“A Study of Bankometer Model: Case study of...

“A Study of Bankometer Model: Case study of Selected Public and Private Sector Banks in India”

Author Name : Sharanappa Kilarahatti, CMA. Dr. Jeelan Basha. V

ABSTRACT

The present study has used Bankometer model to measure the solvency scores of banks. The Bankometer model has been developed by International Monetary Fund to identify financial soundness of banks.  The model helps the bank’s internal management to determine insolvency issues and eradicate the shortcomings pointed out by the model. Banks are one of the institutions that play an important role in a country’s economy cycle, including India. Hence, bank failures can cause a disruption to the country's economy condition. Therefore, it is necessary to identify the possibility of bank bankruptcy as early as possible to eliminate possibility of disruption of the country's economy and further impact the society at large.

Objective of the study is to predict the bankruptcy and make comparison between selected public sector and private sector banks in India on the basis of Bankometer model. The current study is completely based on secondary data. The needed data has been collected from official websites of selected public and private sector banks. The sample period for the study is eleven years covering from 2011 to 2021. The sample size is twenty four selected public and private sector banks. The data collected for the study is graphically presented, adequately tabulated, suitably analyzed and meaningfully interpreted. Descriptive and inferential statistics are used.

 It is evident from the statistics of ANOVA that there is a significant difference among the selected public sector banks. Similar result is found in private sector banks as there is significant difference among banks of private sector.

In nutshell, all selected private and public sector banks are solvent. 2/3 of private sector banks have S-score more than those of public sector banks. Hence, Private sector banks are better than those of public sector banks, which implies that the financial position of private sector banks is far better than those of public sector banks.

Key wards: Bankometer, Solvency, Capital to Asset, Equity to Asset, Capital Adequacy Ratio, Non-Performing Loans to Loans, Cost to Income and Loans to Asset Ratios.