APPLICATION OF TOPSIS METHOD FOR FINANCIAL PERFORMANCE EVALUATION OF SELECTED INDIAN BANKS

Abstract

The main objective of our study is to find the financial performance after comparison with other banks. In this study we used some financial ratios from the annual reports of five banks ICICI , HDFC, Axis, Bank of Baroda, State Bank of India. We have try to find out which bank were doing better in all the banks and finding the rank on the basis of financial ratios. For finding weights of all the ratios we have used Shannon entropy which basically gives you the weightage of the ratios on the basis of available entropy where the points where highest number of elements were given highest value as compared to lowest numbers of particles. After that we have used the topsis method to find out the ranking on the basis of weightage we had find out from the Shannon Entropy. Basically topsis were used where we have multiple decision criteria to decide which one be the best from all the scenerios and this help in giving the ranking to all alternatives. In India there is no as such method to rank the different banks on the basis of their working so were trying to find the ranking of different banks with the help of TOPSIS. After the topsis we have find out the distance from best possible result and try to take value which were at least distance or far point from worst possible solutions and then try to find out the best possible outcomes one after another. Ranking system helps in chose the best banks for investments or which bank were providing best services or we can say that it also gives you the best bank on the terms of ROI. In this paper we have used the number of branches as this gives feasibility to the customer to use the banks and ROI gives you how much return you were getting after investing in the stocks of banks. Also we have taken how much casa were maintained by banks in year 2023 annual reports. ROA and net profit were some other ratios we have taken to analyse the data. This analysis gives you the result that HDFC were doing better than other banks we had taken for this research. Also private Banks were doing better then the government owned banks which were SBI and BOB. As these banks run on different perspectives as compared to the private banks which works on maximising profit and providing best services to their vi customer and come up with different schemes so that more and more customer join them and enjoy the benefits of different banks. Whereas state owned banks were trying to focus on security and they had to follow all government norms and they were faced less competition as they were working to meet the demand of the people. At present Bank of Maharashtra giving loans at least interest rates and private bank known for its faster services and more customer oriented. They have to face competition from other banks and works for maximizing the shareholders worth. Private Banks are doing better as compared to state owned or government owned banks in most of the financial ratios. We have identified ranks of all the banks which we have used on the basis of health, soundness and quality of financial Ratios.