An Analytical study on Capital Adequacy and Management Efficiency Ratios and its Impact on profitability with Special Reference to Karnataka Bank Ltd

Banking industry is growing rapidly, the cash inflow and outflow is big in numbers. With this the bank undergoes a large amount of constantly risk. In order to safe guard the bank from the losses bank may undergo, the BASEL committee on banking supervision formulated the Capital Adequacy norms. Capital Adequacy Ratio is the ratio between the invested capitals of bank to its risk. Karnataka Bank Limited is one of the major Old Private Sector Banking institutions of south India based in Mangaluru in Karnataka which has around 713 branches throughout the country. With the above sound background the researcher was carried his study for analyzing the CAMEL ratio of the bank. The main objectives of the research are to examine the various regulatory capital of the bank and to analyze the capital adequacy ratio and other management efficiency of Karnataka Bank Ltd. The study of these nature is helps the researcher to know about how the banks’ are excel with one another in their banking activities by way of satisfying their customers. The effectiveness of research analyzed with the help of hypothesis testing through the SPSS software. From the study the researcher found the following findings. In terms of CRAR of the bank, it shows 13.32% in 2010–2011 and 12.4% in 2014–2015, which shows the fluctuating trend. During the study period, the ratio of advance to total assets is showing an increasing trend between 54.7% and 61.1%. In terms of percentage of change in NPA of the bank, it shows 48.63% in 2011 and-13.2% in 2013, which shows the fluctuating terms of the bank. The study suggested that the Bank should try to concentrate on improving Tier 1 capital and try to minimize the risk weighted assets to improve the bank's capital adequacy ratio. Bank should take up rigorous action to improve the collection of NPA and reduce it annually for the purpose of the bank's growth. During the study period, the Karnataka Bank has earned a satisfactory loan to total assets. In terms of management efficiency ratios, again the Karnataka Bank has satisfied with RBI regulations compare with the other private State banks. The Karnataka Bank Ltd have a total CAR of 12.37%. The market participation of Karnataka Bank Ltd is also satisfactory in nature, here the bank have ability to assess key point of information on risk exposure, risk assessment process and Capital Adequacy of bank. The degree of ensure a greater finance inclusion and efficient credit delivery mechanism of the bank also good compare with others. From the study, it is concluded that the overall performance and credit rating of the bank is good and satisfactory.