for 1972-73, aspects covered by the plan were deposit mobilization,
deployment of resources and advances to priority sector. The plan was designed to cover at great
length both personnel planning as well as profit planning. A lot of thrust was given to loan recovery,
especially recovery of irregular, bad and
doubtful accounts of the bank. Union Bank of India is firmly committed to consolidating and
maintaining its identity as a leading, innovative Commercial Bank, with a proactive approach to the
changing needs of the society. This is because of number of products and services made available to
its valuable customers. Today, with its efficient, value-added services, sustained growth, consistent
profitability and development of new technologies, UBI has ensured complete customer delight,
living up to its image of, “GOOD PEOPLE TO BANK WITH”. The key to the success of any
organization lies with its people.

VISION STATEMENT OF UBI:

“To become the bank of first choice in our chosen areas by building beneficial
and lasting relationships with customers through a process of continuous
improvement”

At Union Bank of India they have the vision to be:

• The largest nationalized bank in India, with global presence.
• A financial supermarket, with leadership in identified spaces.
• A top shareholder wealth creator where growth is a passion.
• A young, innovative and adaptive organization leveraging its experienced workforce.
• A bank where customers are supreme and the brand admired by all stakeholders.
• An organization that cares for society and demonstrates best corporate governance.
MISSION STATEMENT OF UBI:

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❖ To be customer centric organization known for its differentiated customer service.To offer
comprehensive range of products to meet all financial needs of customer.
❖ To be a top creator of shareholder wealth through focus on profitable growth.
❖ To be a young organization leveraging on technology and experienced workforce.
❖ To be the most trusted brand, admired by all stakeholders.
❖ To be a leader in the area of Financial Inclusion.

ORGANISATIONAL STRUCTURE OF UBI:

BUSINESS OBJECTIVES OF UBI:

Customer Service: From customer satisfaction to customer delight Customer satisfaction can be
achieved through constant effort to bring the products and services. Customer delight is completely
the initiative of the individual employee of UBI. In today‘s market place, customer retention is the
most crucial task. To meet the retail competition ensures to keep up to date and competitive products
like housing loan, car loan, utility payment service etc.
Profits: It is the quality and not the size of the balance sheet. Identify profit centers and give them
preferred attention in terms of infrastructure, skills, technology and decision making.
Technology: Technology is the driving force of today‘s banking products like anywhere banking,
anytime banking, and funds transfer are to be taken care.

22
Re-Setting Manpower: Extended hours of counter- service, relationship management etc. will
enable the customer to realize the untapped productivity of the bank.

BUSINESS STRATEGIES:
Low cost deposits: Bank‘s portfolio of low cost deposits, i.e. savings and current deposits by
identifying ways to improve services to customers.
Fee Based Services: Fee based services will bring more income to the bank. They are to be marked
effectively and focused attention for rendering dependable and timely services.
Counter Service Efficiency: Counter service options like single window, tellers, express DD
counters and Tele- banking.

AWARDS AND COMMENDATIONS OF UBI:

Union Bank of India has been the proud recipient of many awards and commendations. It is an honor
to be appreciated for the work we do in serving the customer and society.

Union Bank of India wins Best Financial Inclusion Initiatives (winner) and Best Technology
Bank of the Year (runner-up) Awards from IBA (Indian Banks‘ Association) at Mumbai on
21st February, 2017
Union bank of India wins champion of champions trophy and six individual category awards
for Union Dhara(banks inhouse journal) at the 55th ABCI ( Association of Business
Communicators of India) awards ceremony held at Mumbai on 18th March, 2016
Union Bank of India wins Banking Disruptor of the year Award 2016 for Product Union
Selfie ( Excellence in Advertising & Marketing) awarded by Bloomberg TV India-18 March,
2016

Union Bank of India won the following awards under Corporate Social Responsibility

1. Bank with Best CSR practices award was presented to Union Bank Social Foundation

2. CSR Leadership Award for promoting Employment for the Physically Challenged

3. CSR Leadership Award for best use of CSR practices in Banking Sector

4. Excellence in Banking (PSU category)

5. Best Bank in Public Sector under Banking Financial Services & Insurance category

Union Bank of India was presented Golden Peacock Awards for excellence in HR practices
during the 10th International Conference on Corporate Social Responsibility conducted by
the Institute of Directors.
Union Bank of India wins the Prestigious ‗1st Best Vigilance Excellence Award (2015-16) in
Corporate Category‘
Sri Atul Kumar, CVO, Union Bank of India wins the Prestigious ‗Vigilance Excellence
Award (2015-16) in Individual Category‘

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Union Bank of India won 6 IBA (Indian Bank Association) Technology Awards 2015-16 under
following categories

1. Best Technology Bank of year

2. Best use of Digital & Channels Technologies

3. Best use of Technology to enhance Customer Experience

4. Best Risk Management, Fraud, Cyber Security

5. Best Financial Inclusion Technology Initiatives and

6. Best Payment Initiatives

Union Bank has bagged ―SKOCH Order-of-Merit Award 2015" under three areas ―eKYC
Application‖, ―Union Fee Pay – Kendriya Vidayalaya ‖ and ―Technology for Financial
Inclusion‖ in the SKOCH summit on Technologies for Growth.
Union Bank has bagged "elets Awards 2015" under ―Multi Channel Payment Solution
(IMPS)‖ in the Global Conference on Financial Inclusion & Payment Systems (FIPS)
organized by elets Technomedia Pvt. Ltd.
Union Bank bagged "ICT4 Development Awards 2015" under ‗Green Information
Technology (IT) Initiative‘ category from Associated Chambers of Commerce and Industry
of India (ASSOCHAM), New Delhi
Union Bank bagged IDC Insights Awards for ‗Excellence in Innovation‘ from Financial
Insights, International Data Corporation (IDC).
Union Bank has bagged "National Award for Innovative Training Practices" ( Second Prize
for 2014-15) instituted by Indian Society for Training & Development (ISTD), New Delhi.
Union Bank of India bags SKOCH ORDER-OF-MERIT award for Financial Inclusion
Technology in Skoch Financial Inclusion & Deepening Award Conference held on 11th June
2015 at Mumbai, Maharastra. Bank bags this award for implementing various Technology
initiatives to support all government schemes covered under the ambit of Financial Inclusion.
Initiatives include FI Gateway, Centralized Bio-metric Authentication System, AADHAAR
Enabled Payment System, AADHAAR Payment Bridge System, Kiosk Banking Application,
Demographic verification of AADHAAR holders & AADHAAR seeding, Direct Benefit
Transfer Scheme and eKYC based account opening.
Union Bank of India bags the Express Uptime Champion Award 2014 for its Network
Operations.

Union Bank of India won 6 IBA (Indian Bank Association) Technology Awards under
following categories

Winner

1. Best Payment Initiatives

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Runner up

1. Best Technology Bank of the year

2. Best Risk Management & Security

3. Best use of Mobility Technology

4. Best Internet Bank

5. Best Use of Technology in Training and Learning Initiative

Union Bank of India bags Financial Inclusion Technology Initiative award in the Global
Conference on Financial Inclusion & Payment Systems
Union Bank bags First prize under RBI Rajbhasha Shield and Second prize under Bilingual
House Journal Competition from Reserve Bank of India

Our bank bags IDRBT IT Excellance Awards 2012-13 under following categories

IT Excellance Award for "Best IT Team"

Special Award for "Technology for FI"

Special Award for "Managing IT Risk"

The Dale Carnegie Leadership Award was conferred on Union Bank of India on 28th October
2010 by Dale Carnegie Training for the Bank's transformation initiatives undertaken through
project Nav Nirman.
Our Bank has been the winner of Association of Business Communicators of India (ABCI)
Gold Award for marketing and Brand Communications, 2010. The award is in recognition of
the transformation process undertaken by the Bank.
Our Bank was ranked as the 275th most valuable global banking brand for calendar year
2009, up from 351st rank in 2008.
The ranking is carried by Brand Finance Plc, an independent intangible asset valuation and
brand strategy global firm
The brand value rating for Union Bank is A+ (A means strong) compared to BB (BB means
Average) in previous year
Bank's brand value increased by 148% during the calendar year 2009.
The Asian Banker ranked Union Bank of India the 7th Strongest Bank in Asia-Pacific Region
in 2009. The Bank was ranked at No. 3 amongst banks in India.
Our Bank has participated in the prestigious Banking Technology Awards 2009 conducted by
IBA-TFCI award and bagged the Best User of Business Intelligence award.
Union Bank of India was awarded the prestigious Skoch Challenger Award 2009 for
excellence in capacity building through innovative concept of 'Village Knowledge Centre' as
part of financial inclusion initiatives.

BANKS PHILOSOPHY ON CORPORATE GOVERNANCE:

Union Bank of India has tradition of good corporate governance practices. Bank has corporate
governance policy in place and laid down code for its Directors on the Board and its Core

25
Management comprising of all General Managers. The bank has laid emphasis on the cardinal values
of fairness, transparency and accountability for performance at all levels, thereby enhancing the
share-holders value and protecting the interest of the stakeholders. The bank considers itself as
trustee of its shareholders and acknowledges its responsibility towards them for creation and
safeguarding shareholders wealth. During the year under review, the bank continued its pursuit of
achieving these objectives through the adoption and monitoring of corporate strategies, prudent
business plans, monitoring of major risks of the bank‘s business and pursuing the policies and
procedures to satisfy its legal and ethical responsibilities.
GRIEVANCE REDRESSAL POLICY:
Bank has set a vision to emerge as number one bank in terms of customer experience.
Towards this end, bank remain alert and sensitive to customer complaints and uses it as a tool for
removing deficiencies in service at all levels. The policy also takes into account the increasing touch
points where standard of customer service gets impacted significantly. Hence, all the delivery
channels viz., ATMs, Phone Banking, Mobile Banking, Internet Banking will be given due
importance in redressing shortcomings based on customer feedbacks. Likewise, channels like call
center and online complaints will be given added focus both in receiving as well as redressing
customer grievances. The adoption of banking codes and standards plays a greater responsibility of
the bank to meet higher standard of customer expectation. Bank will use customer education,
customer awareness and transparency as tools for reducing grievances and enhancing customer
satisfaction.
INTERNAL MECHANISM TO HANDLE CUSTOMER COMPLAINTS / GRIEVANCES:
(a) Three Tier Grievance Redressal System:
The bank will have public grievances mechanism functioning at three levels i.e. Branch, Regional
and Central office level. All complaints received at every level will be immediately acknowledged
and dealt appropriately. The bank also have an online grievance redressal mechanism whereby
grievances can be lodged online and are attended as per the time schedule with an inbuilt escalation
process by which the complaint get escalated to higher offices in case of non fulfillment within time.
The facility has been provided to customer to register the complaint on-line for speedy redressal. Call
centre is another avenue to record complaints and deficiencies in service. Calls to call centre are
processed through a well laid down fulfillment work flow within a committed time and escalation
provision.
(b) Nodal Officer and other Designated Officials to Handle Complaints and
Grievances:

26
Bank appoints a nodal officer in the rank of General Manager who is responsible for implementation
of customer service and complaint handling for the entire bank. At field level, Regional Heads will
be designated to handle complaints / grievances in respect of branches falling under their control.
(c) Mandatory Display Requirements:
As per mandatory requirements the bank provides the following;
• Complaint / suggestion box at each office of the bank.
• Complaint books and registers to customers to register their complaints.
• Compliant form along with the name of the nodal officer.
• Appropriate arrangement for receiving complaints and suggestions.
• The name, address and contact number of Nodal Offieer(s).
• Contact details of banking ombudsum of the area.
• Code of bank‘s commitments to customers / Fair Practice code.
COMMITTEES ON CUSTOMER SERVICE IN BANK:
Customer Service committee of the Board:
The committee is headed by Chairman and Managing Director. There are 8 members including the
CMD in the committee. Other than CMD, there are two EDs, one RBI Nominee Director, one
Shareholder director, one workmen employee director and two part time non-official directors. This
committee review the functioning of the committee on customer service including compliance with
the recommendations of the Committee on Procedures and Performance Audit of Public Services
(CPPAPS). The Committee suggests innovative measures of enhancing the quality of customer
service and improving the level of customer satisfaction for all categories of customers at all times.
Standing Committee on Customer Service:
The standing committee on customer service is chaired by the Managing Director / Executive
Director of the bank. Besides five senior executives of the bank, the committee also have two
eminent non-executives drawn from the public as members.
The functions of the committee’s are as under:
• Evaluate feedback on quality of customer service received from various quarters.
• Look into the simplification of procedures and practices prevailing in the bank, with a view to
safeguard the interests of common persons,
• Review the practice and procedures prevalent in the bank and take necessary corrective action on
an on-going basis.
• Submit report on its performance to the customer service committee of the board at quarterly
intervals.
Code of Bank’s Commitment to Customers:
Bank is proud to be member of the banking codes and standards board of India

27
(BCSBI). As a member of BCSBI, bank has adopted the code of bank‘s commitment
to customers. Under this code bank have the following key commitments:
• To act fairly and reasonably in all the dealings with customers.
• To help customers to understand how the financial products and services work.
• To help customers to use their accounts / services.
• To deal quickly and sympathetically with things that go wrong.
• To treat all personal information of customers as private and confidential.
• To publicize die code.
• To adopt and practice a non-discrimination policy.
Accordingly bank have to display the comprehensive notice board in branches and keep the booklets,
pamphlets, brochures containing relevant information on codes, policies, interest rates, and rules of
business in the branch and make them available to customers. The members of Union Bank of India
family should remain well informed on BCSBI code and follow the same in letter and spirit.
Interaction with Customers:
The bank recognizes the customer‘s expectation / requirement / grievances through personal
interaction with customers by bank‘s staff. Customer day is observed by all the branches on 15th of
every month where customers can lodge their complaints personally and have their redressal on the
spot. Many of the complaints arise on account of lack of awareness among customers about bank
services, such interactions will help the customers to appreciate banking services better.
Account of Illiterate and Visually Challenged Persons:
The bank also allows the illiterate persons to open savings bank and term deposit account. For this
purpose his thumb impression is obtained on the account opening form. The account of such person
may be opened provided he/she calls on the bank personally along with a witness who is known to
both the depositor and the bank. Normally, no cheque book facility* is provided for such savings
bank account. At the time of withdrawal / repayment of amount of deposit and/or interest, the
account holder will affix his / her thumb impression or mark in the presence of die bank‘s officials
who is verifying the identity of the account holder. The bank explains the need for proper care and
safe keeping of the passbook etc. given to the account holder. The bank allows all the banking
facilities including cheque book facility, ATM facility, and locker facility etc., to the visually
challenged persons.
Bank's General Lien:
Bank has the right to retain all the goods or any property of the depositor until all the claims of
holder i.e. bank are satisfied. The right of lien is conferred to the Banker under Sec 171 of Indian
Contract Act.
Training System of UBI:

28
The training is the core of human capital. Traditional banking skills should be converted into new
competencies so as to remain relevant. The starting point of modem training system in banks requires
identifying the various competencies for operations, sales and services, customer service, newer
areas like risk management, project finance, financial inclusion etc. The design and execution of
training depend upon the competencies mapped. Training plays a vital role in enabling staff members
at all levels to prepare themselves to meet the challenges of today and tomorrow. Training helps staff
members to refresh knowledge and learn new skills, training can be effective only if it is integrated
with the day to day functioning of the bank. Training system of the bank started to make an impact
and make its presence felt even beyond the bank, only after the establishment of the staff college at
Bangalore. There are 7 staff training centers located all over India- Luknow (Uttar Pradesh),
Gurgaon (Delhi), Ahmadabad (Gujarat), Powai (Maharashtra), Aluva (Kerala), Bhubaneswar
(Orissa) and Bhopal (Madhya Pradesh),. The Mother college at Bangalore oversees the functioning
of the activities at all these centers. All the centers put together provide a training capacity of 11
channels to train 290 persons on any given day. At staff college Bangalore, this capacity scales up to
16 channels and 421 persons per day. Training in Union Bank is a bank-wide responsibility managed
centrally by the Apex Unit - Staff College, Bangalore - in close consultation with business units. A
high-powered committee of top executives i.e. Chairman, Executive Directors, and General
Managers - meets once in six months to review the training activities and provides directions for the
way forward. The Principal of staff college, Bangalore, is the member-secretary of this committee.
The training in Union Bank has a history of 5 decades. As early as 1962, the bank's staff college was
established at Bombay to take care of the training requirements. Initially there was only one channel.
Now there are 19 channels with a capacity to train 500 persons at a time. Facilities provided for
the trainees are holistic and both the class room and residential arrangements are uniform throughout
The main objectives of UBI training system are to provide training for all the staff i.e. from
housekeepers to executives in the highest cadre. The bank also utilizes external training facilities
offered by reputed organizations like NIBM, BTC, CAB, BIRD, RBI, MDI, and also overseas
training establishments like Harvard business school, London school of economics etc. The training
mission is to promote the culture of continuous learning for the
development of the individual and the bank, to ensure that UBI is a learning organization. Training
programme includes Induction level programs, Programme on promotions, Reinforcement
programme, Re-skilling programmes, Management education and Leadership development
programmes. Training programmes aimed at attitudinal changes and behavioral improvements of the
staff, apart from workshops, conferences, seminars and symposia held at regional locations. A
beginning has been made in distance learning via UBI-net and video conferencing.

29
CORPORATE SOCIAL RESPONSIBILITY:
Corporate social responsibility (CSR) is directly linked to the core business of the bank. It
encompasses as to how the bank adds social, environmental and economic value in all its activities to
make a positive, sustainable impact on both the society and the business. Banks whose corporate
office was inaugurated by Mahatma Gandhi, bank has been proudly following his footsteps in
serving the society.
The Bank showed its social concerns in many ways:
1. Donated 6 lakh to Cochin child foundation for assistance of under privileged
children.
2. Donated 11 lakh to Ramakrishna Mission, Nagpur for building with a
Vivekananda Vidhyarthi Bhavan.
3. Donated 20 lakh to Bhagwan Mahaveer Viklang Sahayata Samithi for providing
artificial limbs to 3,000 physically challenged people.
4. The bank gave 50 lakh each to the states of Karnataka and Andhra Pradesh for
helping flood victims when that assistance was desperately needed.
5. The Union Bank social foundation trust disbursed 67.77 lakh as grants to its Union Adarsh Gram
for carrying out various infrastructural developmental activities for the upliftment in the lifestyle of
villages and family. It approved the adoption of 50 schools in its lead districts to fulfil the
educational needs of the children.
6. On 23rd January, 2010 National Girl Child Day, the bank has initiated a programme to adopt girl
children in the 101 ‗Adarsh Gram‘. Under this initiative, the bank adopts girl children and takes the
responsibility of all necessary financial commitments till their high school level.
7. The bank has earmarked 1% of its profits for social projects which can facilitate visible change in
the society and environment in which the bank operates.
8. Bank contributed 1.50 crore to the Maharashtra Chief Minister‘s Relief Fund for flood relief and
rehabilitation.
9. On 26 July, 2005 when flash floods hit Mumbai, and there were widespread destruction to human
life and property, the bank announced financial assistance to its employees affected by the disaster.
10. The branch has provided a water cooler to provide safe and cold drinking water
For all the school going kids and a large number of other villagers.

30
 1.4 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVES:

 To analyse the financial position and performance of Union Bank of India using CAMEL
model.

SECONDARY OBJECTIVES:

 To investigate the capital adequacy of union bank of India.

 To assess the Asset Quality of union bank of India.

 To analyse the Management Efficiency of UBI.

 To explore the Earning and profitability of union bank of India.

 To study the Liquidity position of union bank of India.

 To give recommendations and suggestion for improvement of performance and financial

position of union Bank of India.

31
 1.5 NEED OF THE STUDY

Evaluation of the organization‘s overall performance and observing the financial condition is
essential to owners, potential investors, depositors, managers and, of course, the regulators. The
study is conducted to analyze the performance of banks with respect to a Camel model. This research
is focused on CAMEL Model as it emphasizes on different indicators that are specifically important
for safety and soundness of the banking industry. This research will provide insight to shareholders
and investors about the key factors that affect the bank performance. It will enhance their knowledge
beyond the typical information like financial statement and disclosure which are made by banks in
their annual statements. On the basis of information investors will take a more valuable decision to
invest in a certain Bank. It will help the regulators in making appropriate rules and regulations,
mitigate the potential risk of failures and take corrective actions. It will also be helpful to formulate
appropriate policies on how these can be improved upon. Moreover, it will be beneficial for
management to formulate a proactive strategy for survival and long term growth of the organization.
Further the study outcomes may be used as a basis for future research.

32
 1.6 SCOPE OF RESEARCH

The scope of the research is restricted to the particular commercial bank due to the
unavailability of data and time constraints. This study aims to evaluate financial performance by
focusing on all five parameters of Camel Model i.e., Capital adequacy, Asset quality, Management
Efficiency, Earnings & Profitability and Liquidity. However there are different ratios that can be
used to analyse these parameters. Data about the sampling variables were collected for the year
2014-15 to 2018-19 and then the data was analyzed using CAMEL Model. The research was
descriptive in nature and it analyses the financial strengths of the bank and assess the relationship
between different significant variables in banks. Secondary data on the subject was collected from
journals, company prospectus, company annual reports and RBI website. Non-Probability
Convenience sampling is used in selecting the banks analysed for the purpose of the study.

33
 1.6 LIMITATIONS OF THE RESEARCH

 The study was limited for the particular bank only.

 Financial performance is measured only using camel model.
 This study will be based on secondary data and information and by review of relevant
literature thus it may bias to some extent.
 The study is totally done on the premise of ratios ascertained from the financial records.

34
 CHAPTER – 2

REVIEW OF LITERATURE

Shri.Ashish.M.Joshi and Dr.K.G.Sankaranarayanan (2018), in his study ―Measuring financial

performance of selected banks using camel model‖ stated that the present study is an attempt to
evaluate relative performance across banks in three sectors i.e. public, private and multi-state
cooperative banks. From the secondary data analysed it is observed that based on 17 factors of camel
model, only five factors shows significant difference among the three categories of banks, further the
financial performance of the selected public private and cooperative sector banks, it is observed that
four factors profit per employee, debt-equity ratio, total assets-to-total deposits ratio, Net NPA‘s-to-
total advances ratio are the major dependent factors impacting the financial performance of the banks
taking return on assets as an dependent variable. Further it is observed that there is a considerable
difference on certain parameters of the camel model across the banks under study.

M. Susmitha and V. Mouneswari (2017), in their study ― Financial Performance Analysis of

Syndicate Bank Using Camel Model‖ stated that It is found out that overall state of capital adequacy
of Syndicate bank was satisfactory. As far as portfolio is concern, the overall state of assets quality
was good. The management efficiency was also satisfactory. Overall earning capacity of the bank
was good but the overall state of liquidity was not satisfactory.

B.Dhivya priya and C.Manjula (2016), in his study “Financial performance analysis of IDBI using
camel model‖ stated that CAMEL evaluation is based on five parameters: Capital Adequacy, Asset
Quality, Management Efficiency, Earning Capacity and Liquidity position of the banks. IDBI is a
government-owned public sector banks; offering credit and financial facilities for the development of
the fledging Indian industry. Researcher has analyzed the financial performance of IDBI using
CAMEL mode. Based on the analysis, it is advisable to improve the capital adequacy, asset quality
and management efficiency of the bank.

Dr.Amit Joshi, Lakhvendra Dutt Sharma and Indira (2015), in his study ―seeking the best indian
bank: an implementation to camel model‖ stated that The present study is an attempt to rank Indian
commercial banks in terms of CAMEL Model on the basis of their overall performance over a period
of five years (2010 to 2014). For this purpose forty two Indian banks (both public and private) were
analysed on the basis of capital adequacy, asset quality, management efficiency, earnings quality and
liquidity position. Otherwise, there are a variety of factors which should be measured to analyse the

35
performance of banks. In this study the factors suggested by CAMEL model are taken care of for
performance analysis. According to the importance of study each parameter is given equal weights.
Results shown that on an average Yes Bank was at the top most position followed by HDFC Bank
and Indian Bank. The study will be useful for the researchers, academicians, students and industry
experts who wish to seek the best bank.

Ruchi Gupta(2014) in her paper revealed that there is a statistically significant difference between
the CAMEL ratios of all the Public Sector Banks in India, thus, signifying that the overall
performance of Public Sector Banks is different. Also, it can be concluded that the banks with least
ranking need to improve their performance to come up to the desired standards. A total of 26 Public
Sector Banks in India have been analysed for the purpose of the study.

As pal and Malhotra (2013), in his study measured the financial performance of Indian public
sector banks‟ asset by camel model and applying the tests like ANOVA, f test and arithmetic test for
the data collected for the year 2007-2011. They concluded that the top two performing banks are
bank of Baroda and Andhra bank because of high capital adequacy and asset quality and the worst
performer is united bank of India because of management inefficiency, low capital adequacy and
poor assets and earning quality. Central bank of India is at last position followed by UCO bank and
bank of Maharashtra.

Nilesh (2013) analyzed the performance of selected public sector banks in India, ranks were given to
the banks on the basis of their performance on the various ratios used under CAMEL approach.
Based on the overall grand ranking of all CAMEL parameters, it was found that Bank of Baroda
ranked first, followed by PNB and State bank of India.

Ms. Litty Denis, Ms. Yesha Sheth (2012), in his study “present scenario of Indian banking
industry: an appraisal through camel analysis‖ stated that Competition has affected adversely the
bottom line performances of the banks. It is therefore critical to evaluate the performance of banks
operating in India in order to study sturdiness of the banks in the face of competition. The paper
bases the analysis of performance of banks on CAMEL Model. The results reveal that Axis bank,
HDFC and Punjab national bank has shown a good growth record for its overall performance.

Chaudhry and Singh (2012), in their study analyzed the impact of the financial reforms on the
soundness of Indian Banking through its impact on the asset quality. The study identified the key
players as risk management, NPA levels, effective cost management and financial inclusion.

Esha rai (2011), ―A study of camel analysis of commercial banks‖ stated that the study deals with
different financial performance and its indicator as well as financial viability of the banks. Its

36
significance also lies mainly in identifying and comparing the financial health of banks in the
framework of CAMEL. It provides necessary information of performance capability of their banks to
the management. It provide the real picture of performance which is beneficial to potential as well as
existing shareholders, about risk return and utilizing fund. The study is also useful for depositors,
merchant bankers as well as other stakeholders; they can identify the overall performance of the
bank.

Siva and Natarajan (2011) empirically tested the applicability of CAMEL norms and its
consequential impact on the performance of SBI Groups. The study concluded that annual CAMEL
scanning helps the commercial bank to diagnose its financial health and alert the bank to take
preventive steps for its sustainability.

DR.D. Maheshwara Reddy and K.V.N.Prasad (2011), in his study ―Evaluating performance of
regional rural banks: an application of camel model‖ stated that Amalgamation of regional rural
banks was considered to strengthen all the branches financially. In every line of business, the
performance of each bank is appraised in financial perspectives and ranked them. In this paper an
attempt is made to discuss the financial performance of selected regional rural banks during post
reorganization period. To measure the financial soundness of selected sample banks, the CAMEL
Model which is an appropriate technique is adopted.

K.V.N.Prasad and Dr.A.A.Chari (2011), conducted a study to evaluate financial performance of

public and private sector banks in India. In this study they compared financial performance of top
four banks in India viz., SBI, PNB, ICICI and HDFC and concluded that on overall basis HDFC
rated top most position.

Sangmi and Nazir (2010), have taken two major banks of north India namely, Punjab national bank
and Jammu and Kashmir Bank on the basis of their role and participation in influencing the financial
condition of north India. They apply the camels model of these two banks by taking the annual report
data from 2001-2005, and found out that both the banks were financially sound and suitable as their
capital adequacy, asset quality, management capability and liquidity is concerned.

R.C.Dangwal and Reetu Kapoor (2010) conducted ―a study on financial performance of

commercial banks‖. Inthis study they compared financial performance of 19 commercial banks with
respect to eight parameters andthey classified the banks as excellent, good, fair and poor categories.

Shrestha, M.D. (2003), in his study of ―Capital Adequacy Norms for Commercial Banks and its
impact of Bank of Kathmandu and Himalayan Bank Ltd.‖, has concluded that BOK and HBL are
found to be successful to comply with requirement of capital adequacy norms. The CD ratio of HBL

37
is very much low which needs to be improved immediately and CD ratio of BOK is satisfactory.
Although, the banks are successful to meet the capital adequacy requirement as per NRB directive.

Bhandari, K.R. (2006) conduct a study on "Financial performance Analysis of Himalayan Bank
Limited in the Framework of CAMEL". The basic objective of the study was to analyze the financial
performance of Himalayan Bank Limited through CAMEL framework. He had used secondary data
for the period of six years from 1999 to 2004. The study revealed the adequate capital of the bank.
The non-performing loan was in decreasing trend, which shows the improvement of the bank. The
bank is still with better return which is proved by its better ROE; however it is in decreasing trend.
The decreasing trend of net interest margin shows management slack monitoring over the banks
earning assets. The liquid fund to total deposit ratio is above the industrial average ratio. NRB
balance and cash in vault to total deposit ratios are below the industrial average ratio during the study
period.

Sharma, S. (2007) performed a study on "Financial Performance Analysis of Nepal SBI Bank Ltd.,
In the Frame work of CAMEL." The main objective of the study is to analyze the financial
performance of Nepal SBI bank Ltd. Through CAMEL framework, the study was based on
secondary data covering the six years from 2001 to 2006. The researcher conducts the financial tools
to analyze the six years data. He concluded That Nepal SBI bank Ltd. Was well capitalized and
complying with directives of NRB. The bank has maintained satisfactory level of past due loan on
total loan except 2001. Earning per employees of the bank was found quite high. Net interest margin
of the bank was found satisfactory. Further the liquidity position of the bank was found sound.

Poudel, R. (2007) carried out ―A study on comparative analysis of financial performance between
Himalayan Bank and Standard Charted Bank‖ the basic objectives of that study was provided
comparative financial performance of SBCNL and HBL. Only five fiscal years financial
performance beginning from 1995/96 through 2000/2001were analyzed. In this study financial and
statistical tools were used to evaluate the performance of banks. In financial tools liquidity, activity,
profitability, structural and income and expenditures ratios. Further, the research used the method of
least square to find out the trend of different financial indicators he found that the performance of
SCBNL is better than that of HBL.

Chand, K.B. (2007) conducted "Financial Performance Analysis (CAMEL - Test) of Selected CBs
(Nabil, NIBL &SCBL)" the main objective of the study is comparative analysis of commercial banks
through the frame work of CAMEL. He did her study covering five FY (2001 to 2005) on the basis
primary as well as secondary data. Some financial and statistical tools and techniques are applied to
evaluate the performance of selected joint venture banks. On his study, except 2001, SCBL had

38
highest CAR among these selected CBs where Nabil is moderate in all time. In the case of NIBL in
2001 it had highest CAR among them and then after it went behind and getting second and some
year third position in CAR. Here Chand gave first rank to SCBL for maintain highest CAR. In case
of Assets quality in average study show the Nabil performance is much better than other and SCBL
and NIBL follows Nabil respectively. Chand study shows the factors affecting the management
efficiency and effectiveness. Bank management quality model was also presented in his study. As
per earning concern SCBL leads other two banks and tough fight between Nabil and NIBL. For
comparative analysis of liquidity part which compare, it is found that NIBL secures first position for
percentage of cash balance and percentage of balance with bank and SCBL scores first position for
investment in government securities. Nabil is a little bit take risk and invest less in government
securities as compare to other two banks. All banks are maintaining the benchmark of the NRB on
case of CRR.

Bhusal, M. (2008) carried out a research study on " Financial Performance Analysis of Commercial
Banks in Nepal the Frame Work of CAMEL (A Comparative Study of Kumari Bank and
Machhapuchchhre Bank", with the fundamental objective to analyze and compare the financial
performance of KBL and MBL in the frame work of CAMEL from FY 2058/59 to 2062/63. with the
help of both secondary as well as primary data, she conducted her study by applying Some financial
and statistical tools and techniques. Her study shows both banks are maintaining CAR as per rule of
NRB and the trend of CAR is decreasing. Both banks are in much satisfactory level in the case of
assets management. Increasing profit of both banks shows the good sign but it is not enough to
compete with other established banks. According to her study, Profits are also not enough to meet
benchmark set by the World Bank. In the case of liquidly both banks are not properly maintaining
the rule of NRB. In her overall analysis there is tough competition between KBL and MBL and both
are in the phase of improvement.

Singh, R. B. (2008) conducted "A Study of CAMEL Analysis of Commercial Banks" i.e. SCBNL,
HBL & Nabil Bank. The objective of that study was to evaluate the capital adequacy ratio, to analyze
assets quality and to absorb the liquidity position of these banks. He used ration analysis and
statistical tools to covered five years analysis. On the basis of Mr. Singh's analysis, SCBNL is on the
top and NABIL followed by HBL.

P Janaki Ramudu and S Durga Rao (2006) conducted a study on ―A Fundamental Analysis of
Indian Banking Industry‖, by analyzing the performance of SBI, ICICI and HDFC.

39
 CHAPTER-3

RESEARCH METHODOLOGY
MEANING OF RESEARCH
According To Clifford woody, research comprises defining and redefining problems,
formulating hypothesis or suggested solutions collecting, organizing and evaluating data, making
deductions and reaching conclusions; to determine whether they fit the formulating hypothesis.
MEANING OF RESEARCH METHODOLOGY:
Research methodology is the specific procedures or techniques used to identify, select, process,
and analyze information about a topic. In a research paper, the methodology section allows the reader to
critically evaluate a study's overall validity and reliability. It is a design or plan as a guide for conducting
research and to systematically solve the research problem. It includes research design, sampling
procedures, data collection method and analysis procedure.
RESEARCH DESIGN
Research design is a blue print framework which specifies the details of the procedures necessary
for obtaining the information needed to structure or solve research problems. The research design refers
to the overall strategy that one chooses to integrate the different components of the study in a coherent
and logical way, thereby, ensuring that will effectively address the research problem.
DESCRIPTIVE AND ANALYTICAL RESEARCH
• Descriptive research: It includes surveys and fact-finding enquiries of different kinds. It tries to
discover answers to the questions who, what, when and sometimes how. Here the researcher
attempts to describe or define a subject, often by creating a profile of a group of problems,
people, or events. The major purpose of descriptive research is description of the state of affairs
as it exists at present.

• Analytical research: The researcher has to use facts or information already available, and
analyze these to make a critical evaluation of the material.

SAMPLING:
Sampling can be defined as the method or the technique consisting of selection for the study
of the so called part or the portion or the sample, with a view to draw conclusions or the solutions
about the universe or the population.
a. Probability Sampling:–This method of the sampling helps in the improvement of the
precision, accuracy, efficiency etc. of the different sample results. This method of sampling
depends on the theory of the probability.
b. Non-probability sampling: Non-probability sampling is a sampling technique where the
samples are gathered in a process that does not give all the individuals in the population equal

40
 chances of being selected. Most researchers are bounded by time, money and workforce and
because of these limitations, it is impossible to randomly sample the entire population and it
is necessary to employ another sampling technique, the non-probability sampling technique.
In this study non-probability sampling technique is adopted which is both convenient and
judgmental in nature.
SAMPLE:
Sample means "where only a small unit of population under study are considered for analysis".
For this study only one particular bank UNION BANK OF INDIA is considered.
SAMPLE SIZE:
Sample size determination is the act of choosing the number of observations or replicates to
include in a statistical sample. The sample size is an important feature of any empirical study in
which the goal is to make inferences about a population from a sample.
DATA COLLECTION
The process by which the researcher collects the information needed to answer the research problem.
In collecting the data, the researcher must decide: Which data to collect, How to collect the data, which
will collect the data, When to collect the data.
METHODS OF DATA COLLECTION:
While dealing about the method of data collection to be used for the study, we should keep in mind two
types of data. i.e., primary data and secondary data.
Primary Data:
Primary data are those which are collected for the first time and they are original in character. The
researcher to study a particular problem and collects them himself.
Secondary Data:
The secondary data are those, which are already collected by someone for some purpose and are available
for the present study. In this study secondary data such as annual reports of UBI has been collected for
supportive evidence and analytical study. Books, journals, articles, websites are also reviewed for the
study.

TOOLS FOR ANALYSIS:

In this study CAMEL MODEL is used as a major tool for analysing the financial
performance of UBI.

CAMEL MODEL:

It is recognized to be an effective internal supervisory tool for evaluating the soundness of financial
firms (banks). The Uniform Financial Institution Rating system, commonly referred to the acronym

41
CAMEL rating, was adopted by the Federal Financial Institution Examination Council on November
13 1979, adopted by the National Credit Union Administration in October 1987. Under this system,
each banking institution subject to onsite examination is evaluated on the basis of six critical
dimensions relating to its operations and performance, which are referred to as the component
factors. These are Capital Adequacy, Asset Quality, Management Efficiency, Earnings Quality, and
Liquidity. These parameters are used to reflect the operating performance, financial performance and
regulatory compliance of the banking institutions world over. The five component areas are:

• C—Capital adequacy

• A—Asset quality

• M—Management

• E—Earnings

• L—Liquidity.

The CAMEL components completely reflect the safety and soundness of banks. RBI has approved
this framework for measuring the performance of Indian Commercial banks. CAMEL is a ratio-
based model for evaluating the performance of banks.

CAPITAL ADEQUACY:

1. Capital adequacy ratio (CAR)

The banks are required to maintain the capital adequacy ratio (CAR) as specified by RBI
from time to time. As per the latest RBI norms, the banks in India should have a CAR of 12%. It is
arrived at by dividing the sum of Tier-I, Tier-II and Tier-III capital by aggregate of risk weighted
assets (RWA). Symbolically,
CAR= (Tier-I + Tier-II + Tier-III)/RWA
Tier-I capital includes equity capital and free reserves.
Tier-II capital comprises of subordinate debt of 5-7 years tenure, revaluation reserves, hybrid debt
capital instruments and undisclosed reserves and cumulative perpetual preference shares.
Tier-III capital comprises of short-term subordinate debt. The higher the CAR, the stronger the bank.
2. Debt-Equity Ratio:
This ratio indicates the degree of leverage of a bank. It indicates how much of the bank
business is financed through debt and how much through equity. Debt-Equity ratio is arrived at by
dividing total borrowings and deposits by shareholders‘ net worth, which includes equity capital, and

42
reserves and surpluses. Higher ratio indicates less protection for the creditors and depositors in the
banking system.
Borrowings/ (Share Capital + reserves)
3. Advances to Assets:
This is a ratio of the Total Advances to Total Assets. This ratio indicates a bank‘s
aggressiveness in lending which ultimately results in better profitability. Total advances also include
receivables. The value of Total Assets excludes the revaluation of all the assets.
Total Advances/ Total Asset
4. Government Securities to Total Investments:
This ratio shows the risk involved in a bank‘s investment. Government Securities, are
generally, considered as the most safe debt instrument, which, as a result, carries the lowest return.
Since government securities are risk-free, the higher the Government Securities to investment ratio,
the lower the risk involved in a bank‘s investment. It is arrived at by dividing the amount invested in
government securities by total investment.
Government Securities/ Total Investment
ASSETS QUALITY
The quality of assets is an important parameter to gauge the degree of financial strength. The
prime motto behind measuring the assets quality is to ascertain the component of Non-Performing
Assets (NPAs) as a percentage of the total assets. This indicates what types of advances the bank has
made to generate interest income. Thus, assets quality indicates the type of the debtors the bank is
having. The following are the ratios that are necessary to assess the asset quality:
1. Gross NPAs to Net Advance:
It is a measure of the quality of assets in a situation, where the management has not provided
for loss on NPAs. The Gross NPAs are measured as a percentage of Net Advances. The lower the
ratio, the better is the quality of advances.
Gross NPA/ net advances

2. Net NPAs to Net Advances:

It is a measure of the quality of assets in a situation where the management has not provided
for loss on NPAs. Net NPAs are Gross NPAs net of provisions on NPAs and interest in suspense
account. In this ratio, Net NPAs are measured as a percentage of net advances.
Net NPA/ net advances

43
3. Total Investments to Total Assets Ratio:
Total investments to total assets indicate the extent of deployment of assets in investment as
against advances. This ratio is used as a tool to measure the percentage of total assets locked up in
investments, which, by conventional definition, does not form part of the core income of a bank. It is
arrived at by dividing total investments by total assets. A higher ratio means that the bank has
conservatively kept a high cushion of investments to guard against NPAs.
Total investments / total assets
4. Net NPAs to Total Assets
It is a measure of the quality of assets in a situation where the management has not provided
for loss on NPAs. Here, the Net NPAs are measured as a percentage of Total Assets. The lower the
ratio, the better is the quality of advances.
Net NPA / total assets

MANAGEMENT EFFICIENCY
Management efficiency is another vital component of the CAMEL Model that ensures the
survival and growth of a bank. The ratios in this segment involve subjective analysis and efficiency
of management. The management of the bank takes crucial decisions depending on the risk
perception. It sets vision and goals for the organization and sees that it achieves them. This parameter
is used to evaluate management efficiency as to assign premium to better quality banks and discount
poorly managed ones.
1. Total advances to Total deposits:
The ratio measures the efficiency of management in converting the deposits available with
the bank (excluding other funds like equity capital, etc.) into high earning advances. Total deposits
include demand deposits, savings deposits, term deposits and deposits of other banks. Total advances
also include the receivables.
Total Advance/ Total Deposit
2. Business per Employee:
This tool measures the efficiency of all the employees of a bank in generating business for the
bank. It is arrived at by dividing the total business by total number of employees. By business, we
mean the sum of total deposits and total advances in a particular year.
Total Income/ No. of Employees
3. Profit per Employee:
This ratio measures the efficiency of employees at the branch level. It also gives valuable
inputs to assess the real strength of a bank‘s branch network. It is arrived at by dividing the Profit

44
after Tax (PAT) earned by the bank by the total number of employees. The higher the ratio, higher is
the efficiency of the management.
Profit after Tax/ No. of Employees
4. Asset turnover ratio:
Asset Turnover measures how quickly a bank turns over its asset through its income, both
interest incomes as well as non-interest income. It measures the ability of a bank to use its assets to
efficiently generate income. The higher the ratio indicates that the bank is utilizing all its assets
efficiently to generate income. Symbolically,
ATR = Total Income/ Total Assets

EARNING QUALITY:
Earning quality reflects quality of a bank‘s profitability and its ability to earn consistently.
The quality of earning is a very important criterion that determines the ability of a bank to earn
consistently, going into the future. It basically determines the profitability of the bank. It also
explains the sustainability and growth in earnings in the future. This parameter gains importance in
the light of the argument that much of bank‘s income is earned through non-core activities like
investments, treasury operation, and corporate advisory service and so on. The following ratios try to
assess the quality of income in terms of income generated by core activity-income from lending
operation.
1. Spread or Net Interest Margin (NIM) to Total Assets:
NIM, being the difference between the interest income and interest expended as a percentage
of total assets. It is an important measure of a banks core income(income from lending operations). A
higher spread indicates the better earnings given the total assets. Interest income includes dividend
income and interest expended includes interest paid on deposits, loan from the RBI, and other short
term and long term loans.
(Interest income - Interest expended)/ total assets
2. Net Profit Margin (NPR):
Net profit margin is an important criterion to measure the earnings quality in banks.
Increasing profits is the best indicator that the bank can pay dividends due to which the share price
will trend upward. Stakeholders look at net profit margin thoroughly because it signifies the quality
of the bank that is reflected in its ability in converting revenue into profits available for shareholders.
It is explained as percentage of revenue that is residual after all operating expenses, interest, taxes
and preferred stock dividends other than common stock dividend is deducted from the total income
of the bank. A high Net Profit Margin clearly signifies that the bank has stable and steady earnings.
Symbolically,

45
 NPR = Net profit After Taxes / Total Income.
3. Interest Income to Total Income:
Interest income is a basic source of revenue for banks. The interest income to total income
indicates the ability of the bank in generating income from its lending. This ratio measures the
income from lending operations as a percentage of the total income generated by the bank in a year.
Interest income includes income on advances, interest on deposits with the RBI, and dividend
income.
Interest Income/ Total Income

4. Return on Equity (ROE):

The return on equity (ROE), also known as return on investment (ROI), is a sound measure of
return, since it is the product of the operating performance, debt- equity management and asset
turnover of the bank. ROE measures how much the shareholders earned for their investment in the
bank. This ratio indicates how profitable a bank is by comparing its net income to its average
shareholders‘ equity. If a bank can mobilize deposits at a lower rate and advance these to customers
to generate higher returns than the cost of deposits, it is able to create additional revenues that accrue
to shareholders as increased equity. The higher the ratio percentage, the more efficient the bank is in
earnings and utilizing its equity base to generate better return is to investors. Symbolically,

ROE = Net Income / Average Shareholders Equity.

LIQUIDITY
Liquidity is very important for any organization dealing with money. For a bank, liquidity is
a crucial aspect which represents its ability to meet its financial obligations. It is of utmost
importance for a bank to maintain correct level of liquidity, which will otherwise lead to declined
earnings. Banks have to take proper care in hedging liquidity risk, while at the same time ensuring
that a good percentage of funds are invested in higher return generating investments, so that banks
can generate profit while at the same time provide liquidity to the depositors. Among a bank‘s assets,
cash investments are the most liquid. A high liquidity ratio indicates that the bank is more affluent.
The ratios suggested to measure liquidity under CAMEL Model are as follows:

1. Liquidity Asset to Total Asset:

Liquidity for a bank means the ability to meet its financial obligations as they come due.
Bank lending finances investments in relatively illiquid assets, but it fund its loans with mostly short

46
term liabilities. Thus one of the main challenges to a bank is ensuring its own liquidity under all
reasonable conditions. Liquid assets include cash in hand, balance with the RBI, balance with other
banks (both in India and abroad), and money at call and short notice. Total asset include the
revaluations of all the assets. The proportion of liquid asset to total asset indicates the overall
liquidity position of the bank.
Liquidity Asset/ Total Asset

2. Government Securities to Total Asset:

Government Securities are the most liquid and safe investments. This ratio measures the
government securities as a proportion of total assets. Banks invest in government securities primarily
to meet their SLR requirements, which are around 25% of net demand and time liabilities. This ratio
measures the risk involved in the assets hand by a bank.
Government Securities/ Total Asset

3. Liquidity Asset to Demand Deposit:

This ratio measures the ability of a bank to meet the demand from deposits in a particular
year. Demand deposits offer high liquidity to the depositor and hence banks have to invest these
assets in a highly liquid form.
Liquidity Asset/ demand Deposit

4. Liquidity Asset to Total Deposit:

This ratio measures the liquidity available to the deposits of a bank. Total deposits include
demand deposits, savings deposits, term deposits and deposits of other financial institutions. Liquid
assets include cash in hand, balance with the RBI, and balance with other banks (both in India and
abroad), and money at call and short notice.
Liquidity Asset/ Total Deposits.

47
 CHAPTER – 4
DATA ANALYSIS AND INTERPRETATION

4.1 CAPITAL ADEQUACY:

4.1.1. TABLE SHOWING CAPITAL ADEQUACY RATIO (CAR):

YEAR RATIO
March 2015 10.22
March 2016 10.56
March 2017 11.79
March 2018 11.50
March 2019 11.78
MEAN 11.17
S.D 0.73

4.1.1 CHART SHOWING CAPITAL ADEQUACY RATIO (CAR)

CAPITAL ADEQUACY RATIO

12
11.5
11
RATIO

10.5
10
9.5
9 RATIO

YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 11.17 and 0.73.
The UBI has maintained highest CAR over the five years, in the year 2015 the CAR ratio is 10.22
and it gradually tends to increase by 10.56 in 2016, 11.79 in 2017, and again reduces to 11.50 in
2018, and at last it slightly jumps up to11.78, which shows the bank has maintained high capital
adequacy and better financial health.

48
 4.1.2. TABLE SHOWING DEBT-EQUITY RATIO

YEAR RATIO
March 2015 1.78
March 2016 1.35
March 2017 1.76
March 2018 1.81
March 2019 1.62
MEAN 1.66
S.D 0.19

4.1.2 CHART SHOWING DEBT-EQUITY RATIO

DEBT-EQUITYRATIO
2

1.5
RATIO

0.5 RATIO

0
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 1.66 and 0.19.
The UBI has high debt equity ratio in the year 2018 with 1.81 which gradually decreases to 1.62 in
the year 2019 which shows the banks financial leverage. The lower the debt equity ratio the better is
the financial leverage of the bank.

49
 4.1.3. TABLE SHOWING TOTAL ADVANCES TO TOTAL ASSETS RATIO

YEAR RATIO
March 2015 0.66
March 2016 0.66
March 2017 0.63
March 2018 0.59
March 2019 0.59
MEAN 0.63
S.D 0.035

4.1.3 CHART SHOWING TOTAL ADVANCES TO TOTAL ASSETS RATIO

TOTAL ADVANCES TO TOTAL ASSETS

RATIO

2018-19
Y 2017-18
E
2016-17
A
R 2015-16
2014-15

0.54 0.56 0.58 0.6 0.62 0.64 0.66

RATIO

INTERPRETATION:
From the above the table it is interpreted that the mean and standard deviation is 0.63 and
0.035. The UBI has maintained highest total advances to total assets ratio in the year 2015 which
gradually decreases to 0.59 in the year 2019. The higher the ratio the better is the banks performance.

50
 4.1.4 TABLE SHOWING GOVT. SECURITIES TO TOTAL INVESTMENTS RATIO

YEAR RATIO
March 2015 0.77
March 2016 0.80
March 2017 0.78
March 2018 0.78
March 2019 0.74
MEAN 0.77
S.D 0.022

4.1.4 CHART SHOWING GOVT. SECURITIES TO TOTAL INVESTMENTS RATIO

GOVT. SECURITIES TO TOTAL

INVESTMENTS RATIO
Mar-19 Mar-15
19% 20%

Mar-18 Mar-16
20% 21%

Mar-17
20%

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 0.77 and 0.022.
The above ratio indicates the risk taking ability of the bank. UBI has maintained 0.74 in the year
2019 which shows that higher the ratio lower is the risk involved in the bank‘s investment.

51
4.2 ASSET QUALITY:
4.2.1. TABLE SHOWING GROSS NPA TO NET ADVANCES RATIO

YEAR RATIO
March 2015 0.05
March 2016 0.09
March 2017 0.12
March 2018 0.17
March 2019 0.16
MEAN 0.21
S.D 0.166

4.2.1. CHART SHOWING GROSS NPA TO NET ADVANCES RATIO

GROSS NPA TO NET ADVANCES RATIO

0.18
0.16
0.14
0.12
0.1
RATIO
0.08
0.06 RATIO
0.04
0.02
0
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 0.21and 0.166.
The UBI has maintained lowest ratio which is 0.05 in the year 2015 and increased to 0.16 in the year
2019 which shows that the banks credit risk is very low in the year 2015 and it becomes higher year
by year. Higher the ratio indicates the higher credit risk faced by the bank.

52
 4.2.2. TABLE SHOWING NET NPA TO NET ADVANCES RATIO

YEAR RATIO
March 2015 0.03
March 2016 0.05
March 2017 0.07
March 2018 0.08
March 2019 0.07
MEAN 0.059
S.D 0.021

4.2.2. CHART SHOWING NET NPA TO NET ADVANCES RATIO

NET NPA TO NET ADVANCES RATIO

0.08

R 0.06
A
T 0.04
I RATIO
O 0.02

0
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 0.059 and 0.021.
The UBI has maintained lowest ratio which is 0.03 in the year 2015 and increased to 0.08 in the year
2018 and again shows decreasing trend by 0.07 in the year 2019 which shows that the banks credit
risk is lowering. Higher the ratio indicates the higher credit risk faced by the bank.

53
 4.2.3. TABLE SHOWING TOTAL INVESTMENTS TO TOTAL ASSETS RATIO

YEAR RATIO
March 2015 0.22
March 2016 0.22
March 2017 0.25
March 2018 0.26
March 2019 0.26
MEAN 0.24
S.D 0.020

4.2.3. CHART SHOWING TOTAL INVESTMENTS TO TOTAL ASSETS RATIO

TOTAL INVESTMENTS TO TOTAL ASSETS

RATIO
0.27
0.26
R 0.25
A
0.24
T
0.23
I RATIO
0.22
O
0.21
0.2
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 0.24 and
0.020.Total Investment to total assets ratio is a standard measure to know the percentage of total Assets
locked up in investments. The UBI has maintained lower ratio in the year 2015 and increases to 0.26 in
the year 2019 which indicates that the bank‘s assets are highly locked up in investments.

54
 4.2.4. TABLE SHOWING NET NPA TO TOTAL ASSETS RATIO

YEAR RATIO
March 2015 0.018
March 2016 0.034
March 2017 0.041
March 2018 0.049
March 2019 0.041
MEAN 0.037
S.D 0.011

4.2.4. CHART SHOWING NET NPA TO TOTAL ASSETS RATIO

NET NPA TO TOTAL ASSETS RATIO

2018-19
2017-18
YEAR

2016-17
2015-16
RATIO
2014-15

0
0.02
0.04
0.06
RATIO

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 0.037 and 0.011.
The UBI has maintained very low ratio in the year 2015 and increased to 0.049 in the year 2018 and
again shows a declining trend in the year 2019 which is 0.041.

55
4.3 MANAGEMENT EFFICIENCY:

4.3.1. TABLE SHOWING TOTAL ADVANCES TO TOTAL DEPOSITS RATIO

YEAR RATIO
March 2015 0.81
March 2016 0.78
March 2017 0.76
March 2018 0.71
March 2019 0.72
MEAN 0.76
S.D 0.042

4.3.1. CHART SHOWING TOTAL ADVANCES TO TOTAL DEPOSITS RATIO

TOTAL ADVANCES TO TOTAL DEPOSITS RATIO

0.82
0.8
0.78
0.76
RATIO 0.74
0.72 RATIO
0.7
0.68
0.66
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 0.76 and 0.042.
This ratio indicates the ability of the bank to convert its deposits into higher earning advances. The
banks total advances to total deposits ratio in the year 2015 is 0.81 and decreased to 0.71 in the year
2019. The higher the ratio it is better for the bank to perform.

56
 4.3.2. TABLE SHOWING BUSINESS PER EMPLOYEE RATIO

YEAR RATIO
March 2015 1.02
March 2016 1.02
March 2017 1.02
March 2018 1.02
March 2019 1.06
MEAN 4.69
S.D 0.017

4.3.2. CHART SHOWING BUSINESS PER EMPLOYEE RATIO

BUSINESS PER EMPLOYEE RATIO

1.07
1.06
1.05
1.04
CRORES
1.03
RATIO
1.02
1.01
1
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and the standard deviation is 4.69 and
0.017. The UBI has higher business per employee of 1.06cr in the year 2019, which is stable for the
previous four years of 1.02cr. The higher the ratio indicates the bank is better staffed.

57
 4.3.3. TABLE SHOWING PROFIT PER EMPLOYEE RATIO

YEAR RATIO
March 2015 4.96
March 2016 3.83
March 2017 1.55
March 2018 0
March 2019 0
MEAN 2.068
S.D 2.252

4.3.3. CHART SHOWING PROFIT PER EMPLOYEE RATIO

PROFIT PER EMPLOYEE RATIO

6

LAKHS 3

2 RATIO

0
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 2.068 and 2.252.
The UBI has highest profit per employee which is 4.96 lakhs in the year 2015 and 3.83 lakhs in the
year 2016, 1.55 lakhs in the year 2017 and it becomes zero in the year 2018 and 2019. The higher the
ratio the better is the efficiency of the bank to maximize its profits.

58
 4.3.4. TABLE SHOWING ASSET TURNOVER RATIO

YEAR RATIO
March 2015 0.09
March 2016 0.09
March 2017 0.08
March 2018 0.08
March 2019 0.08
MEAN 0.084
S.D 0.005

4.3.4. CHART SHOWING ASSET TURNOVER RATIO

ASSET TURNOVER RATIO

0.09
0.088
0.086
0.084
RATIO

0.082
0.08 RATIO
0.078
0.076
0.074
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and standard deviation is 0.084 and 0.005.
The above ratio measures the ability of a bank to use its assets to efficiently generate income. The
asset turnover ratio of UBI in the year 2015 and 2016 is 0.09 and it decreases to 0.08 for the
remaining three years. The higher the ratio indicates the better is the bank in generating income
through assets.

59
4.4 EARNINGS CAPACITY:

4.4.1. TABLE SHOWING INTEREST INCOME TO TOTAL INCOME RATIO

YEAR RATIO
March 2015 0.89
March 2016 0.89
March 2017 0.86
March 2018 0.86
March 2019 0.87
MEAN 0.874
S.D 0.015

4.4.1. CHART SHOWING INTEREST INCOME TO TOTAL INCOME RATIO

INTEREST INCOME TO TOTAL INCOME RATIO

0.9
0.89
0.88
RATIO 0.87
0.86 RATIO
0.85
0.84
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that the mean and the standard deviation is 0.874 and
0.015. The above ratio indicates the capability of the bank in generating incomes from advances. The
UBI has maintained 0.89 in the year 2015 and 2016 and 0.86 in the year 2017 and 2018, 0.87 in the
year 2019. The higher the ratio the better it signifies the regularity of income for the bank.

60
 4.4.2. TABLE SHOWING NIM TO TOTAL ASSETS RATIO

YEAR RATIO
March 2015 0.021
March 2016 0.022
March 2017 0.019
March 2018 0.019
March 2019 0.021
MEAN 0.020
S.D 0.001

4.4.2. CHART SHOWING NIM TO TOTAL ASSETS RATIO

NIM TO TOTAL ASSETS RATIO

0.022

0.021

0.02
RATIO
0.019 RATIO

0.018

0.017
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that mean and standard deviation is 0.020 and 0.001.
The above ratio shows the ability of the bank to keep the interest on deposits low and interest on
advance high. In the year 2015 the NIM of UBI is 0.021, and 0.022 in 2016, 0.019 in 2017 and 2018
and 0.021 in 2019. A higher NIM indicates better earnings as against the total assets.

61
 4.4.3. TABLE SHOWING NET PROFIT MARGIN RATIO

YEAR RATIO
March 2015 0.05
March 2016 0.04
March 2017 0.02
March 2018 0.00
March 2019 0.00
MEAN 0.020
S.D 0.022

4.4.3. CHART SHOWING NET PROFIT MARGIN RATIO

NET PROFIT MARGIN RATIO

0.06

0.05
R
0.04
A
T 0.03
I 0.02 RATIO
O
0.01

0
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that mean and standard deviation is 0.020 and 0.022.
The above ratio signifies the quality of the bank that is reflected in its ability in converting revenue
into profits available for shareholders. The UBI has maintained the ratio of 0.05 in the year 2015 and
it gradually declines to 0.04 in the year 2016, 0.02 in the year 2017 and it becomes zero in the year
2018 and 2019. A high Net Profit Margin clearly signifies that the bank has stable and steady
earnings.

62
 4.4.4. TABLE SHOWING RETURN ON EQUITY RATIO

YEAR RATIO
March 2015 52.46
March 2016 54.79
March 2017 55.64
March 2018 41.39
March 2019 26.85
MEAN 46.23
S.D 12.24

4.4.4. TABLE SHOWING RETURN ON EQUITY RATIO

RETURN ON EQUITY RATIO

Mar-19,
26.85 Mar-15, 52.46
Mar-18, 41.39

Mar-16, 54.79

Mar-17, 55.64

INTERPRETATION:

From the above table it is interpreted that mean and standard deviation is 46.23 and 12.24.
This ratio indicates how profitable a bank is by comparing its net income to its average shareholders‘
equity. The UBI has higher ratio in the year 2015 with 52.46, and increased to 54.79 in the 2016 and
55.64 in the year 2017, again it has started declining to 41.39 in 2018 and 26.85in 2019. The higher
the ratio, the more efficient the bank is in earnings and utilizing its equity base to generate better
return is to investors.

63
4.5 LIQUIDITY EFFICIENCY:

4.5.1. TABLE SHOWING LIQUID ASSETS TO TOTAL DEPOSITS RATIO

YEAR RATIO
March 2015 0.058
March 2016 0.072
March 2017 0.072
March 2018 0.101
March 2019 0.086
MEAN 0.078
S.D 0.016

4.5.1. CHART SHOWING LIQUID ASSETS TO TOTAL DEPOSITS RATIO

LIQUID ASSETS TO TOTAL DEPOSITS RATIO

0.12
0.1
0.08
RATIO 0.06
RATIO
0.04
0.02
0
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that mean and standard deviation is 0.078 and 0.016.
The above ratio indicates the liquidity position of the bank. In 2015 the ratio is 0.058 and started
increasing by 0.072 in the year 2016 and remains same in the year 2017, by 0.101 in 2018 and
decreased by 0.086 in the year 2019. Higher the ratio it is better for the bank.

64
 4.5.2. TABLE SHOWING GOVT.SECURITIES TO TOTAL DEPOSITS RATIO

YEAR RATIO
March 2015 0.23
March 2016 0.21
March 2017 0.24
March 2018 0.24
March 2019 0.23
MEAN 0.23
S.D 0.012

4.5.2. CHART SHOWING GOVT.SECURITIES TO TOTAL DEPOSITS RATIO

GOVT.SECURITIES TO TOTAL DEPOSITS

RATIO
0.25
0.24
0.23
RATIO 0.22
0.21 RATIO
0.2
0.19
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that mean and standard deviation is 0.23 and 0.012.
This ratio measures the total assets of the bank that are held in government securities. The UBI has
maintained 0.23 in the year 2015, 0.21 in 2016, 0.24 in the year 2017 and 2018 and 0.23 in the year
2019 Higher the ratio it is better for the bank to perform.

65
 4.5.3. TABLE SHOWING LIQUID ASSETS TO TOTAL DEPOSITS RATIO

YEAR RATIO

March 2015 0.071

March 2016 0.086

March 2017 0.87

March 2018 0.121

March 2019 0.103

MEAN 0.94

S.D 0.019

4.5.3. CHART SHOWING LIQUID ASSETS TO TOTAL DEPOSITS RATIO

LIQUID ASSETS TO TOTAL DEPOSITS

RATIO
0.15

0.1
RATIO
0.05 RATIO

0
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR

INTERPRETATION:

From the above table it is interpreted that mean and standard deviation is 0.94 and 0.019.
This ratio measures liquidity available to the depositors of a bank. In the year 2015 the ratio is 0.71,
in 2016 it Increases to 0.086 and again it shows increasing trend of 0.087 in 2017 and 0.121 in the
year 2018 and again decreases to 0.103 in 2019. Higher the ratio better is for the banks performance.

66
 4.5.4. TABLE SHOWING LIQUID ASSETS TO DEMAND DEPOSITS RATIO

YEAR RATIO
March 2015 1.07
March 2016 0.99
March 2017 1.25
March 2018 1.97
March 2019 1.62
MEAN 1.38
S.D 0.41

4.5.4. CHART SHOWING LIQUID ASSETS TO DEMAND DEPOSITS RATIO

LIQUID ASSETS TO DEMAND DEPOSITS RATIO

2
1.5
RATIO 1
0.5 RATIO
0

YEAR

INTERPRETATION:
From the above table it is interpreted that mean and standard deviation is 1.38 and 0.41. The
UBI has the ratio of 1.07 in the year 2015, 0.99 in the year 2016 and 1.25 in 2017, which gradually
increases to 1.97 in 2018 and decrease to 1.62 in 2019.

67
 CHAPTER -5

FINDINGS, SUGGESTIONS AND CONCLUSIONS

5.1 FINDINGS:
CAPITAL ADEQUACY:

 It is found that, the average CAR is 11.17, which shows that the bank has maintained
adequate capital adequacy for the past five years.
 It is found that Debt Equity ratio has declined to 1.62 in the year 2019 from 1.78 in the year
2015, the lower the debt-equity ratio the better is the performance of the bank.
 It is found that the average Total advances to total assets ratio is 0.63. It shows a declining
trend for the past five years. The higher the ratio it is better for the bank.
 The government securities to total investments ratio‘s average is 0.77 which is higher and
shows that the banks investment involves lower risk.

ASSET QUALITY

 From gross NPA to net advances ratio it is found that the average is 0.21 which is lower and
indicates that the credit risk faced by the bank will also be lower.
 It is found that Net NPA to Net Advances ratios average is 0.59 which is moderate and the
level of credit risk will also be moderate.
 It is found that from total investments to total assets ratio, the average of 0.25 assets are
locked up in investments.
 The average Net NPA to total assets ratio is 0.037 which is lower.

MANAGEMENT EFFICIENCY

 Total advances to total deposits ratio is 0.76 which shows that the ability of the bank to
convert its deposits into higher earning advances.
 It is found that the average business per employee is 4.69cr which indicates that the bank is
better staffed.
 It is found that the net profit per employee is zero for the past two years and indicates the
bank is less efficient to maximize its profits.
 It is found that the asset turnover ratio of UBI is 0.084.

EARNINGS CAPACITY

 The interest income to total income of UBI is 0.87 the higher is the ratio the better it signifies
the regularity of income for the bank.
 It is found that the NIM of UBI is 0.02 which indicates there are no better earnings against
total assets.
 The net profit margin is 0.020 which clearly states that the bank has no stable and steady
earnings.
 The banks average return on equity is 46.23 which is less efficient for the bank to generate
better return to its investors.

LIQUIDITY EFFICIENCY

68
  The liquid assets to total deposit ratio is 0.078 which indicates that the liquidity position of
the bank is very poor.
 It is found that the govt. securities to total deposits ratio is 0.23 which shows that the
investments from total deposits which are held in government securities.
 Liquid assets to total deposits ratio measures the liquidity available to the depositors of the
bank which is 0.94.
 It is found that the liquid assets to demand deposits ratio is1.38.

5.2 SUGGESTIONS:
Sound financial health plays a significant role in the success of any companies, particularly, the
Banking companies. The study was focused to evaluate the financial performance of UBI by
applying CAMEL model. Various parameters like: Capital adequacy, management efficiency and
liquidity ratios are used to measure its performance. The overall rating of bank performance is found
to be efficient but it is advisable for the banks:
 To frame well documented loan policy and procedures.
 UBI will be able to earn returns in the form of interest or profit; if it has maintained 0% NPA
by way of lending, investing or creating quality assets.
 The bank is suggested to reduce their NPAs. The bank has to check over the credit
worthiness of the borrower before providing loans to them.
 Banks were advised to impart training programme among its employees for development and
improvement in their knowledge; and nominate them for training programme in different
foreign banks. Imparting knowledge itself, will increase the business per employee and profit
per employee of the bank.
 It is suggested to adopt a modern technology, banking reforms and recovery mechanism.
 It was found that the bank is not having considerable growth in net profits; and needs to
improve its position with regard to asset quality and capital adequacy; and also it has to
improve its management efficiency and earning capacity.

69
 5.3 CONCLUSION
Economic growth of countries is highly deepened on growth of the banking system of that
country. CAMEL approach is a significant tool to assess the relative financial strength of a bank and
to suggest necessary measures to improve weaknesses of a bank. The study has been conducted to
examine performance of UNION BANK OF INDIA during 2015-19. This study highlights the banks
performance with respect to CAMEL ratios. In case of capital adequacy, the bank is having high
ratios and has to maintain the same to achieve high capital and safety assets to minimizing of risk
weighted assets. In management capability the least in total advances to total deposits are to convert
more number of deposits into earning advances. In asset quality, the NPA‘s are to be maintained
from very small up to zero. In earnings capacity banks having least ROA should use assets in
efficient manner to increase earning capability of the bank. In liquidity the banks has to maintain
high number of liquid assets to overcome short term obligations. Here in the present study the union
bank‘s capital adequacy is good and asset quality of this bank should be increased by reducing its
NPA‟s. Earning Quality is good. Business per employee ratio is increased year to year because
management efficiency is good. Liquidity efficiency is to be increased to provide the liquidity for its
depositors. It should attract the customers and provide financial facilities to increase the performance
of the bank.

70
APPENDICES

71
72
73
74
 REFERENCES
Websites:
1. https://www.capitalmarket.com
2. http://www.unionbankofindia.co.in
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4. https://www.ssrn.com
5. https://scholar.google.com
6. https://www.researchgate.net
7. www.academia.edu
8. https://en.m.wikipedia.org

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