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The IUP Journal of Bank Management
An Analysis of the Financial Performance of Indian Commercial Banks
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The Indian banking industry is currently facing challenges to implement the capital regulations specified under Basel III norms. In implementing the new capital regulations, the financial stability of banks plays an important role. The banks which are in a sound financial position can easily implement the new regulations, but it is difficult for the financially weaker banks to determine the required capital as per the international norms. Thus, financial analysis has become the need of the hour for the banking sector to identify the financial position. In this context, evaluating the financial health of Indian bank has become compulsory to compete with the environmental changes. In this context, it is quite important to study the solvency position of Indian banks. The present study intends to analyze the financial health of selected Indian commercial banks through the application of Altman Z-score model. It is found that the financial health of the selected banks under study is strong and satisfactory.

 
 
 

Banking industry plays a crucial role in ensuring the stability of an economy as banks are regarded as the central part of financial system. The stable and sound position of bank creates an environment of high growth and leads to the development of economy. Nowadays, the assessment of financial performance of banks has become a serious issue due to the failure of business, high competition, increasing risk, possibility of scams and fraud, inability to fulfil the regulatory requirements; all these factors create chances of uncertainty in banking operations. This sometimes leads to the insolvency of business like the largest crisis in US banks in 2008. Hence the need for Indian banks to analyze their profits efficiently.

Good financial performance of a bank is an indicator of rapid growth and ensures security to depositors, shareholders, employees and economy. The banking sector is capable of channelizing the funds within economy from the surplus to deficit units. The sound performance of banks affects the quality of the banking and financial services offered by banks. The banking sector forms the central part of financial system of India and plays a crucial role in the overall growth of the economy.

 
 
 
Bank Management Journal, An Analysis of the Financial Performance, Indian Commercial Banks