CHAPTER 1INTRODUCTION

IINTRODUCTIONThis chapter briefly introduces to CAMELS its history and its evaluation in India. This chapter also include Raison dtre of the study, objective, Problem statement, Research Hypothesis, Research Methodology, sources of data, Plan of the study etc.

A sound financial system is indispensable for a healthy and vibrant economy. The banking sector constitutes a predominant component of the financial services industry. The performance of any economy to a large extent is dependent on the performance of the banking sector. The banking sectors performance is seen as the Replica of economic activities of the nation as a healthy banking system acts as the bedrock of social, economic and industrial growth of a nation. Banking institutions in our country have been assigned a significant role in financing the process of planned economic growth.

During the past six decades since independence, the banking sector has witnessed significant changes and has surely come a long way from the days of nationalisation during early 1970s to the advent of liberalization, privatization and globalization, in the post-1991 era. The flurry of reforms witnessed over the last one and half decade has brought about significant changes in the banking arena in the country. Leveraging on their new found tech-savvy and increased thrust on product/service innovation, the banks in the country witnessed a phenomenal growth in the last few years as the economic growth moved up into top gear to be amongst top in the world.

The Asian crisis of 1997 and the recent events like the US subprime crisis have once again underlined the significance of a strong and robust financial sector for smooth and efficient allocation of resources. The Indian banking sector has been the backbone of the Indian economy over the past few decades, helping it survive various national and worldwide economic shocks and meltdowns. It is one of the healthiest performers in the world banking industry seeing tremendous competitiveness, growth, efficiency, profitability and soundness, especially in the recent years.

Indian banks, were initially in a denial mode about the impact of crisis (on them), but soon admitted to vulnerability to global shocks, have shown remarkable resilience, thanks to the Reserve Bank of Indias timely and prudent measures which saved the domestic banks from the blushes of the worst financial crisis. Life seems to be returning to normal in the global banking sector after it was hard hit by the financial catastrophe, which unravelled in September, 2008, as better than expected results from banks across the globe lend credence to the claims that stimulus efforts are finally yielding results. Against this background, it is important to measure the performance of the banking sector through a performance measurement system that provides an opportunity to assess the performance of Indian banks specially the private sector banks.

The present supervisory system in banking sector is a substantial improvement over the earlier system in terms of frequency, coverage and focus as also the tool employed. Majority of the Basel Core Principles for effective banking supervision have already been adhered to and rest is at the stage of implementation. Two supervisory rating models based on CAMELS (Capital Adequacy, Assets Quality, Management, Earning, Liquidity, Systems and Controls) and CACS (Capital Adequacy, Assets Quality, Compliance, Systems and Controls) factors for rating of Indian commercial Banks and Foreign Banks operating in India respectively, have been worked out on the lines recommended by Padmanabhan Working Group (1995). These ratings would enable the RBI to identify the banks whose condition warrants special supervisory attention (Bodla and Verma, 2006).

Two decades have elapsed since the initiation of banking sector reforms in India. Over this period, the banking sector has experienced a paradigm shift. Hence, it is high time to make performance appraisal of this sector. Accordingly, a framework for the evaluation of the current strength of the system, and of operations and the performance of the banks has been provided by Reserve Banks measuring rod of CAMELS which stands for capital adequacy, assets quality, management efficiency, earning quality, liquidity and internal control systems.

The main endeavour of CAMEL system is to detect problems before they manifest themselves. The RBI has instituted this mechanism for critical analysis of the balance-sheet of banks by themselves and presentation of such analysis to provide for internal assessment of the health of banks. The analysis, which is made available to the RBI, forms a supplement to the system of off-site monitoring of banks. The prime objective of the CAMEL model of rating banking institutions is to catch up the comparative performance of various banks (Bodla and Verma, 2006).

1.1 The development of CAMELS Rating SystemThe CAMELS ratings is a supervisory rating system originally developed in the U.S. to classify a bank's overall condition. It's applied to every bank and credit union in the U.S. (approximately 8,000 institutions) and is also implemented outside the U.S. by various banking supervisory regulators.The ratings are assigned based on a ratio analysis of the financial statements, combined with on-site examinations made by a designated supervisory regulator. In the U.S. these supervisory regulators include the Federal Reserve, the Office of the Comptroller of the Currency, the National Credit Union Administration, and the Federal Deposit Insurance Corporation.Ratings are not released to the public but only to the top management to prevent a possible bank run on an institution which receives a CAMELS rating downgrade. Institutions with deteriorating situations and declining CAMELS ratings are subject to ever increasing supervisory scrutiny. Failed institutions are eventually resolved via a formal resolution process designed to protect retail depositors.The CAMEL framework was originally intended to determine when to schedule on-site examination of a bank (Thomson, 1991; Whalen and Thomson, 1988). The five CAMEL factors, viz. Capital adequacy, Asset quality, Management soundness, Earnings and profitability, and Liquidity, indicate the increased likelihood of bank failure when any of these five factors prove inadequate. The choice of the five CAMEL factors is based on the idea that each represents a major element in a banks financial statements. Several studies provide explanations for choice of CAMEL measures: Lane et al. (1986), Looney et al. (1989), Elliott et al (1991), Eccher et al. (1996), and Thomson (1991). For example, Waldron et al (2006) suggested that one of these threats represented in CAMEL exists in the loss of assets; similarly, short-term liquid assets aid in covering loan payment defaults and offset the threat of losses or large withdrawals that might occur. The CAMELS framework extends the CAMEL framework, considering six major aspects of banking: Capital adequacy, Asset quality, Management soundness, Earnings and profitability, Liquidity, and Sensitivity to market risk. Sensitivity to market risk, the "S" in CAMELS is a complex and evolving measurement area. It was added in 1995 by Federal Reserve and the OCC primarily to address interest rate risk, the sensitivity of all loans and deposits to relatively abrupt and unexpected shifts in interest rates.

1.2 CAMELS in IndiaIn 1994, the RBI established the Board of Financial Supervision (BFS), which operates as a unit of the RBI. The entire supervisory mechanism was realigned to suit the changing needs of a strong and stable financial system. The supervisory jurisdiction of the BFS was slowly extended to the entire financial system barring the capital market institutions and the insurance sector. Its mandate is to strengthen supervision of the financial system by integrating oversight of the activities of financial services firms. The BFS has also established a sub-committee to routinely examine auditing practices, quality, and coverage. In addition to the normal on-site inspections, Reserve Bank of India also conducts off-site surveillance which particularly focuses on the risk profile of the supervised entity. The Off-site Monitoring and Surveillance System (OSMOS) were introduced in 1995 as an additional tool for supervision of commercial banks. It was introduced with the aim to supplement the on-site inspections. Under off-site system, 12 returns (called DSB returns) are called from the financial institutions, which focus on supervisory concerns such as capital adequacy, asset quality, large credits and concentrations, connected lending, earnings and risk exposures (viz. currency, liquidity and interest rate risks).In 1995, RBI had set up a working group under the chairmanship of Shri S. Padmanabhan to review the banking supervision system. Based on the Committees certain recommendations and suggestions a rating system for domestic and foreign banks based on the international CAMELS model combining financial management and systems and control elements was introduced for the inspection cycle commencing from July 1998. CAMEL is, basically, a ratio-based model for evaluating the performance of banks. It is a model for ranking/rating of the banks. It recommended that the banks should be rated on a six point scale (A to F) based on the elides of international CAMEL rating model. CAMELS evaluate banks on the six parameters. Various ratios forming the model are explained as follows (Joshi and Joshi, 2002):

A) Capital AdequacyCapital adequacy has emerged as one of the major indicators of the financial health of a banking entity. It is important for a bank to maintain depositors confidence and preventing the bank from going bankrupt. Capital is seen as a cushion to protect depositors and promote the stability and efficiency of financial system around the world. Capital Adequacy reflects the overall financial condition of the banks and also the ability of management to meet the need for additional capital. It also indicates whether the bank has enough capital to absorb unexpected losses. Capital Adequacy Ratio acts as an indicator of bank leverage. The following ratios measure Capital Adequacy:1. Capital adequacy ratio (CAR)Capital adequacy ratios ("CAR") are a measure of the amount of a bank's core capital expressed as a percentage of its risk-weighted asset.Capital adequacy ratio is defined as

CAR = (Tier 1 Capital + Tier 2 Capital) / Risk weighted Assets

TIER 1 CAPITAL - (paid up capital + statutory reserves + disclosed free reserves) - (equity investments in subsidiary + intangible assets + current and b/f losses)

TIER 2 CAPITAL i. Undisclosed Reserves, ii. General Loss reserves, iii. Hybrid debt capital instruments and subordinated debts where risk can either be weighted assets (a) or the respective national regulator's minimum total capital requirement. If using risk weighted assets,

CAR = [ ( T1 + T2 ) / a ] > = 10%

10% Percent threshold varies from bank to bank (10% in this case, a common requirement for regulators conforming to the Basel accords) is set by the national banking regulator of different countries.

Two types of capital are measured: tier one capital (T1 above), which can absorb losses without a bank being required to cease trading, and tier two capital (T2 above), which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.

B) Assets QualityThe quality of assets is an important parameter to gauge the degree of financial strength. The prime motto behind measuring the assets quality is to ascertain the component of Non-Performing Assets (NPAs) as a percentage of the total assets. This indicates what types of advances the bank has made to generate interest income. Thus, assets quality indicates the type of the debtors the bank is having. The asset quality assessment is based on evaluating credit risks associated with a bank's portfolios. A bank's ability to detect, measure, monitor and regulate credit risks is also assessed, while taking into account any provisions against bad and doubtful claims.

(TOTAL NON-PERFORMING LOANS>90 DAYS - PROVISIONS) / TOTAL LOANS

The nominator contains the net non-performing loans. The total of non-performing loans over 90 days has been defined by Basil II as a critical point for loan repayment. The provisions include reserve capital withheld by the bank in order to compensate for losses originating from loans the delay of which has been provisioned. The lower the index the more accurate the bank provisions of these delays and consequently, the higher the quality and reliability of its portfolios.

C) Management Quality RatioManagement quality ratio is another vital component of the CAMEL Model that ensures the survival and growth of a bank. The ratios in this segment involve subjective analysis and efficiency of management. The management of the bank takes crucial decisions depending on the risk perception. It sets vision and goals for the organization and sees that it achieves them. This parameter is used to evaluate management efficiency as to assign premium to better quality banks and discount poorly managed ones. The ratios used to evaluate management efficiency are described as under:

1. Total advances to Total Deposits2. Business per Employee3. Profit per Employee4. Return on Net Worth

D) Earning QualityEarnings and profitability form the primary source for capital base increases and are examined in relation to interest rate policies and provisions adequacy. These ratios, also, help support a bank's current and future activities. Strong profits combined with its earnings profile reflect a bank's ability to support current and future tasks. More specifically, this ratio reflects the bank's ability to absorb losses, expand its financing, as well as, its ability to pay dividends to its shareholders, and helps develop an adequate amount of own capital. The assessment of earnings is not only performed in terms of amount and profit tendencies, but also in respect of quality and duration.

(a) ROA= NET PROFITS/ TOTAL ASSETS

This ratio correlates net profits with total assets and indicates whether asset management is efficient enough to produce profits. The higher the ratio the more efficient the bank; a satisfactory performance would produce a value between 1% and 2.5%.

(b) ROE= NET PROFITS/ OWN CAPITAL

E) LiquidityLiquidity is very important for any organization dealing with money. For a bank, liquidity is a crucial aspect which represents its ability to meet its financial obligations. It is of utmost importance for a bank to maintain correct level of liquidity, which will otherwise lead to declined earnings. Banks have to take proper care in hedging liquidity risk, while at the same time ensuring that a good percentage of funds are invested in higher return generating investments, so that banks can generate profit while at the same time provide liquidity to the depositors. Among a banks assets, cash investments are the most liquid. A high liquidity ratio indicates that the bank is more affluent. During liquidity assessment, the current liquidity status of the bank is taken into account in relation to the liabilities it has undertaken. It also tests the bank's ability to deal with changes in its financing resources, as well as, changes in market conditions which alter the fast liquidation of its assets, with the least possible losses.

(a) LOANS TO TOTAL DEPOSITS (L1) = TOTAL LOANS / TOTAL DEPOSITS.

This ratio presents the extent in which deposits are maintained for issuing loans and therefore the bank's dependence in interbank markets. The lower this ratio is the better the bank's liquidity status, while a value of less than one offers security for loans since deposits alone are sufficient to cover such loans.

(b) CIRCULATING ASSETS TO TOTAL ASSETS (L2) = CIRCULATING ASSETS/ TOTAL ASSETS

This ratio gives us a bank's liquidity status of circulating assets, such as cash in hand, claims against other banking institutions and its trading, investment and derivatives portfolios. The ratio offers banks the ability to know the extent if their liabilities that may be covered by its not directly available assets. The higher is the bank's ratio, the better its liquidity status.

F) Sensitivity - sensitivity to market risk, especially interest rate riskA bank's assessment on sensitivity towards market risks examines the extent to which potential changes in interest rates, foreign currency exchange rates, product purchase and selling prices, affect the bank's profits and the value of its assets.

TOTAL SECURITIES TO TOTAL ASSETS = TOTAL SECURITIES / TOTAL ASSETS

Market forces, especially in the recent years, consist of a major reason for changes in the viability of banks. Price movements in favour of a bank's portfolio may boost the Bank's results whereas unfavourable movements may create severe problems to the Bank. This ratio correlates a bank's total securities portfolio with its assets and gives us the percentage change of its portfolio in changes of interest rates or other issues related to the issuers of the securities. The lower the value of this ratio, the better for the bank since this indicates that its reactions towards market risks are appropriate. On the other hand, a higher value of this ratio would indicate that the bank's portfolio is susceptible to market risks.

1.3 Raison dtre of the studyBanks serve as backbone to the financial sector, which facilitate the proper utilization of financial resources of a country. The banking sector is increasingly growing and it has witnessed a huge flow of investment. In the early 1990s the then Narasimha Rao government embarked on a policy of liberalization and gave licences to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as UTI Bank (now re-named as Axis Bank) (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more.

In addition to simply being involved in the financial intermediation activities, banks are operating in a rapidly innovating industry that urges them to create more specialized financial services to better satisfy the changing needs of their customers. Sundararajan et al. (2002) argues that the financial system, the bank in particular, is exposed to a variety of risks that are growing more complex nowadays. Furthermore, the economic downturn of 2008 which resulted in bank failures, are triggered in the U.S. and then wildly spread worldwide. It therefore increasingly urges the need of more frequent banking examination.

In order to cope with the complexity and a mix of risk exposure to banking system properly, responsibly, beneficially and sustainably, it is of great importance to evaluate the overall performance of banks by implementing a regulatory banking supervision framework. One of such measures of supervisory information is the CAMEL rating system which was put into effect firstly in the U.S. in 1979, and now is in use by three U.S. supervisory agencies-the Federal Reserve System, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC). It has been proved to be a useful and efficient tool in response to the financial crisis in 2008 by U.S. government.

CAMELS rating are used as a private rating framework in bank analysis for its own investment purposes rather than that used by regulatory bodies in supervising the banks. Credit Rating of Indian banks are questioned several times because of differences in credit rating assigned to them by different credit rating agencies. Therefore, it is necessary to test the CAMELS model as a tool to assign credit rating to different private sector banks and assign credit rating to them accordingly.

Banking in India is mature in terms of supply, product range and reach-even in rural India through rural banking and remote banking. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets.

The Raison dtre of the study is to analyse the overall financial performance of major private sector banks in India through application of CAMEL Model. Besides it also attempts to compare the performance of these Banks with the help of Composite Ranking Method. The study aims to give detailed analysis of CAMELS model in Indian banking institutions (Private Sector) and the CAMELS framework as the main measure to evaluate the overall safety and soundness of private sector banks.

CAMELS framework in modern banking has become very important as a tool to measure performance of banking institutions. Therefore, the study aims in performance evaluation of Indian Private Sector banks using CAMELS approach.

The study is also aims at the implementation challenges of BASEL III norms in Indian banking industry i.e. private sector banks in India and future of CAMELS model as a tool to evaluate the overall safety and soundness of private sector banks under BSEL III norms.

1.4 Statement of the problemThe Asian crisis of 1997 and the recent events like the US subprime crisis have posed a serious challenge to the financial system at large. The commercial banks in India, both public and private sector, were by and large successful in managing the crisis. But, it cannot be said with confidence that the commercial banks in India, specially the private sector banks are isolated from such kinds of shocks in near future. Further, in the recent years the financial system especially the banks in India have undergone numerous changes in the form of reforms, regulations & norms. CAMELs framework for the performance evaluation of banks is an addition to this. Thus, it becomes imperative to take a closer look at the financial nuances of the private commercial banking sector in India. Hence, this study aims to look at the financial soundness of the commercial banks operating in India using a very simplified approach using internationally accepted CAMELS rating parameters and then t- test is applied on the results so achieved through ratio analysis to test the level of significance of those results. The study is conducted to analyze the pros & cons of this model too.

1.5 Objective of the StudyThe research synopsis, the review of literature, and the critical comments from reviewers of national and international journal are kept in mind while framing the research objective of the study. The research objective mentioned in the masters synopsis aimed To give the detailed analysis of the CAMEL MODEL in Indian Banking Institutions primarily of private sector banks. To study CAMELS framework contribution in modern banking as a tool to evaluate the overall safety and soundness of private sector banks. Performance evaluation of Indian Private sector banks. To study and compare credit rating of Indian Private Sector banks using CAMELS approach. It also attempts to compare the performance of these Banks with the help of Composite Ranking Method. To study implementation challenges of Basel III norms in Indian Private Sector banks and futures of CAMELS approach. On the basis of result of the result of the study to suggest various measures to improve the performance of the Banks in future.

1.6 Research HypothesisFor the purpose of modelling the above objectives and based on the problem statement of the study, the following hypotheses have been constructed. These hypotheses are based on existing research work recently undertaken by WIRNKAR A.D. AND TANKO M.

HO1: There is no significant difference between banks efficiency and capital adequacy.

HO2: There is no significant difference between banks efficiency and asset quality.

HO3: There is no significant difference between banks efficiency and management quality.

HO4: There is no significant difference between banks efficiency and earnings ability.

HO5: There is no significant difference between banks efficiency and liquidity.HO6: There is no significant difference between banks efficiency and Sensitivity.

1.7 Research MethodologyFinancial Performance Analysis is the process of scientifically making a proper, critical and comparative evaluation of profitability and the financial health of Banks through the applications of the techniques of financial statement analysis. Financial Analysis covers a vast area and is of great practical importance. The Banks use various ratios for measuring the financial performance which tells us the true financial position of the bank. To look at the financial soundness and infer about convergence of the private commercial banks operating in India a very simplified approach i.e. internationally accepted CAMEL rating parameters have been used. CAMELS are an acronym for six measures (capital adequacy, assets quality, management soundness, earnings, liquidity, and sensitivity to market risk). In this analysis the six indicators which reflect the soundness of the institution framework are considered. Various ratios calculated under the Model help in identifying the strengths /weaknesses of banks and suggesting improvement in its future working. Four top private commercial banks of India were selected purposively for the study. The banks selected for the purpose for the study are traded in National Stock Exchange (http://www.nseindia.com/content/indices/ind_cnxbank.htm) and are part of CNX bank Index. CNX Bank Index is an index comprised of the most liquid and large capitalized Indian Banking stocks. It provides investors and market intermediaries with a benchmark that captures the capital market performance of the Indian banks.The banks selected for the purpose of the study are Axis Bank, HDFC Bank Ltd (HDFC), ICICI Bank Ltd (ICICI) and Yes Bank.

Following is a description of the graduations of rating:-Rating 1: Indicates strong performance: BEST rating.Rating 2: Reflects satisfactory performance.Rating 3: Represents performance that is flawed to some degree. Rating 4: Refers to marginal performance and is significantly below average andRating 5: Is considered unsatisfactory: WORST rating.

CAMELS Numerical Rating with Rating Description is mentioned below:-1. STRONG: It is the highest rating and is indicative of performance that is significantly higher than average.2. SATISFACTORY: It reflects performance that is average or above; it includes performance that adequately provides for the safe and sound operation of the banks.3. FAIR: Represent performance that is flawed to some degree. It is neither satisfactory nor unsatisfactory but is characterised by performance of below average quality.4. MARGINAL: Performance is significantly at below average; if not changed, such performance might evolve into weaknesses or conditions that could threaten the viability of the bank.5. UNSATISFACTORY: Is the lowest rating and indicative of performance that is critically deficient and in need of immediate remedial attention. Such performance by itself, or in combination with other weakness, threatens the viability of the institution.

1.8 Sources of DataThe ratios depicting the CAMELS parameters are calculated based on the publicly available information. The data are collected from the secondary sources such as publicly available information published at Reserve Bank of India, Indian Bankers Association and Moneycontrol.com magazines, journals, etc. These sources consist of already variable data in the form of statements, and reports, which may include sensory reports, financial statements of the company, reports of governments departments, etc.

The secondary data also include collection on the basis of organizational file, official records, newspapers, magazines, management books, preserved information in the companys database and the Website of the banks. Only Secondary sources were used for data collection.

1.9 Plan of the StudyThe study is divided into 5 chapters. Contents in each chapter are designed in such a way that contents in the chapters reflect the title head of their respective chapters. Each chapter tries to find out and answer the questions raised in this particular study and tries to fulfil the objectives of the study. The title head of each chapter with their chapter numbers are as follows:-CHAPTER 1: INTRODUCTIONThis chapter introduces briefly about the title of this study i.e. An empirical study of CAMELS approach on Indian private sector banks. This chapter will also include in brief about the Raison detre of the study, objective of the study, brief about the methodology to be used in the study, sources of data, and limitations of the study etc.CHAPTER 2: REVIEW OF EXISTING LITERATURE In the process of continuous evaluation of the banks financial performance both in public sector and private sector, the academicians, scholars and administrators have made several studies on the CAMELS model but in different perspectives and in different periods. This has been made me to take up the study on those areas where the study is incomplete. Hence, the knowledge on the current topic of the financial performance of the banks is reviewed here under to appraise the need for the present study. This chapter include the reviews of such research reports related to this area of study and which helped in framing the conceptual framework of this literature.CHAPTER 3: THEORETICAL UNDERPINNINGSThe objective of this chapter is to provide a brief of the history of Banking in India in phases. The second half of the chapter gives the conceptual framework of the CAMELS and BASEL in Indian Banking Industry.CHAPTER 4: RESEARCH METHODOLOGYIn this chapter, an attempt has been made to present the methodology adopted for the study, such as, data and samples, and data analysis for preliminary and main analysis with detailed description of financial ratio analysis and Statistical test used for the analysis.CHAPTER 4: ANALYSIS AND INTERPRETATIONThis chapter will include analysis and interpretation of results so obtained using tests and presenting those results properly with analysis.CHAPTER 5: CONCLUSION AND SUGGESTIONSThe result achieved in the study with their positive and negative impact is stated in this chapter. The chapter will clearly mention the significance and contribution of the study and suggest ways and measure to overcome negative result in the study and conclude the study.

1.10 Limitations of the StudyNo study can be done without any limitations. There are limitations in every study conducted throughout the universe. This study is of no exception. Some of the limitations of this study are outlined below:-

1) The study was limited to four banks.2) Time and resource constrains. 3) The study is based on the data of past three or four years only. 4) The method discussed pertains only to banks though it can be used for performance evaluation of other financial institutions.5) The study is completely done on the basis of ratios calculated from the secondary data available like prospectus of the company, annual report, news papers, magazines etc.6) It has not been possible to get a personal interview with the top management employees of all banks under study.

1.11 Summary and ConclusionThis chapter has attempted to provide a brief outlook on history of CAMELS and CAMELS evaluation in India. The chapter briefs about Raison dtre of undertaking the study, the objectives of the study and briefly outlines the statement of problem.The research synopsis, the review of literature, and the critical comments from reviewers of national and international journal are kept in mind while framing the research objective of the study.

The research hypothesis is framed keeping in mind the existing research work, recently undertaken by various senior professors, senior industry professionals, economists and full time researchers interested in the area of study undertaken in this synopsis. Research Methodology along with sources of data is also outlined in this introductory chapter.

No study can be done without any limitations. There are limitations in every study conducted throughout the universe. This study is of no exception. Therefore, limitations of the study are also included in this chapter.