Abstract:
Financial institutions are the pillars of the economic system of any country. It
comprises banks, credit unions, investment companies, insurance companies, and
mortgage companies. They provide financial support and services to their
customers. Banks are considered as one of the important contributors to the
development of the economy of the country. The present paper seeks to conduct a
comparative study of the financial performance of the public and private sector
banks of the country to understand the financial decision-making efficiency of the
bank. The research instruments used are Capital adequacy, Asset quality,
Management capability, Earnings capacity, and Liquidity (CAMEL) Model and t-test.
The analysis reveals that both the banks have managed their capital adequacy ratio
well above the minimum standard of 8% as per Basel III. Further, it found that there
is a significant difference in capital adequacy, earning quality, and liquidity of SBI and
ICICI Bank. Some ratios indicate a significant difference in management efficiency
like operating expenses to total assets, business per employee, and cost to income
ratio. Asset quality ratios indicate no significant difference in asset quality of SBI and
ICICI Bank. This study helps to understand the quality of financial decisions taken by
the public and private sector banks. It can be concluded that public sector banks need
to focus on strategic decisions to sustain competition with private banks. They
require to be more professional like private players in the banking business
