IMPACT OF CAPITAL ADEQUACY RATIO ON OPERATING PERFORMANCE, PROFITABILITY AND RETURN RATIO: A COMPARISON BETWEEN SELECTED PUBLIC AND PRIVATE SECTOR BANKS IN INDIA

Abstract

The aim of the study was to understand impact of capital adequacy ratio on operating performance, profitability and return ratio and understand this as a comparison between select public sector banks and private sector banks. For the purpose of this study, panel data was collected from twelve sample Indian banks over a period of ten years (2014-2023). These banks included six public sector banks and six private sector banks. Descriptive analysis, independent sample t-test and simple regression were performed on the data. It was found that private sector banks perform better than public sector banks. The private sector banks demonstrate stronger financial performance, higher efficiency, better asset quality and more aggressive lending strategies compared to public sector banks. These differences highlight the need for public sector banks to adopt more efficient practices and improve their financial health to compete effectively with private sector banks.