EVELUATION OF MARKET RISK OF SELECT BANKS

The information needed to analyze risk exposure and bank results were
gathered from select private industry and public sector banks. This section provides
statistical analysis to compare the performance of selected banks with their respective
risk exposure. This chapter has been classified in two sections based on the risk.

Section – I: Capital Risk

Section – II: Interest rate Risk

SECTION – I
CAPITAL RISK

Shareholders have an interest in elevated yields on the capital invested in the

bank, ensuring that there is no unnecessarily elevated shareholder equity. On the
other hand, it is vital for the Bank to maintain a adequate buffer or risk capital to
cover potential risks to shareholders and society. The capital adequacy rules therefore
set out the minimum buffer size requirements, based on the amount of risk assumed
by the bank.

The Basel III Regulations strengthen the link between risk-taking and capital
requirements, including stricter risk management and disclosure of banking
information. Maintaining stable revenues over time requires not only a low level of
risk where solvency, efficiency and collateral for each borrower are determinative
factors, but also the capacity to adjust quickly to changing customer behavior and
other company elements. Banks will maintain a sustainable balance of deposits and
loans and strive to match all maturities with sustainable growth.

Capital Adequacy Ratio (CAR), also referred to as Capital to Risk (Weighted)

Assets Ratio (CRAR), is the ratio between the capital of the bank and its risk.
National regulators track the bank's CAR to ensure that it absorbs a reasonable
quantity of losses and meets the statutory capital requirements. It's a survey of the
bank's resources. The Basle III minimum capital adequacy ratio shall be retained by
banks.

1
 As far as their risk-weighted assets are concerned, the capital adequacy ratio
estimates the assets of the bank. The capital ratio to risk-weighted assets contributes
to financial stabilization and efficiency in global economic systems. The minimum
capital adequacy (including the capital stock balance) of a bank shall be at least 8%
of the bank's risk-weighted assets under Basel III by 2013. The guidance on asset
conservation buffers is designed to construct up the assets of banks that can be used
in times of stress.

BANKOMETER MODEL

The IMF has developed and suggested to consider the Bankometer to measure the
financial condition of the banks.

S = 1.5 times X1 + 1.2 times X2 + 3.5 times X3 + 0.6 times X4 + 0.3 times X5 +
0.4 times X6

Whereas:

X1 = CA or CapitalAssetRatio

X2 = EA or Equity to Asset

X3 = CAR or CapitalAdequacyRatio

X4 = NPL or non-performing loans to Loans

X5 = CI or Cost to Income

X6 = LA or Loan to Asset

Criteria to be considered:

- For the value of S is less than 50 means that the bank is experiencing financial
difficulties and high risk.

- For the value of 50 is less than S is less than 70 then the bank is considered to be
in the gray area.

- For S greater than 70, provide an assessment that the bank is in a very healthy
state.

2
 The bank wise performance has been calculated as per the Capital risk of the
selected banks of the Private and Public sector banks from the period of 2009-10 to
2018-19 year.

Tabulation of Data analysis:

Table -4.0
State Bank India Capital Risk Ratios

Capital Loan Capital

Equity Cost Net
Capital Risk –S
Asset to
to Asset Adequacy to NPA to
Ratio Ratio Ratio Income Asset Advance

2009 -10 0.04378 5.732919 13 41.82 77.87991 0.012252 96.15049

2010 -11 0.038534 5.065316 12 46.38 80.15543 0.012268 94.11971

2011 -12 0.03667 5.805058 14 40.55 82.25623 0.013594 101.0967

2012 -13 0.032067 5.861404 13 37.6 85.57243 0.015766 98.10022

2013 -14 0.031159 6.150737 13 40.08 85.82944 0.019703 99.29522

2014 -15 0.02765 5.977073 12 36.85 82.42784 0.016304 93.24988

2015 -16 0.026129 6.032464 13 39.14 82.98044 0.029839 97.73023

2016 -17 0.023144 5.271172 13 41.15 72.9625 0.030723 93.40856

2017 -18 0.024678 5.681675 13 47.52 72.00552 0.056555 95.44717

2018 -19 0.022951 6.030543 13 44.68 75.72939 0.29591 96.64438

S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg .) 96.524

Source: Secondary Data.

The table above shows the state bank of India's capital risk ratios have been
calculated from the period of 2009-10 to 2018-19 and these ratios were used to
calculate the BankoMeter. The study noted that in 2009-10 the SBI capital asset ratio
is observed to be increasing, but later it has decreased. The capital asset ratio
(0.04378) is discovered to be greater in 2009-10 and lowest in 2018-19 (i.e.
0.02295). The calculation of the equity to asset ratio shows a slight fluctuation of 5.5
percent to 6 percent and the lowest reported in 2013-14 with the 6.1507. The lowest
Equity to asset ratio was represented in the 2010-11 year. The capital adequacy ratio
shows the almost continual motion in the following years, i.e. 13 percent. SBI's cost

3
to income was evaluated and the research outcome stated that the cost to income
showed greater in 2010-12 (46.38 percent) and also reflected the cost to income
indicated the lowest year in 2014-15 with the 36.85 percent. SBI's loan to deposit
stated that there has been growing trend in 2009-10 to 2013-14, but it began moving
downwards after 2014-15 year. The net NPA to advances are found to be in
increasing trend but in the year 2018-19 it had shown higher value (0.29591). The
capital risk of the SBI has been found to be good, which is greater than the IMF
norm (96.494% > 70%). Hence the study concludes that the financial health of the
SBI is found to be good.

Figure–4.0
Capital Risk of SBI

102.00
101.10

99.30 100.00
98.10 97.73 98.00
96.64
96.15
95.45 96.00
94.12
93.25 93.41 94.00

92.00

90.00

88.00
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capital Risk

Source: Secondary Data.

The above graph indicates the SBI capital risk from the period of 2009-10
to 2018-19 i.e., 10 years. In the year of 2011-12 Capital risk is found to be higher
(101.10) but in the year of 2014-15 least risk (93.25) has been observed. The study
observed that the State bank of India capital risk is found to be greater than the 70%
as per the IMF norms in all the years during the study period. Hence it concludes that
the financial health as per the bankometer model the SBI is observed to be good from
the perspective of capital risk.

4
 Table-4.1
Bank of Baroda capital Risk Ratios

Capital Net NPA

Capital Asset Equity to Adequacy Cost to Loan to to Capital
Ratio Asset Ratio Ratio Income Asset Advance Risk –S
2009 -10 0.054063 1.964242 13 29.55 74.4088 0.004124 86.56918
2010 -11 0.049801 2.141018 15 30.51 72.25496 0.00445 93.20158
2011 -12 0.056832 3.157875 15 29.84 74.48097 0.006651 95.12307
2012 -13 0.057337 3.96489 15 26.38 74.39258 0.014352 95.02352
2013 -14 0.056501 4.450595 13 26.95 69.12522 0.018088 86.67141
2014 -15 0.060432 5.156403 12 27.38 69.11563 0.018533 84.1497
2015 -16 0.060432 5.724652 13 29.96 69.11563 0.043743 89.12073
2016 -17 0.066855 6.14937 13 47.15 66.72786 0.046183 93.84338
2017 -18 0.064249 5.98809 13 38.58 63.54928 0.059866 89.81171
2018 -19 0.070922 6.227056 12 48.92 72.09487 0.035643 93.11418
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 90.648
Source: Secondary Data.

The table above illustrates the Bank of Baroda capital risk ratios from the
period of 2009-10 to 2018-19. These ratios were considered to calculate the
Bankometer. The study depicts that the Bank of Baroda’s Capital to Asset Ratio is
found to be in increasing trend from the year of 2009-10 to 2018-19. The BOB’s
Equity to Asset ratio calculation indicated that the constant uptrend movement from
the year of 2009-10 to 2018-19. It has been observed that the 2009-10 it been
observed lowest (1.9642) and in the year of 2018-19 had shown highest (6.227056).
The Capital Adequacy ratio has been indicated slightly changes and recorded least in
the year of 2018-19 with the 12%. The capital Risk component Cost to income
indicated the increase from the period of 2009-10 to 2018-19 with the 29.55 to 48.92.
The Loan to Deposits were observed to be decreasing mode from the period of 2009-
10 with the 74.4088 and reached lowest level with the 63.5492. In the year of 2018-
19 Loan to deposit had raised with the 72.09487. The net NPA of BOB has been
found to be increasing but in the year of 2018 -19 it has decreased slightly (0.0356).
The capital risk of the BOB has been found to be good, which is greater than the IMF
norm (90.448% > 70%). Hence the study concludes that the financial health of the
BOB is found to be good.

5
 Figure–4.1
Capital Risk of BOB
96.00 95.1295.02
93.84
94.00 93.20 93.11
92.00
90.00
88.00 89.81
89.12
86.00
84.00 86.67
86.57
82.00
80.00
84.15
78.00

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capital Risk

Source : Secondary Data.

The above graph represents the Bank of Baroda capital risk (Bankometer)
from the period of 2009-10 to 2018-19 i.e., 10 years. In the year of 2011-12 Capital
risk is found to be higher (95.12) but in the year of 2014-15 least risk (84.15) has
been observed. The study observed that the Bank of Baroda capital risk is found to be
greater than the 70% as per the IMF norms in all the years capital risk has been found
to be good. Hence, the study concludes that the financial health as per the
Bankometer Model the Bank of Baroda is observed to be good from the perspective
of capital risk.

6
 Table-4.2
Bank of India capital Risk Ratios

Capital Loan Net NPA Capital

Capital Equity to Adequacy Cost to to to Risk -S
Asset Ratio Asset Ratio Ratio Income Asset Advance
2009 -10 0.419332 4.886808 11 32.35 71.30659 0.023577 83.23495
2010 -11 0.348348 4.596748 15 32.72 77.00471 0.017392 99.16694
2011 -12 0.755369 -9.8599 13 28.85 78.8663 0.025983 -29.3817
2012 -13 0.7116 -7.0336 12 29.39 79.33502 0.037086 -9.99968
2013 -14 0.452358 5.256956 11 28.74 77.15185 0.04217 84.99493
2014 -15 0.435089 4.907712 10 30.58 69.8057 0.078702 78.68539
2015 -16 0.664376 4.872421 10 41.49 71.64832 0.174041 83.05422
2016 -17 1.001922 4.726128 11 51.87 66.46015 0.18016 87.92739
2017 -18 1.972338 5.3531 9 71.61 61.10211 0.212903 86.93381
2018 -19 3.65655 6.543755 10 60.55 59.58531 0.144188 90.42297
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 65.448
Source: Secondary Data.

The table of bank of India Capital risk ratios illustrated from the period of
2009-10 to 2018 to 2019. The Capital Asset ratio has been measured and the values
indicated that the in the year of 2010-11 lowest Capital Asset ratio has been indicated
and in the year of 2018-19 it has shown highest with the value of 3.65655. Equity to
Asset ratio found to be negative in the year of 2011-12 and 2012-13 with the -9.8599
& -7.0336. It has been found that the in the year of 2018-19 has been found higher
(6.5437). The capital adequacy ratio is fluctuating from 10 to 15 and it has been
found that in the year of 2017-18 lowest with 9 and in the year of 2010-11 highest
with 15%. The cost to income is observed to be having in increasing trend during the
study period and found highest in the year of 2017-18 with the 71.61. The loans to
assets ratio is found to be in increasing trend from the period of 2009-10 to 2012-13.
From the period of 2013-14 onwards its started decreasing mode. The net NPA of
BOI has been found to be increasing but in the year of 2018-19 it has decreased
slightly (0.1441). The capital risk of the BOI has been found to be good, which is
below the IMF norm (65.448% < 70% ). Hence the study concludes that the financial
health of the BOI is found to be in gray. There is a need to improve the capital risk
for the Bank of India.

7
 Figure–4.2
Capital Risk of BOI

120.00
99.17
100.00 90.42
84.99 87.9386.93
83.23 83.05
78.69
80.00

60.00

40.00

20.00

0.00

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
-20.00 -10.00

-40.00 -29.38

Capital Risk

Source: Secondary Data.

The above graph illustrates the of Bank of India capital risk (bankometer
model) from the period of 2009-10 to 2018-19 i.e., 10 years. In the year of 2010-11
Capital risk is found to be higher (99.17) but in the sub sequent years i.e., 2011-12
and 2012-13 capital risk has recorded negatively (-29.38 & -10.00), which indicates
that the financial health of the bank is found to be vulnerable in that two years. The
study observed that the BOI capital risk is found to be greater than the 70% as per the
IMF norms in all the years during the study period except two years. Hence it
concludes that the financial health as per the Bankometer model the BOI is observed
to be good from the perspective of capital risk.

8
 Table-4.3
Canara Bank capital Risk Ratios
Capital Equity Capitalr Cost Loan Net NPA
Asset to Adequacy to to to Capital
Ratio Asset Ratio Ratio Income Asset Advance Risk -S

2009 -10 0.155072 4.87568 16 26.64 72.26056 0.012962 98.98743

2010 -11 0.131428 5.430006 15 25.18 72.10326 0.011101 95.61511
2011 -12 0.117501 5.564257 14 21.71 71.19394 0.01455 90.85267
2012 -13 0.106161 5.546055 12 21.91 68.16031 0.021771 82.66469
2013 -14 0.093073 4.979508 11 24 71.64132 0.019797 80.48342
2014 -15 0.085908 4.896642 11 23.83 69.7227 0.026462 79.55879
2015 -16 0.097261 4.830013 11 35.68 67.74217 0.064103 82.28124
2016 -17 0.101101 4.961571 13 33.31 69.11839 0.063242 89.28384
2017 -18 0.117335 4.860368 11 48.4 72.79733 0.074704 88.1922
2018 -19 0.108416 5.207105 12 38.78 71.40292 0.053668 88.63852
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 87.655
Source: Secondary Data.

The table represents the Capital Risk Ratios of Canara Bank from the period
of 2009-10 to 2018-19 year. The Capital Asset ratio states that from the year of
2009-
10 onwards it is decreasing trend but from the year of 2015-16 onwards it is started
moving up and recorded highest in the year of 2017-18 with the 0.117335%. The
equity to asset ratio is found to be fluctuating between 4.5 to 5.5, it has indicated that
in the year of 2011-12 highest value (5.5642) and least value (4.8300) in the year
2015-2016. The capital adequacy ratio is seen to be fluctuating from 11 to 16. It has
been observed that in the year 2009-2010 highest with 16 and lowest with 11 in most
the years. The cost to income is observed to be having in increasing trend during the
study period and found in the year of 2018-19 with 38.78. The loans to assets ratio is
found to be fluctuating, it is observed that in the year 2015-16 it is low by (67.74217)
and highest (72.79733) in the year 2017-18. The net NPA of Canara Bank has been
found to be increasing but in the year of 2018-19 it has decreased slightly (0.0536).
The capital risk of the Canara bank has been found to be good, which is greater than
the IMF norm (87.637% > 70% ). Hence the study concludes that the financial health
of the Canara bank is found to be good.

9
 Figure-4.3
Capital Risk of CANARA Bank
120.00

98.99 100.00
95.62
90.85 89.28 88.19 88.64
82.66 82.28 80.00
80.48 79.56
60.00

40.00

20.00

0.00
2009-102010-112011-122012-132013-142014-152015-162016-172017-182018-19
Capital Risk

Source: Secondary Data.

The above graph indicates the Canara Bank capital risk of bankometer
Model from the period of 2009-10 to 2018-19 i.e., 10 years. It has been observed that
in the year 2009-10 capital risk has been recorded higher with the value of 98.99 and
started moving down reached 79.56 in the year 2014-15. The study observed that the
Canara bank capital risk is found to be greater than the 70% as per the IMF norms in
all the years during the study period. Hence it concludes that the financial health as
per the bankometer model the Canara bank is observed to be good from the
perspective of capital risk.

10
 Table-4.4
Punjab National Bank Capital Risk Ratios
Capital Net NPA Capital
Loan to
Capital Asset Equity to Adequacy Cost to to Risk -S
Ratio Asset Ratio Ratio Income Asset Advance
2009 -10 0.125226 5.578781 12 31.5 75.21791 0.012392 88.42698
2010 -11 0.104518 5.705163 12 32.5 76.0012 0.010667 89.15986
2011 -12 0.082015 5.854416 12 35.9 78.34332 0.017979 91.26643
2012 -13 0.072098 6.2077 13 31.33 78.39232 0.024014 93.82772
2013 -14 0.071181 6.941325 13 31.06 80.25522 0.030969 95.37503
2014 -15 0.062988 6.700584 12 36.36 79.37346 0.042059 92.8178
2015 -16 0.058318 6.69617 13 37.13 78.52841 0.087547 96.22577
2016 -17 0.055317 5.48765 11 48.18 78.20768 0.073309 90.94921
2017 -18 0.05834 5.395115 12 40.22 67.37551 0.114759 87.64671
2018 -19 0.071211 5.004613 9 63.44 67.66989 0.114801 83.78119
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 90.947
Source: Secondary Data.

The table above illustrates the Punjab National Bank capital risk ratios from
the period of 2009-10 to 2018-19. These ratios were considered to calculate the
Bankometer. The study states that the Punjab National Bank’s Capital to Asset Ratio
is found that the values indicated in the year 2016-17 is observed to be lowest
(0.055317) and highest (0.125226) in the year 2009-10. The PNB’s Equity to Asset
ratio calculation indicated that the constant uptrend movement from the year of 2009-
10 to 2013-14 and it has been observed that from the year 2014-15 to 2018-29 its
decreasing the lowest value observed (5.004613) in the year of 2018-19 had shown
highest (6.941325) in the year 2013-14. The Capital Adequacy ratio has been
indicated slight changes and recorded least in the year of 2018-19 with the 9%. The
capital Risk component Cost to income indicated the increase in most of the years the
highest value (63.44) is observed in the year 2018 -19. The Loan to Deposits were
observed to be fluctuating and it is noticed that the lowest value is (67.3755) in the
year 2017-18 and highest value is (80.2552) in the year 2013-14. The net NPA of
PNB has been found to be increasing but in the year of 2018-19 it has reached to
0.114801. The capital risk of the PNB has been found to be good, which is greater
than the IMF norm (90.947% > 70%). Hence the study concludes that the financial
health of the PNB is found to be good.

11
 Figure–4.4
Capital Risk of Punjab National Bank
98.00
96.00 96.23
94.00 95.38
92.00 93.83
92.82
90.00
88.00 91.27 90.95
86.00 89.16
84.00 88.43
87.65
82.00
80.00
78.00 83.78
76.00
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capital Risk

Source : Secondary Data

The above graph depicts the Punjab National Bank capital risk of bankometer
Model from the period of 2009-10 to 2018-19 i.e., 10 years. It has been observed that
from the year 2009-10 to 2015-16 capital risk moved in uptrend but later years capital
risk is falling downwards. The least capital risk has been found in the year of 2018-19
with the value of 83.78. The study observed that the PNB capital risk is found to be
greater than the 70% as per the IMF norms in all the years during the study period.
Hence it concludes that the financial health as per the bankometer model the PNB is
observed to be good from the perspective of capital risk.

12
 Table-4.5
HDFC Bank Capital Risk Ratios
Capital Loan to Net NPA
Capital Asset Equity to Adequacy Cost to to Capital
Ratio Asset Ratio Ratio Income Asset Advance Risk - S

2009 -10 0.206093 9.733668 18 46.27 75.41208 0.00230 119.0367

2010 -11 0.167371 9.204842 16 45.13 77.21618 0.00184 111.7234
2011 -12 0.137614 8.858029 17 38.03 80.65136 0.00177 114.0067
2012 -13 0.116716 8.987161 17 38.02 83.50287 0.00190 115.268
2013 -14 0.095272 8.769833 17 36.53 85.92639 0.00260 115.4978
2014 -15 0.082573 10.40264 16 36.84 85.1481 0.00234 113.7197
2015 -16 0.069241 10.175 17 36.69 89.26805 0.00271 118.5297
2016 -17 0.057434 10.28683 16 37.84 91.03558 0.00315 116.1985
2017 -18 0.047047 9.934781 15 39.62 88.79451 0.00372 111.8983
2018 -19 0.043764 11.98887 17 38.41 88.76231 0.00392 120.9826
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 115.686
Source : Secondary Data

The table above shows the HDFC’s capital risk ratios have been calculated
from the period of 2009-10 to 2018-19 and these ratios were used to calculate the
BankoMeter. The study noted that in 2009-10 the HDFC capital asset ratio observed
the variations. It has been seen that in the year 2009-10 value is lowest with (0.2060)
and highest with (0.1673) in the year 2010-11. The calculation of the equity to asset
ratio shows a slight fluctuation the lowest reported in 2013-14 with the 8.7698. The
highest Equity to asset ratio was represented in the 2014-15 year with 10.4026. The
capital adequacy ratio shows the almost continual motion in the following years, i.e.
17 percent. The HDFC’s cost to income was evaluated and the research outcome
stated that the cost to income showed greater in 2009-10 (46.27%) and also reflected
the cost to income indicated the lowest year in 2013-14 with the (36.53%). HDFC’s
loan to deposit stated that there has been growing trend in 2009-10 to 2016-17, but it
began moving downwards after year 2017-18. The net NPA of HDFC Bank has been
found to be increasing but in the year of 2018-19 it has decreased slightly (0.00392).
The capital risk of the HDFC Bank has been found to be good, which is greater than
the IMF norm (115.686% >70%). Hence the study concludes that the financial health
of the HDFC Bank is found to be good.

13
 Figure–4.5
Capital Risk of HDFC Bank
122.00
120.98
120.00
119.04
118.53
118.00

116.00 116.20
115.27 115.50
114.00
114.01 113.72
112.00
111.72 111.90
110.00

108.00

106.00
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capital Risk

Source : Secondary Data

The above graph depicts the private sector bank HDFC Bank capital risk of
bankometer Model from the period of 2009-10 to 2018-19 i.e., 10 years. It has been
observed that the bank has maintained the ratio always above the 110 during the
study period. The study found in the year of 2018-19 capital risk has been observed
higher with the value of 120.980. The study observed that the HDFC Bank capital
risk is found to be greater than the 70% as per the IMF norms in all the years during
the study period. Hence it concludes that the financial health as per the bankometer
model the HDFC Bank is observed to be greater from the perspective of capital risk.

14
 Table-4.6
ICICI Bank Capital Risk Ratios
Capital Net NPA Capital
Loan to
Capital Asset Equity to Adequacy Cost to to Risk - S
Ratio Asset Ratio Ratio Incomer Asset Advance
2009 -10 0.227832 10.48264 23 39.565 93.46193 0.01108 142.6818
2010 -11 0.21579 10.36078 20 44.6546 98.80872 0.00940 135.6765
2011 -12 0.190795 10.1419 19 45.6546 103.6088 0.00637 134.0964
2012 -13 0.170955 10.18971 19 39.5456 104.8301 0.00676 132.7798
2013 -14 0.154515 10.22438 18 38.9655 107.7408 0.00851 130.287
2014 -15 0.140381 10.2538 17 35.65465 113.6116 0.01427 128.1562
2015 -16 0.126992 9.967178 17 36.654 109.4555 0.02626 126.4295
2016 -17 0.118567 10.33592 17 38.944 100.5326 0.04893 123.9772
2017 -18 0.114676 9.596587 18 38.656 96.76647 0.04908 124.9913
2018 -19 0.134183 11.23615 17 39.656 89.84973 0.02314 121.0213
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 130.009
Source : Secondary Data

The table represents the Capital Risk Ratios of ICICI bank from the period of
2009-10 to 2018-19 year. The Capital Asset ratio states that from the year of 2009-10
onwards it is decreasing trend but in the year of 2018-19 it moved up and recorded
the value of (0.1441). The equity to asset ratio is found to be fluctuating between 9.5
to 11.2, it has indicated that in the year of 2018-19 highest value (11.23) and least
value (9.59) in the year 2017-2018. The capital adequacy ratio is seen to be
decreasing from 23 to 17. It has been observed that in the year 2009-2010 highest
with 23. The cost to income is observed to be having the fluctuating trend during the
study period and found highest value in the year of 2011-12 with 45.6546 and lowest
with 35.6546 in the 2014-15. The loans to assets ratio is found to be increasing in
2009-10 to 2014-15 and started decreasing from 2015-16 it is observed that in the
year 2009-10 it is low by (93.4619) and highest (113.6116) in the year 2014-15. The
net NPA of ICICI Bank has been found to be increasing but in the year of 2018-19 it
has decreased slightly (0.02314). The capital risk of the ICICI Bank has been found
to be good, which is greater than the IMF norm (130.009% > 70%). Hence the study
concludes that the financial health of the ICICI Bank is found to be good.

15
 Figure–4.6
Capital Risk of ICICI Bank
145.00
142.68
140.00

135.00 135.68
134.10
132.78
130.00
130.29
128.16
125.00 126.43
123.98 124.99
120.00
121.02
115.00

110.00
2009-102010-112011-122012-132013-142014-152015-162016-172017-182018-19
Capital Risk

Source : Secondary Data

The above graph depicts the private sector bank - ICICI Bank capital risk of
bankometer Model from the period of 2009-10 to 2018-19 i.e., 10 years. The study
found that the capital risk is continuously going downwards from the year of 2009-10
to 2018-19. But the bank has maintained the ratio always above the 120 during the
study period. The study found in the year of 2009-10 capital risk has been observed
higher with the value of 142.68. The study observed that the ICICI Bank capital risk
is found to be greater than the 70% as per the IMF norms in all the years during the
study period. Hence the study concludes that the financial health as per the
bankometer model the ICICI Bank is observed to be greater from the perspective of
capital risk.

16
 Tabl -4.7
Kotak Mahindra Bank Capital Risk Ratios
Capital Net NPA Capital
Loan to
Capital Asset Equity to Adequacy Cost to to Risk - S
Ratio Asset Ratio Ratio Income Asset Advance
2009 -10 0.631663 14.45299 11 46.76 136.2301 0.00762 125.3157
2010 -11 0.500047 14.92902 11 41.44 150.9976 0.00512 129.999
2011 -12 0.401021 14.00752 12 33.59 145.7557 0.00447 127.7925
2012 -13 0.32227 13.18027 11 32.65 134.1543 0.00470 118.2593
2013 -14 0.315094 15.61278 12 35.57 125.9316 0.00800 122.2564
2014 -15 0.259948 14.90385 11 37.33 121.6749 0.00687 116.6476
2015 -16 0.380887 13.8553 11 39.07 106.5054 0.00872 110.0261
2016 -17 0.33327 13.93716 13 38.68 107.4482 0.01028 117.3139
2017 -18 0.282133 14.94971 12 39.91 107.719 0.00808 115.4283
2018 -19 0.626059 13.74256 11 38.52 91.06361 0.00751 103.9161
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 118.691
Source: Secondary Data.

The table of Kotak Mahindra Bank Capital risk ratios illustrated from the
period of 2009-10 to 2018 to 2019. The Capital Asset ratio has been measured and
the values indicated that the in the year of 2014-15 lowest Capital Asset ratio has
been indicated and in the year of 2009-10 it has shown highest with the value of
0.63166. Equity to Asset ratio found to have fluctuation of 13% to 15.6%. In the year
of 2013-14 it has been noticed the highest values with (15.6127) and lowest value
(13.1802) in the year 2012-13. The capital adequacy ratio is found to be same in most
of the years with 11%. The cost to income is observed to be having the highest value
of 46.76 in the year 2009-10 and lowest value of 32.65 in the year 2012-13. The
loans to assets ratios noticed to be having variations during the study it shows the
highest value of 150.99 in the year 2010-11 and lowest value of 91.06 in the year
2018-19. The net NPA of Kotak Mahindra bank has been found to be increasing but
in the year of 2017-18 it has shown slightly downward. The capital risk of the Kotak
Mahindra bank has been found to be good, which is greater than the IMF norm
(118.691% > 70%). Hence the study concludes that the financial health of the Kotak
Mahindra Bank is found to be good.

17
 Figure–4.7
Capital Risk of Kotak Mahindra Bank
140.00
130.00 127.79
125.32 122.26
118.26 120.00
116.65 117.31 115.43
110.03
100.00
103.92

80.00

60.00

40.00

20.00

0.00
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capital Risk

Source: Secondary Data.

The above graph indicates the Kotak Mahindra Bank capital risk (Bankometer
Model) from the period of 2009-10 to 2018-19 i.e., 10 years. It has been observed
with the bar chart that most of the study period capital risk ratio is found to be moved
above the 100%. The study observed that in the year of 2010-11 it has recorded
higher (130.00) and lowest in the year of 2018-19 with the value of 103.92. The
study observed that the Kotak Mahindra Bank capital risk is found to be greater than
the 70% as per the IMF norms in all the years during the study period. Hence, the
study concludes that the financial health as per the Bankometer Model the Kotak
Mahindra bank is observed to be good from the perspective of capital risk.

18
 Table-4.8
Axis Bank Capital Risk Ratios
Capitalr Net NPA Capital
Loan to
Capital Asset Equity to Adequacy Cost to to Risk - S
Ratio Asset Ratio Ratio Income Asset Advance
2009 -10 0.224363 8.853976 12 41.38 73.85625 0.02459 94.93257
2010 -11 0.169252 7.789451 13 39.45 75.28177 0.00833 97.05393
2011 -12 0.144771 7.946881 14 33.54 77.16775 0.00699 99.68671
2012 -13 0.137407 9.73649 17 32.72 78.12446 0.00357 112.4578
2013 -14 0.12161 9.938148 16 34.53 82.83341 0.00441 111.6032
2014 -15 0.101468 9.620175 15 34.74 88.27115 0.00463 109.9297
2015 -16 0.089575 10.06681 15 35.7 96.19347 0.00732 113.9063
2016 -17 0.078338 9.220581 15 46.42 91.85074 0.02263 114.3621
2017 -18 0.072944 9.124215 17 51.64 98.72402 0.03688 125.5622
2018 -19 0.064211 8.324168 16 44.28 90.21401 0.02279 115.4686
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 109.496
Source : Secondary Data.

The table above shows the Axis bank capital risk ratios has been calculated
from the period of 2009-10 to 2018-19 and these ratios were used to calculate the
BankoMeter. The study noted that in 2009-10 the Axis bank’s capital asset ratio
observed that in the year 2017-2018 it shows the lowest value of (0.0729) and
highest value (0.1692) in the year 2011-12. The calculation of the equity to asset ratio
shows a slight fluctuation the lowest reported in 2010-13 with the 7.7894. The
highest Equity to asset ratio was represented in the 2015-16 year with 10.0668. The
capital adequacy ratio shows the variation from 12 to 17. The Axis’s cost to income
was evaluated and the research outcome stated that the cost to income showed
increase in 2013-14 to 2018-19 and reflected the cost to income indicated the
lowest year in 2012-13 with the (32.72%). Axis Bank’s loan to deposit stated that
there has been growing trend in 2009-10 to 2017-18, but it moved downwards in the
year 2018-19 to 90.2140. The net NPA of Axis bank has been found to be increasing
but in the year of 2018-19 it has decreased slightly (0.02279). The capital risk of the
Axis Bank has been found to be good, which is greater than the IMF norm
(109.488% > 70% ). Hence the study concludes that the financial health of the Axis
Bank is found to be good.

19
 Figure–4.8
Capital Risk of Axis Bankr
140.00
125.56
120.00
112.46 111.60 109.93 113.91 114.36 115.47

99.69 100.00
94.93 97.05
80.00

60.00

40.00

20.00

0.00
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capital Risk

Source : Secondary Data.

The above graph shows the Axis Bank capital risk (Bankometer Model) from
the period of 2009-10 to 2018-19 i.e., 10 years. It has been observed with the bar
chart that most of the study period capital risk ratio is found to be moving upwards
from 2009 to 2012 . The study observed that in the year of 2017-18 it has recorded
higher (125.56) and lowest in the year of 2009-10 with the value of 94.93. The study
observed that the Axis Bank capital risk is found to be greater than the 70% as per
the IMF norms in all the years during the study period. Hence, the study concludes
that the financial health as per the Bankometer Model the Axis bank is observed to be
good from the perspective of capital risk.

20
 Table-4.9
Yes Bank Capital Risk Ratios
Capitalr Capital Net NPAr Capital
Loan to
Asset Equity to Adequacy Cost to to Risk - S
Ratio Asset Ratio Ratio Income Asset Advance
2009 -10 0.933608 8.491857 17 29.7 82.81457 0.00047 113.1268
2010 -11 0.58832 6.429881 17 24.5 74.80287 0.00027 105.3696
2011 -12 0.479439 6.351915 18 20.87 77.28854 0.00046 108.5181
2012 -13 0.361862 5.86017 18 22.77 70.19514 0.00015 105.4841
2013 -14 0.330839 6.527439 14 24.09 74.99156 0.00047 94.55309
2014 -15 0.306839 8.568587 16 25.91 82.87717 0.00000 107.6664
2015 -16 0.254492 8.328589 17 29.17 87.91966 0.00290 113.7966
2016 -17 0.212262 10.24815 17 32.18 92.58368 0.00811 118.8085
2017 -18 0.147413 8.242128 18 34.27 101.4103 0.00645 123.9606
2018 -19 0.12158 7.064693 17 37.05 106.1023 0.01857 121.7271
S = 1.5T X1 + 1.2T X2 + 3.5T X3 + 0.6T X4 + 0.3T X5 + 0.4T X6 (Avg.) 111.299
Source : Secondary Data.

The table represents the Capital Risk Ratios of YES bank from the period of
2009-10 to 2018-19 year. The Capital Asset ratio states that from the year of 2009-10
onwards it is showing decreasing trend with lowest value of 0.1215 in the year 2018-
19 and highest value of 0.9336 in the year 2009-10. The equity to asset ratio is found
to be fluctuating; it has indicated that in the year of 2016-17 highest value (10.248)
and least value (5.860) in the year 2012-2013. The capital adequacy ratio is seen to
have the lowest value in the year 2013-14 of 14%. It is noticed that the Cost of
Income is having fluctuating trend, the lowest value is (20.87) in the year 2011-12
and highest value is noticed (37.05) in the year 2018-19. The loans to assets ratio is
found to be increasing from 2013-14 to 2018-19 and decreased from 2009-10 to
2011-13 it is observed that in the year 2011-12 it is low by (70.1951) and highest
(106.1023) in the year 2018-19. The net NPA of Yes bank has been found stable
from the beginning of the study period but in the year of 2015-16 it has started
moving upward. The capital risk of the Yes bank has been found to be good, which is
greater than the IMF norm (111.299% > 70% ). Hence the study concludes that the
financial health of the Yes bank is found to be good.

21
 Figure–4.9
Capital Risk of Yes Bank
140.00
123.96 121.73
118.81 120.00
113.13 113.80
105.37 108.52 105.48 107.67
100.00
94.55
80.00

60.00

40.00

20.00

0.00
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capital Risk

Source : Secondary Data.

The above graph indicates the Yes Bank capital risk of bankometer Model
from the period of 2009-10 to 2018-19 i.e., 10 years. It has been observed that the
capital risk has moved above the 105 except in the year of 2013-14. The ratio
calculation is found to be higher in the year 2017-18 with the value of 123.96 and
least ratio value has been depicted in the year of 2013-14 with the value of 94.553.
The study observed that the Yes bank capital risk is found to be greater than the 70%
as per the IMF norms in all the years during the study period. Hence it concludes that
the financial health as per the bankometer model the Yes bank is observed to be good
from the perspective of capital risk.

22
 Figure-4.10
Capital Risk of Public and Private sector Banks

2018-19 116.61678
90.443
2017-18 120.36156
89.544
2016-17 118.12674
91.035
2015-16 116.53506
89.634
2014-15 115.22226
85.670
2013-14 114.837662
89.348
2012-13 116.84842
71.910
2011-12 116.81846
69.782
2010-11 115.96262
94.246
2009-10 119.0132
90.666
80.000100.000120.000140.000
0.000 20.000 40.000 60.000

PrivatePublic

Source : Secondary Data.

The abobe graph represents the capital risk comparison between the public
and Private sector bankks capital risk for the period of 10 years (i.e., 2009-10 to
2018-19). The average capital risk of the public sector banks were found to be below
100% but private sector banks are observed to ne greater than the 115%. In the year
2011-12 public sector banks have experienced stress as their capital risk is found to
be below 70% i.e., 69.782 but later years it has been improved significantly. The
private sector banks have shown constant performance in capital risk management
during the study period. Hence the study concludes that as per the IMF clause (2000
year) the capital risk of the private sector banks andthe public sector banks financial
health found be good (i.e., >70%).

23
 SECTION - II
INTEREST RATE RISK

Introduction:

Gap management techniques require management to evaluate the maturity and

re-price potential of the bank's sensitive assets, deposits and lending on the money
market. A bank can hedge itself by making sure for each time period that

RateSensitiveAssets (RSA) = RateSensitiveLiabilities (RSL)

The best recognized example of re-pricing is that the loans are prepared to
mature or renew. If the interest rate has risen since these loans were first produced,
the bank will only renew these credits if the expected return on other financial
instruments of comparable quality is approximated.

Interest Sensitive Gap: A gap exists between these interest sensitive assets and
interest sensitive liabilities when: InterestSensitiveGap = InterestSensitiveAssets –
InterestSensitiveLiabilities.

In situations where interest-bearing assets exceed the amount of interest-

bearing debt in each planning period, the bank is said to have an asset-sensitive gap.
In this situation, the bank's net interest margin increases when interest rates rise, as
interest income generated by the bank's resources is higher than borrowed money,
and vice versa. If the interest rate falls, the bank with a favourable distinction will
fall. In the reverse situation, the bank has an adverse gap and is said to be susceptible
to liability. Liability sensitive (negative) gap=InterestSensitiveAssets-Interest
Sensitive Liabilities < 0. In that case, the increase in the interest rate will reduce the
bank's NetInterestMargin, as the rising cost of Interest-SensitiveLiabilities is greater
than the increase in the interest income of the bank and vice versa. A bank that is
relatively remote from InterestRateRisk only where InterestSensitiveAssets and
liabilities are equal.

24
 GAP ANALYSIS –ASSETS AND LIABILITIES MANAGEMENT FOR STATE BANK OF INDIA
Table-4.11
The Gap analysis of State Bank of India

2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19
Years
Advances 869501.6 1006402 1163670 1392608 1578277 1692211 1870261 1896887 1960119 2226853.67
Investments 402754.1 419066.5 460949.1 519393.2 578793.1 695691.8 705189.1 1027281 1183794 1119247.77
Sensitive
Assets 1272256 1425468 1624619 1912001 2157070 2387903 2575450 2924168 3143913 3346101.44
Deposits 1116465 1255562 1414689 1627403 1838852 2052961 2253858 2599811 2722178 2940541.06
Borrowings 122074.6 142470.8 157991.4 203723.2 223759.7 244663.4 258214.4 336365.7 369079.3 413747.66
Sensitive
liabilities 1238539 1398033 1572681 1831126 2062612 2297624 2512072 2936176 3091258 3354288.72

GAP (A-L) 33716.64 27434.75 51938.59 80875.41 94457.71 90278.89 63378.02 -12008.6 52655.16 -8187.28

Interest
Sensitivity
Ratio (A/L) 1.027223 1.019624 1.033026 1.044167 1.045795 1.039292 1.025229 0.99591 1.017034 0.997559161
Source: Secondary Data.

118
 The above table represents the State bank of India’s Gap analysis for the
year 2009-10 to 2018-19. Sensitive Gap Analysis includes the difference between
sensitivity assets with Sensitivity liabilities and used to identify the effect of interest
rate change in State bank of India.

Sensitivity assets includes sum of Investment and Advance and shows that
Sensitive assets is 1272256 cr. in 2009-10. It observed that YOY the value of
sensitive assets is increasing that means uptrend shown during the tenure. Similarly,
Sensitive liabilities includes sum of deposit and Borrowings and result that same like
Sensitive assets, sensitive liabilities had raised its liabilities value YOY and in the
year 2018-19 bank receiving liabilities has 3354288.72 cr. There confirming that a
Sensitive asset as well as Sensitive liabilities seems to uptrend during the tenure.

Figure-4.11
State bankrof India’s Gap Analysis

GAP= Assets - Liabilities

100000

80000

60000

40000
GAP= Assets - Liabilities

20000

-20000

Source: Secondary Data.

Above graph shows the SBI’s Sensitive Gap Analysis i.e., difference between
Sensitive Assets with Sensitive Liabilities. Positive Gap is found in the year 2009-10
positive gap, which is continued till 2014-15, that means sensitive assets excess over
the sensitive liabilities during these tenure. Negative gap had shown for the years
2016-17 and 2018-19 which indicates that liabilities is exceeding in this year.

119
 Figure-4.12
State bank of India’s Interest Sensitivity Ratio

Source : Secondary Data

The above graph show the interest sensitivity ratio (Sensitive Assets/
Sensitive Liabilities) and result indicates that, during the tenure Interest
sensitivity ratio of State Bank of India seems to be higher than ‘1’ which means as
per BASEL III norms, interest rate rises, the net interest margin of the bank will
increase because the interest revenues generated by the assets of the bank will
increase more than the cost of borrowed fund, but interest sensitivity ratio is found
lesser than ‘0’ in the year 2016-17 and 2018-19 which means in rising interest rate
will lower the bank’s net interest margin. Hence SBI Interest sensitive ratio is almost
valued at 1 which indicates that there may not be a wider difference and concludes
that the assets and liabilities of the State Bank of India remained good.

120
 GAP ANALYSIS –ASSETS AND LIABILITIES MANAGEMENT FOR BANK OF BARODA
Table-4.12
Showing the Gap analysis of Bank of Baroda

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19

Advances 146294 177711.9 232085.1 292077.1 333625.2 435415.5 435415.5 391486 392262.3 437941.3
Investments 53626.58 63163.27 74154.42 86697 125617.1 130246.5 130246.5 128894.1 140716.4 175137.2
Sensitive
Assets 199920.6 240875.2 306239.5 378774.1 459242.3 565661.9 565661.9 520380.1 532978.7 613078.5

Deposits 196608.4 245951.2 311603.3 392616 482638.9 629981.3 629981.3 586690.5 617256.9 607451.4
Borrowings 5644.85 13404.27 22378.33 23598.06 26552.94 35501.52 35501.52 33845.23 31242 64859.82
Sensitive
Liabilities 202253.3 259355.4 333981.6 416214 509191.8 665482.8 665482.8 620535.7 648498.9 672311.2

Gap (A-L) -2332.73 -18480.3 -27742.1 -37439.9 -49949.6 -99820.8 -99820.8 -100156 -115520 -59232.7

Interest
Sensitivity
Ratio (A/L) 0.988466 0.928745 0.916935 0.910047 0.901904 0.850002 0.850002 0.838598 0.821865 0.911897
Source: Secondary Data.

121
 The above table illustrates the Bank of Baroda’s Gap analysis for the year
2009-10 to 2018-19. Sensitive Gap Analysis includes the difference between
sensitivity assets with Sensitivity liabilities and used to identify the effect of interest
rate change in Bank of Baroda.

Sensitivity assets includes sum of Investment and Advance and shows that
Sensitive assets is 199920.6 cr. in 2009-10. It observed that YOY the value of
sensitive assets is increasing that means uptrend shown during the study period (i.e.,
2009-10 to 2018-19). Similarly, Sensitive liabilities includes sum of deposit and
Borrowings and result that same like Sensitive assets, sensitive liabilities had raised
its liabilities value YOY and in the year 2018-19 bank receiving liabilities has
672311.2 cr. Hence it is concluded that Sensitive assets as well as Sensitive liabilities
are up trend during the tenure.

Figure-4.13
Bank of Baroda’s Gap Analysis

Gap = Assets - liabilities

0

-20000

-40000

-60000
Gap = Assets - liabilities
-80000

-100000

-120000

-140000

Source: Secondary Data.

The above graph represent the Bank of Baroda’s Sensitive Gap Analysis i.e.,
difference between Sensitive Assets with Sensitive Liabilities. Negative Gap had
observed during the tenure (i.e., 2009-10 to 2018-19), that means sensitive liabilities
excess over the sensitive assets.

122
 Figure-4.14
Bank of Baroda’s Interest Sensitivity Ratio

Interest Sensitivity Ratio

1.2

0.8

0.6
Interest Sensitivity Ratio
0.4

0.2

Source: Secondary Data.

The above graph show the Bank of Baroda’s Interest sensitivity ratio
(Sensitive Assets/ Sensitive Liabilities) and result indicates that, Interest sensitivity
ratio of State Bank of India seems to be lesser than ‘0’ which means as per BASEL
III norms, in rising interest rate will lower the bank’s net interest margin, because the
rising cost associate with interest sensitive liabilities will exceed increase in interest
revenue from the bank’s earning assets. Hence it is concludes that Bank of Baroda’s
liabilities are exceeding over assets which means Bank of Baroda Interest Rate Risk
is high.

123
 GAP ANALYSIS –ASSETS AND LIABILITIES MANAGEMENT FOR BANK OF INDIA
Table-4.13
The Gap analysis of Bank of India

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19
Advances 79003.93 111833 140724.4 160364.1 175887.8 171756 160860.7 140458.6 132488.8 132597.6
Investments 37650.56 48610.45 55565.88 61417.35 70236.8 81310.35 79189.55 71549.19 68645.94 66932.27
Sensitive
Assets 116654.5 160443.4 196290.3 221781.5 246124.6 253066.4 240050.2 212007.8 201134.8 199529.9
Deposits 110794.7 145228.8 178434.2 202135.4 227976.1 246048.7 224514.2 211342.6 216831.8 222534.1
Borrowings 8982.2 19355.4 23613.85 23322.86 24456.04 18232.41 27183.31 16097.67 9228.08 6146.04
Sensitive
Liabilities 119776.9 164584.2 202048 225458.2 252432.1 264281.1 251697.6 227440.3 226059.9 228680.1
Gap (SA-SL)
-3122.42 -4140.72 -5757.72 -3676.74 -6307.56 -11214.8 -11647.3 -15432.5 -24925.1 -29150.2
Interest
Sensitive
Ratio
(SA/SL) 0.973931 0.974841 0.971503 0.983692 0.975013 0.957565 0.953725 0.932147 0.889741 0.872528
Source: Secondary Data.

124
 The table depicts the Bank of India’s Gap analysis for the year 2009-10 to
2018-19. Sensitive Gap Analysis includes the difference between sensitivity assets
with Sensitivity liabilities and used to identify the effect of interest rate change in
Bank of India.

Sensitivity assets includes sum of Investment and Advance and shows that
Sensitive assets is 116654.5cr. in 2009-10. It observed that YOY the value of
sensitive assets is increasing that means uptrend shown during the study period (i.e.,
2009-10 to 2017-18) and decrease in 2018-19 with the difference of 1604.9 cr.
Similarly, Sensitive liabilities includes sum of deposit and Borrowings and result that
shown that YOY value of sensitive liabilities is raising and bank receiving liabilities
has 228680.1 cr. in the year 2018-19. Thereby, confirming that Sensitive assets as
well as Sensitive liabilities are up trend during the tenure.

Figure-4.15
Bank of India’s Gap Analysis

Gap = Assets - Liabilities

0

-5000

-10000

-15000
Gap = Assets - Liabilities
-20000

-25000

-30000

-35000

Source: Secondary Data.

The above graph represent the Bank of India’s Sensitive Gap Analysis i.e.,
difference between Sensitive Assets with Sensitive Liabilities. Negative Gap had
observed during the tenure (i.e., 2009-10 to 2018-19), that means sensitive liabilities
excess over the sensitive assets and YOY the Gap difference shown down trend
during the tenure.

125
 Figure-4.16
Bank of India’s Interest Sensitivity Ratio

Interest sensitive ratio

1
0.98
0.96
0.94
0.92
0.9
0.88
0.86
0.84
0.82 Interest sensitive ratio
0.8

Source: Secondary Data.

The above graph show the Bank of India’s Interest sensitivity ratio (Sensitive
Assets/ Sensitive Liabilities) and result indicates that, Interest sensitivity ratio of
State Bank of India seems to be lesser than ‘0’ which means as per BASEL III norms,
in rising interest rate will lower the bank’s net interest margin, because the rising cost
associate with interest sensitive liabilities will exceed increase in interest revenue
from the bank’s earning assets. Hence it is concludes that Bank of Baroda’s liabilities
are exceeding over assets which means Bank of India are consist of high Interest
Rate Risk.

126
 GAP ANALYSIS –ASSETS AND LIABILITIES MANAGEMENT FOR CANARA INDIA
Table-4.14
Showing the Gap analysis of Canara Bank

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19
Advances 169463.9 211448.5 232728.7 242435.8 301326 330293.9 324992.4 342320.1 382074.6 427727.3
Investments 71120.48 86499.41 106496.6 127533.5 135445.4 155406.5 152469.8 162072.9 157443.6 152985.3
Sensitive
Assets 240584.3 297947.9 339225.4 369969.3 436771.4 485700.3 477462.2 504393.1 539518.1 580712.6
Deposits 234517.8 293257.9 326894 355684.6 420603.7 473725 479748.9 495266.3 524847 599033.3
Borrowings 8473.78 14295 15614.42 20355.09 27309.72 25762.82 26963.42 39591.76 38909.5 40992.29
Sensitive
Liabilities 242991.6 307552.9 342508.5 376039.7 447913.4 499487.8 506712.4 534858.1 563756.5 640025.6

GAP -2407.21 -9604.99 -3283.1 -6070.44 -11142 -13787.5 -29250.2 -30465 -24238.3 -59313

Interest
Sensitive
0.990093 0.96877 0.990415 0.983857 0.975125 0.972397 0.942275 0.943041 0.957006 0.907327
Ratio
Source: Secondary Data.

127
 The table depicts the Canara Bank’s Gap analysis for the year 2009-10 to
2018-19. Sensitive Gap Analysis includes the difference between Sensitivity assets
with Sensitivity liabilities and used to identify the effect of interest rate change in
Canara Bank.

Sensitivity assets includes sum of Investment and Advance and shows that
YOY value of sensitive assets is increasing that means uptrend shown during the
study period (i.e., 2009-10 to 2018-19). Similarly, Sensitive liabilities includes sum
of deposit and Borrowings and result that shown that YOY value of sensitive
liabilities is raising and bank receiving liabilities has 640025.6cr. in the year 2018-19.
Thereby, confirming that Sensitive assets as well as Sensitive liabilities are observed
to be uptrend during the tenure.

Figure-4.16
Canara Bank’s Gap Analysis

GAP = Assets - liabilities

0

-10000

-20000

-30000
GAP = Assets - liabilities
-40000

-50000

-60000

-70000

Source: Secondary Data.

The above graph shows the Canara bank’s Sensitive Gap Analysis i.e.,
difference between Sensitive Assets with Sensitive Liabilities. Negative Gap had
observed during the tenure (i.e., 2009 -10 to 2018 -19 ), that means sensitive
liabilities excess over the sensitive assets and YOY the Gap difference are decreasing
during the accounting period.

128
 Figure-4.17
Canara Banks’ Interest Sensitivity Ratio

Interest Sensitive Ratio

1

0.98

0.96

0.94

0.92 Interest Sensitive Ratio

0.9

0.88

0.86

Source: Secondary Data.

The above graph show the Canara Bank’s Interest sensitivity ratio (Sensitive
Assets/ Sensitive Liabilities) and result indicates that, Interest sensitivity ratio of
State Bank of India seems to be lesser than ‘0’ which means as per BASEL III norms,
in rising interest rate will lower the bank’s net interest margin, because the rising cost
associate with interest sensitive liabilities will exceed increase in interest revenue
from the bank’s earning assets. Therefore confirming that Canara Bank’s liabilities
are exceeding over assets which means rate of interest risk is high in Canara banks
assets and liabilities management.

129
 GAP ANALYSIS–ASSETS AND LIABILITIES MANAGEMENT FOR PUNJAB NATIONAL BANK
Table-4.15
Showing the Gap analysis of Punjab National Bank

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19

Advances 158453.4 191110.9 247746.6 301346.5 320218.5 366073.2 404614.1 446083 424230.5 438798
Investments 65391.68 79253.88 96911.28 125819.9 134734 149224.7 156761.7 165126.5 191527.2 205910.18
Sensitive
Assets 223845.1 270364.7 344657.9 427166.4 454952.4 515297.9 561375.7 611209.5 615757.7 644708.18
Deposits 210659.2 251457.7 316231.9 384408.2 399000.2 461203.5 515245.4 570382.6 629650.9 648439.02
Borrowings 8950.95 22762.94 34638.5 42645.42 47089.98 59033.31 59204.76 81673.74 43336.01 65329.66
Sensitive
Liabilities 219610.1 274220.6 350870.4 427053.6 446090.1 520236.8 574450.2 652056.4 672986.9 713768.68

GAP 4234.98 -3855.87 -6212.57 112.77 8862.3 -4938.93 -13074.5 -40846.9 -57229.2 -69060.5

Interest
Sensitive
Ratio 1.019284 0.985939 0.982294 1.000264 1.019867 0.990506 0.97724 0.937357 0.914962 0.9032452
Source: Secondary Data.

130
 The table depicts the Punjab National Bank’s Gap analysis for the year 2009-
10 to 2018-19. Sensitive Gap Analysis includes the difference between Sensitivity
assets with Sensitivity liabilities and used to identify the effect of interest rate change
in Punjab National Bank.

Sensitivity assets includes sum of Investment and Advance and shows that
YOY value of sensitive assets is increasing that means uptrend is observed during the
accounting period (i.e., 2009-10 to 2018-19). Similarly, Sensitive liabilities includes
sum of deposit and Borrowings and result that shown that YOY value of sensitive
liabilities is raising and bank receiving liabilities has 713768.68 cr. in the year 2018-
19. Thereby, confirming that as Sensitive assets increases Sensitive liabilities raised
as well.

Figure-4.18
Punjab National Bank’s Gap Analysis

GAP = Assets - Liabilities

20000
10000
0
-10000
-20000
-30000
-40000 GAP = Assets - Liabilities
-50000
-60000
-70000
-80000

Source: Secondary Data.

The above graph shows the Punjab National bank’s Sensitive Gap Analysis
i.e., difference between Sensitive Assets with Sensitive Liabilities. Positive gap is
found in the initial year and in the year 2014-15 which means in this tenure, assets
excess over liabilities. Negative Gap had observed form the initial year and it is
continued till 2018-2019 11and stated that sensitive liabilities excess over the
sensitive assets and YOY the Gap difference are decreasing during the accounting
period.

131
 Figure-4.19
Punjab National Bank’s Interest Sensitivity Ratio

Interest Senstivie Ratio

1.04
1.02
1
0.98
0.96
0.94
0.92
0.9
0.88
Interest Senstivie Ratio
0.86
0.84

Source: Secondary Data.

The above graph show the interest sensitivity ratio (Sensitive Assets/ Sensitive
Liabilities) and result indicates that, Punjab National Bank’s Interest sensitivity ratio
seems to be higher than ‘1’ in the year 2009-10 and 2013-14 which means as per
BASEL III norms, on those year Punjab national banks interest rate rises, the net
interest margin of the bank had increased. The graph shows that Interest sensitivity
ratio for the 2014-15 to 2018-19 are observed to be less than ‘0’ which means in
rising interest rate will lower the bank’s net interest margin. Hence Punjab national
Bank asset and liabilities management is not appropriate and facing the moderate
interest rate of risk.

132
 GAP ANALYSIS–ASSETS AND LIABILITIES MANAGEMENT FOR HDFC BANK
Table-4.16
Showing the Gap analysis of HDFC bank

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19

Advances 126162.7 160831.4 198837.5 247245.1 315418.9 383408 487290.4 585481 700033.8 819401.2

Investments 58508.28 70276.67 96795.11 110960.4 119571.1 164272.6 161683.3 210777.1 238460.9 290587.9

Sensitive
Assets 184671 231108.1 295632.6 358205.5 434989.9 547680.6 648973.8 796258.1 938494.8 1109989

Deposits 167297.8 208287.2 246539.6 296091.8 367080.3 450283.7 545873.3 643134.3 788375.1 923140.9

Borrowings 13171.8 14650.44 26334.15 39496.61 49596.72 59478.25 71763.45 98415.64 156442.1 117085.1

Sensitive
Liabilities 180469.6 222937.7 272873.7 335588.4 416677.1 509761.9 617636.7 741549.9 944817.2 1040226

GAP 4201.43 8170.44 22758.91 22617.15 18312.87 37918.68 31337.02 54708.21 -6322.46 69763.04
Interest
sensitive
Ratio 1.023281 1.036649 1.083405 1.067396 1.04395 1.074385 1.050737 1.073775 0.993308 1.067065
Source: Secondary Data.

133
The table depicts the HDFC Bank’s Gap analysis for the year 2009-10 to 2018-19.
Sensitive Gap Analysis includes the difference between Sensitivity assets with
Sensitivity liabilities and used to identify the effect of interest rate change in HDFC.

Sensitivity assets includes sum of Investment and Advance and shows that YOY
value of sensitive assets is increasing during the accounting period (i.e., 2009-10 to
2018-19). Sensitive liabilities includes sum of deposit and Borrowings and result that
shown that YOY value of sensitive liabilities is raising and bank receiving liabilities
has 1040226 cr. in the year 2018-19. Thereby, confirming that as Sensitive assets
increases Sensitive liabilities raised as well.

Figure-4.20
HDFC’s Gap Analysis

GAP = Assets - Liabilities

80000

70000

60000

50000

40000
GAP = Assets - Liabilities
30000
20000

10000

-10000

-20000

Source: Secondary Data.

The above graph represent the HDFCs’ Sensitive Gap Analysis i.e., difference
between Sensitive Assets with Sensitive Liabilities. Except in 2017-18, form the
initial year on wards the study observed Positive gap between the assets and
liabilities which means in these accounting period, assets excess over liabilities.

134
 Figure-4.21
HDFC banks’ Interest Sensitivity Ratio

Interest sensitive Ratio

1.1

1.08

1.06

1.04

1.02

0.98

0.96

0.94
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Interest sensitive Ratio

Source: Secondary Data.

The above graph show the interest sensitivity ratio (Sensitive Assets/ Sensitive
Liabilities) and result indicates that, HDFC banks’ Interest sensitivity ratio seems to
be greater than ‘1’ during the accounting period i.e., 2009-10 to 2018-19 which
means as per BASEL III norms, as HDFC banks interest rate rises, the net interest
margin of the bank had increased during those years. Hence HDFC interest sensitive
ratio is almost valued at 1 which indicates there may not be wider difference between
asset and liabilities and concluded that HDFC banks is managing its assets and
liabilities appropriate and graph reveals that HDFC has low interest rate of risk.

135
 GAP ANALYSIS–ASSETS AND LIABILITIES MANAGEMENT FOR ICICI
Table-4.17
Showing the Gap analysis of ICICI

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19

Advances 225778.1 256019.3 292125.4 329974.1 387341.8 438490.1 493729.1 515317.3 566854.2 586646.6

Investments 186319.8 209652.8 239864.1 255666.7 267609.4 302761.6 286044.1 304373.3 372207.7 207732.7

412097.9 465672.1 531989.5 585640.8 654951.2 741251.7 779773.2 819690.6 939061.9 794379.3

Deposits 241572.3 259106 281950.5 314770.5 359512.7 385955.3 451077.4 512587.3 585796.1 652919.7

Borrowings 115698.3 125838.9 161296.6 172888.2 183542.1 211252 220377.7 188286.8 229401.8 165320

357270.6 384944.9 443247.1 487658.8 543054.8 597207.3 671455.1 700874 815197.9 818239.6

GAP 54827.29 80727.23 88742.42 97982.05 111896.5 144044.5 108318.2 118816.6 123864 -23860.4

Interest
Sensitive
Ratio 1.153462 1.209711 1.20021 1.200923 1.20605 1.241197 1.161319 1.169526 1.151943 0.970839
Source: Secondary Data.

136
 The table depicts the ICICI Bank’s Gap analysis for the year 2009-10 to 2018-
19. Sensitive Gap Analysis includes the difference between Sensitivity assets with
Sensitivity liabilities and used to identify the effect of interest rate change in ICICI.

Sensitivity assets includes sum of Investment and Advance and shows that
YOY value of sensitive assets is increasing during the accounting period (i.e., 2009-
10 to 2018-19). Sensitive liabilities includes sum of deposit and Borrowings and
result that shown that YOY value of sensitive liabilities is raising and bank receiving
liabilities has 818239.6cr. in the year 2018-19. Hence, concluded that sensitive assets
and liabilities of ICICI had shown uptrend.

Figure-4.22
ICICI’s Gap Analysis

GAP = Assets - Liabilities

160000

140000

120000

100000

80000
GAP = Assets - Liabilities

60000
40000

20000

-20000

-40000

Source: Secondary Data.

The above graph represent the ICICI’s Sensitive Gap Analysis i.e., difference
between Sensitive Assets with Sensitive Liabilities. Form the initial year on wards till
2017-18 Positive gap had observed between the assets and liabilities which means in
these accounting period, assets excess over liabilities. While, Negative gap is found
in the end period of the study (i.e., 2018-19) that means in this year liabilities are
excess over the assets.

137
 Figure-4.23
ICICI Banks’ Interest Sensitivity Ratio

Interest Sensitive Ratio

1.4

1.2

0.8

0.6
Interest Sensitive Ratio

0.4

0.2

Source: Secondary Data.

The above graph show the interest sensitivity ratio (Sensitive Assets/ Sensitive
Liabilities) and result indicates that, ICICI banks’ Interest sensitivity ratio seems to
be greater than ‘1’ during the accounting period i.e., 2009-10 to 2018-19 which
means as per BASEL III norms, as ICICI banks interest rate rises, the net interest
margin of the bank had increased during those years. Therefore ICICI interest
sensitive ratio is almost valued at 1 which indicates there may not be wider difference
between asset and liabilities and concluded that ICICI banks is managing its assets
and liabilities appropriate and graph reveals that HDFC has low interest rate of risk.

138
 GAP ANALYSIS –ASSETS AND LIABILITIES MANAGEMENT FOR KOTAK MAHINDRA BANK
Table-4.18
Showing the Gap analysis of Kotak Mahindra bank

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19

Advances 29724.29 41241.95 53143.61 66257.65 71692.52 88632.21 144792.8 167124.9 205997.3 205694.8

Investments 19484.78 26048.99 31658.43 40907.24 38791.05 47350.87 70273.9 68461.54 90976.6 71189.09

49209.07 67290.94 84802.04 107164.9 110483.6 135983.1 215066.7 235586.5 296973.9 276883.9

Deposits 21819.18 27312.98 36460.73 49389.14 56929.75 72843.46 135948.8 155540 191235.8 225880.4

Borrowings 13885.7 22073.32 29194.69 36171.96 29007.14 31414.88 43729.79 49689.91 58603.97 32248.29

35704.88 49386.3 65655.42 85561.1 85936.89 104258.3 179678.6 205229.9 249839.8 258128.7

Gap 13504.19 17904.64 19146.62 21603.79 24546.68 31724.74 35388.17 30356.54 47134.15 18755.25

Interest
Sensitive
ratio 1.378217 1.362543 1.291623 1.252495 1.285636 1.30429 1.196953 1.147915 1.188658 1.072659
Source: Secondary Data.

139
 The table depicts the Kotak Mahindra Bank’s Gap analysis for the year 2009-10
to 2018-19. Sensitive Gap Analysis includes the difference between Sensitivity assets
with Sensitivity liabilities and used to identify the effect of interest rate change in
Kotak Mahindra.

Sensitivity assets includes sum of Investment and Advance and shows that
YOY value of sensitive assets is increasing during the accounting period (i.e., 2009-
10 to 2018-19). Sensitive liabilities includes sum of deposit and Borrowings and
result that shown that YOY value of sensitive liabilities is raising and bank receiving
liabilities has 258128.7cr. in the year 2018-19. Hence concluded that uptrend had
observed in sensitive assets as well as in sensitivity liabilities.

Figure-4.24
Kotak Mahindra bank’s Gap Analysis

Gap = Assets - liabilities

50000
45000
40000
35000
30000
25000
20000

Gap = Assets - liabilities

15000
10000
5000
0

Source: Secondary Data.

The above graph represent the Kotak Mahindra’s Sensitive Gap Analysis i.e.,
difference between Sensitive Assets with Sensitive Liabilities. Form the initial year on
wards till 2018-19, Positive gap had observed between the assets and liabilities which
means in these accounting period, assets excess over liabilities.

140
 Figure-4.25
Kotak Mahindra Banks’ Interest Sensitivity Ratio

Interest Sensitive ratio

1.6

1.4

1.2

0.8
Interest Sensitive ratio
0.6

0.4

0.2

Source: Secondary Data.

The above graph show the interest sensitivity ratio (Sensitive Assets/ Sensitive
Liabilities) and result indicates that, Kotak Mahindra banks’ Interest sensitivity ratio
seems to be greater than ‘1’ during the accounting period i.e., 2009-10 to 2018-19
which means as per BASEL III norms, as Kotak Mahindra banks interest rate rises, the
net interest margin of the bank had increased during accounting period. Hence it is
concluded that Kotak Mahindra is managing its assets and liabilities adequately.

141
 GAP ANALYSIS–ASSETS AND LIABILITIES MANAGEMENT FOR AXIS BANK
Table-4.19
Gap analysis of Axis Bank

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19

Advances 104343.1 142407.8 169759.5 196990.1 232381.7 284448.7 344663.3 381164.7 449843.65 494798

Investments 55876.55 71787.55 92921.44 113378.1 113092.8 133319.2 121880.8 129018.4 153036.71 174969.3

160219.7 214195.4 262681 310368.2 345474.5 417767.9 466544.1 510183 602880.36 669767.3

Deposits 141278.7 189166.4 219987.7 252149.1 280541.1 322244.2 358302.2 414982.7 455657.76 548471.3

Borrowings 17169.55 26267.88 34071.67 44105.1 52739.22 84393.5 104493.7 112454.8 155767.09 152775.8

158448.2 215434.3 254059.4 296254.2 333280.3 406637.7 462795.9 527437.4 611424.85 701247.1

Gap 1771.46 -1238.93 8621.63 14113.98 12194.22 11130.22 3748.18 -17254.4 -8544.49 -31479.9

Interest
Sensitive
Ratio 1.01118 0.99424 1.033935 1.047641 1.03658 1.02737 1.00809 0.96728 0.986025 0.9551
Source:Secondary Data.

142
 The table illustrates the AXIS’s Gap analysis for the year 2009-10 to 2018-
19. Sensitive Gap Analysis includes the difference between Sensitivity assets with
Sensitivity liabilities and used to identify the effect of interest rate change in
AXIS.

Sensitivity assets includes sum of Investment and Advance and shows that
YOY value of sensitive assets is raised (i.e., 2009-10 to 2018-19).It stated that
initially Axis obtained assets as 160219.7, drastically increase to 669767.3 in
2018-19. Similarly, Sensitive liabilities includes sum of deposit & Borrowings and
shown up trend YOY. Table indicated Axis is receiving liabilities as 158448.2 and
impeccable liabilities growth had found till the tenure of the study (i.e., 701247.1).

Figure-4.26
Axis bank’s Gap Analysis

Gap = Assets - Liabilities

20000

10000

-10000
Gap = Assets - Liabilities

-20000

-30000

-40000

Source: Secondary Data.

The above graph represent the Axis Bank’s Sensitive Gap Analysis i.e.,
difference between Sensitive Assets with Sensitive Liabilities. In Initial year to till
2011-12, Negative gap is found which indicates that in those years liabilities are
exceeding assets of banks. Form the year 2013-14 to 2018-19, Positive gap had
observed between the assets and liabilities which means in these accounting
period, assets excess over liabilities.

143
 Figure-4.27
Axis Banks’ Interest Sensitivity Ratio

Interest Sensitive Ratio

1.06

1.04

1.02

0.98
Interest Sensitive Ratio
0.96
0.94

0.92

0.9

Source: Secondary Data.

The above graph show the interest sensitivity ratio (Sensitive Assets/
Sensitive Liabilities) and result indicates that, Axis banks’ Interest sensitivity ratio
seems to be greater than ‘1’ during the accounting period i.e., 2009-10 to 2018-19
which means as per BASEL III norms, as Axis banks interest rate rises, the net
interest margin of the bank had increased during accounting period. Hence it is
concluded that Axis is managing effectively its assets and liabilities.

144
 GAP ANALYSIS –ASSETS AND LIABILITIES MANAGEMENT FOR YES BANK
Table-4.20
Showing the Gap analysis of Yes bank

Years 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19

Advances 22193.12 34363.64 37988.64 46999.57 55632.96 75549.82 98209.93 132262.7 203518.8 241499.6

Investments 10209.94 18828.84 27757.35 42976.04 40932.86 46570.24 48788.47 49981.8 68293.44 89522.03

Sensitive
Assets 32403.06 53192.48 65745.99 89975.61 96565.82 122120.1 146998.4 182244.5 271812.3 331021.6

Deposits 26798.57 45938.93 49151.71 66955.59 74185.63 91158.78 111704.2 142857.4 200688.6 227610.2

Borrowings 4749.08 6690.91 14156.49 20922.15 21314.29 26220.4 31658.98 38606.67 74893.58 108424.1

Sensitive
liabilities 31547.65 52629.84 63308.2 87877.74 95499.92 117379.2 143363.2 181464.1 275582.2 336034.3

GAP 855.41 562.64 2437.79 2097.87 1065.9 4740.88 3635.24 780.37 -3769.91 -5012.66

Interest
Sensitive
Ratio 1.027115 1.010691 1.038507 1.023873 1.011161 1.040389 1.025357 1.0043 0.98632 0.985083
Source: Secondary Data.

145
 The table depicts the Yes bank’s Gap analysis for the year 2009-10 to
2018-19. Sensitive Gap Analysis includes the difference between Sensitivity assets
with Sensitivity liabilities and used to identify the effect of interest rate change in
yes bank.

Sensitivity assets includes sum of Investment and Advance and shows that
YOY value of sensitive assets is raised (i.e., 2009-10 to 2018-19).It stated that
initially yes bank obtained assets as 32403.06, increase to 331021.6in 2018-19.
Similarly, Sensitive liabilities includes sum of deposit & Borrowings and shown
up trend YOY. Table indicated Yes bank is receiving liabilities as 31547.65,
raised to 336034.3.

Figure-4.28
Yes bank’s Gap Analysis

Gap = Assets - liabilities

6000

4000

2000

0 Gap = Assets - liabilities

-2000

-4000

-6000

Source: Secondary Data.

The above graph represent the Yes Bank’s Sensitive Gap Analysis i.e.,
difference between Sensitive Assets with Sensitive Liabilities. Form the initial
year on wards till 2016-17 Positive gap had observed between the assets and
liabilities which means in these accounting period, assets excess over liabilities.
While, Negative gap is found for remaining year (i.e., 2017-18 to 2018-19) that
means in this year liabilities are excess over the assets.

146
 Figure-4.29
Yes Banks’ Interest Sensitivity Ratio

Interest Sensitive Ratio

1.05
1.04
1.03
1.02
1.01
1
0.99
0.98
0.97
Interest Sensitive Ratio
0.96
0.95

Source: Secondary Data.

The above graph show the interest sensitivity ratio (Sensitive Assets/
Sensitive Liabilities) and result indicates that, Yes banks’ Interest sensitivity ratio
seems to be greater than ‘1’ during the accounting period i.e., 2009-10 to 2016-17
which means as per BASEL III norms, as Yes banks interest rate rises, the net
interest margin of the bank had increased. While, remaining three year Interest
Sensitivity ratio is less than ‘1’, Hence, the study concluded that Yes bank is not
managing its assets and liabilities appropriately.

147
 Figure-4.30
Comparison of Public and Private Banks Interest rate sensitive Ratio

0.7000 0.6442

0.6000
0.5188
0.5000
0.3993 0.3936
0.4000

0.3000

0.2000 0.1821
0.1130 0.1307 0.1042
0.1000 0.0653 0.0559 0.0788
0.0461 0.0479 0.0442 0.0528
0.0156 0.0201 0.0103 0.0240 0.0138
0.0000
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
PublicPrivate

Source: Secondary Data.

The above graph show the public and private sector banks’ interest
sensitivity ratio (Sensitive Assets/ Sensitive Liabilities) and result indicates that,
both banks’ Interest sensitivity ratio seems to be lower than ‘1’ during the
accounting period i.e., 2009-10 to 2016-17, which means as per BASEL III norms,
as the interest rate rises are having the negative impact on the management of
assets and liabilities, as their interest rate sensitivity ratio is lower than the 1. This
ratio indicates imbalance leads to liabilities are higher than the assets. The graph
indicates that the public sector banks are slightly better than the private sector
banks. Hence, the study concluded that both selected public and private sector
banks are not managing their assets and liabilities properly.

148