Determination of Profitability and Liquidity Analysis of Banking Industry in India

The banking industry has a key function in the public sector, and the majority of people profit from it. It also plays a significant role in global commerce. This study focuses on the financial performance of selected commercial banks, including Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank, Punjab & Sind Bank, Punjab National Bank, and State Bank of India. Secondary data is acquired from the bank's balance sheets and websites. The following financial ratios were employed in this study: net profit margin, return on assets, return on net worth, and return on long-term funds, current ratio, and quick ratio. To investigate the financial performance of selected banks and organisations that demonstrate strong profitability and liquidity maintenance.


Introduction
The terms "banking fundamentals" refer to the ideas and guidelines that govern the activity of the banking.Credit facilities, cash storage, investments, and any other financial operations are all handled by the banking sector.Since the banking sector distributes the money to borrowers who make profitable investments, it is one of the main engines of most economies.In addition to handling the deposits and withdrawals, banks also deal in currency exchange, forex trading, and wealth management.Additionally, they serve as a middleman between depositors and borrowers, utilizing the money that clients to deposit to offer credit facilities to those who wish to borrow.Banks generate revenue by the levying an interest rate on loans, which allows them to charge a higher interest rate than what they have to pay on deposits from customers.They must, however, abide by the rules of the established by the national government or central bank.The Federal Reserve oversees bank regulations in the US.Banks can lend out the remaining 90% of the deposits, but they must hold onto at least 10% of each one in reserve.The Reserve Bank of India (RBI) claims that the banking industry in India is adequately to capitalized and subject to strict regulations.The nation has significantly better financial and the economic circumstances than any other nation on the planet.Studies on credit, market, and the liquidity risk indicate that Indian banks have fared well during the global financial crisis and are generally robust.Through a number of initiatives, including the Pradhan Mantri Jan Dhan Yojana and Post Payment Banks, India has also New banking concepts such as payments and small financing banks have recently been introduced to the Indian banking sector.Through a number of initiatives, including the Pradhan Mantri Jan Dhan Yojana and the Post Payment Banks, India has also concentrated on expanding the reach of the banking system in recent years.Major banking sector changes including digital payments, neo-banking, the growth of Indian NBFCs, and fintech, along with the schemes like these, have greatly improved India's financial system.

Objectives of this study
• To analyze the financial performance of selected Commercial Banks in India.
• To know about the Banking sector performance in India.

Methodology: Research Methodology
In this study focused on Secondary data's, they are data's collected from balance sheets, journals, websites and there are 10 banking firms selected in this study they are S.No Name of the Bank Güven Sayilgan, Onur Yildirim (2009) The authors using monthly data and the aggregate balance sheet of the banks, the multi-variable single-equation regression method was used in this article to investigate that the factors that determine return on assets (ROA) and return on equity (ROE) for the Turkish banks over the 2002-2007 period.The results of the regression show that the ratio of equity to total assets, the ratio of budget balance to the industrial production index, and the first difference of the ratio off-balance sheet transactions to total assets all have a statistically significant of the positive impact on profitability indicators, while the consumer price index inflation and the ratio of budget balance to total assets have a statistically significant negative impact.Mustafa Tevfik Kartal (2021) Author discovers this tendency raises to concerns about bank credit availability being restricted.As such, TBS's profitability level is significant.To maintain the stability in profitability, it is important to identify the factors that have an impact on it first.11 explanatory variables, quarterly data, and the Multivariate Adaptive Regression Splines (MARS) approach are utilized in this context from 2006 to 2018.The nonperforming loans (NPL)/total credits, capital, net earnings, total assets, and the USD/TL foreign exchange rate (FER) are found to have an impact on the profitability of the Turkish banking industry.Regulatory bodies should take the necessary actions to maintain a steady the net profit and boost the sector's profitability above its existing level.As a result, banks may be able to offer economic growth.the competitive in order to counter large banks' concentration.

Conclusion
Bank profitability is influenced by both bank-specific characteristics and developments in related industries.The empirical research examines three determinants: banking sector concentration, banking sector development, and stock market development.Credit and liquidity risk, management efficiency, business diversity, market concentration, and economic growth all have an impact on bank profits.High profits reduce risk in two ways.Profits tend to accumulate buffers against negative shocks.And the promise of future profits limits banks' risk-taking behaviour because they have more "skin in the game."While bank profitability is vital for financial stability, the source of a bank's profits is extremely important.This study examines the financial performance of selected banks, as well as institutions that demonstrate good performance in terms of profitability and liquidity maintenance.
Chart Title • Email: editor@ijfmr.comIJFMR240319542 Volume 6, Issue 3, May-June 2024 2 concentrated on expanding the reach of the banking system in recent years.The Reserve Bank of India (RBI) claims that the banking industry in India is adequately the capitalized and subject to strict regulations.The nation has significantly better financial and econ omic circumstances than any other nation on the planet.Studies on credit, market, and liquidity the risk indicate that Indian banks have fared well during the global financial crisis and are generally robust.The Reserve Bank of India (RBI) claims that the banking industry in the India is adequately capitalized and subject to strict the regulations.The nation has significantly better financial and economic circumstances than any other nation on the planet.Studies on credit, market, and liquidity risk indicate that the Indian banks have fared well during the global financial crisis and are generally robust.
Sanderson Abel Pierre Le Roux (2016) the goal of the study was to identify the factors that influenced the Zimbabwe's banking sector's profitability from 2009 to 2014.With Zimbabwe's adoption of a multicurrency system, the study focused on the evolution and the factors of profitability in the banking sector.The study, which makes use of fixed effects panel regression models, demonstrates that the quality of the decisions made by bank management regarding capital size, expense management, asset composition and management, credit risk, and the liquidity risk determines the profitability of the banking system in Zimbabwe.The findings suggest that to raising asset quality, enhancing capital levels, expense control, and the liquidity can all boost the profitability of the banking industry in Zimbabwe.The study attests to the fact that bank managers Mehmet Sabri TOPAK, Nimet Hülya TALU (2016) the author stated that ROA and ROE are positively impacted by the ratios of net fees and the commissions to total expenses and interest on loans to interest on deposits.It has been discovered that there is a negative correlation between the profitability and the size, as shown by the natural logarithm of total assets, and the ratio of other operating expenses to total operating income.Although it has been determined that the ratio of the long-term subordinated loans and equity to total assets does not significantly explain ROE, it does positively affect ROA.The ratio of other expenses to total operating the income has been determined to negatively affect ROA and ROE in each of the 12 banks, based on the results for individual institutions.Fadi Mashharawi, Khaled Al-Zu'bi (2009) this study looks at the factors that has affected the Jordanian bank's profitability between 1992 and 2006.Ten Jordanian banks are included in the sample of the data set.There are three types of explanatory variables that are used: macroeconomic factors, variables specific to banks, and variables related to financial structures.The most significant elements influencing a bank's profitability, according to the results of the pooled data regression under ordinary least square (OLS) and to seemingly unrelated regression (SUR), are the overhead ratio (OVERHD), relative size (RSIZE), concentration ratio (CR3), and the economic growth (GRTH).As a result, banks must be better control and keep an eye on their overhead costs.Additionally, minor banks should work to become more IJFMR240319542 Volume 6, Issue 3, May-June 2024 4

Graph showing Quick Ratio Interpretation for all the Variables When
When analyzing correlation for all the variables like Net Profit Margin, Return on Assets, Return on Net Worth, Return on Long Term Fund, Current Ratio, and Quick Ratio there is positive corrective when comparing the other banks and there is no negative correlation in the above analysis.And the graphs represent the correlation values.
analysing Net Profit Margin, Return on Assets, Return on Net Worth, Return on Long Term Fund, Current Ratio, and Quick Ratio showing mean and standard deviation of the variables.Only few actors showing negative mean values and others are high value showing.