Long Term Solvency Position of Select Public Sector Banks: An Analysis
Keywords:
Bankruptcy, Capital Adequacy, Liquidity, SolvencyAbstract
Solvency is the ability of a firm to meet its long-term financial obligations. It is essential to staying in business as it asserts a company’s ability to continue operations into the foreseeable future. While a company also needs liquidity to thrive, liquidity should not be confused with solvency. A company that is insolvent must often enter bankruptcy.The current study attempts to know the long term solvency capacity of public sector banks. For analysis the data have been collected from six public sector banks such as PNB, ANDHRA BANK, SYNDICATE BANK, UNION BANK and SBI, from 2011 to 2015.In this study mean, standard deviation, co efficient of variation and regression analysis have applied. However, the analysis reveals that banks should maintain adequate capital as per capital adequacy norms, which were setup on International standards of Basel norms(I,II,III).So that public sector banks can acquire the solvency capacity and can reduce NPA.
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