Evaluating Performance of Regional Rural Banks: An Application of Camel Model

Abstract

The regional rural banks would be a ‘model financial infrastructure’ for rural development with patronage and encouragement given by planners in the field. Thus, the State sponsored, regionally based and rural oriented commercial banks have taken birth in rural India which popularly known as ‘Regional Rural Banks’. These banks penetrate every corner of the country and have been extending a helping hand in the growth of the economy. Despite the RRBs journeyed over three decades, they have achieved performance to the expected level quantitatively not turning towards sound financial management and productivity. Moreover the achieved performance is not uniform though they are working under the approach of same management. Effective performance is the success of every business. In order to achieve the effective and efficient performance, the RRBs have been taken up amalgamation process in the entire organization in the year 2005-06. 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.