A CAMEL Model-Based Risk and Performance Analysis of Ujjivan and Suryoday Small Finance Banks in India: A Comparative Study for FY 2023–24

Abstract

This study employs the CAMEL framework—comprising Capital Adequacy, Asset Quality, Management Efficiency, Earnings, and Liquidity—to conduct a comparative performance and risk analysis of two prominent Indian Small Finance Banks: Ujjivan SFB and Suryoday SFB, during the financial year 2023–24. As pivotal players in promoting financial inclusion, these banks operate in challenging environments that demand robust financial management. Using secondary data from audited financial reports and regulatory disclosures, the study applies statistical tools, including correlation and ANOVA, to evaluate critical financial indicators.

The results reveal a significant inverse relationship between asset quality and profitability, highlighting that improved asset health directly enhances returns. Furthermore, notable differences were found between the two banks in terms of Net Interest Margin and Capital Adequacy, with Suryoday SFB outperforming Ujjivan SFB in both areas. Interestingly, a negative correlation was observed between liquidity (CASA ratio) and earnings (NIM), challenging the conventional assumption that higher liquidity always supports profitability.

These findings underscore the CAMEL model’s effectiveness as a diagnostic and comparative tool for financial performance assessment within the Small Finance Bank segment. The study provides valuable implications for regulators, investors, and bank management, emphasizing the need for tailored risk strategies, capital planning, and a balanced approach to liquidity and earnings. However, limitations such as a restricted sample size and single-year focus suggest avenues for future longitudinal and sector-wide research.