THE CAMEL’S FRAMEWORK WITH A FOCUS ON THE IMPACT OF NON-PERFORMING ASSETS OF SELECTED PRIVATE AND PUBLIC SECTOR BANKS

Abstract

The banking industry is the backbone of the economic development of a country.  The CAMEL model is one of the models to identify the financial health of the banks. NPAs are a universal phenomenon, and this study focuses on evaluating the financial health of selected Indian commercial banks using the CAMELS framework and examining the CAMELS ratios' impact on NPAs of public-sector and private-sector banks. The studies use secondary sources from RBI and different banks' websites. The study makes use of five years of data, 2021 to 2025. Five private sector banks (Axis Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and INDUSLND Bank) and five public sector banks (Bank of Baroda, Canara Bank, Punjab National Bank, State Bank of India, and Union Bank of India) had been considered for the study. All these banks are evaluated on the basis of CAMEL determinants.  Panel regression has been conducted to understand the factors influencing net non-performing assets. While analyzing CAMEL parameters, the fixed-effects model was conducted. The findings include that the CAMEL is useful in evaluating the financial health of banks and selected private banks' financial health is better in some of the aspects of the CAMEL model compared to public sector banks. The net NPA has an impact on the financial health of both private and public sector banks.