Analytical Evaluation Of Liquidity And Solvency Position Of Commercial Banks In India

The stability and performance of commercial banks are critical to the financial system and overall economic growth. This study aims to analytically evaluate the liquidity and solvency positions of six major Indian commercial banks, comprising three public sector banks (State Bank of India, Bank of Baroda, Punjab National Bank) and three private sector banks (HDFC Bank, ICICI Bank, Axis Bank) over the period 2016–2025. Using secondary data from annual reports, RBI publications, and financial databases, key liquidity ratios (Current Ratio, Cash to Deposit Ratio, Liquid Assets to Total Assets) and solvency ratios (Debt-to-Equity Ratio, Capital Adequacy Ratio, Interest Coverage Ratio) were computed. The study employs trend analysis, ratio analysis, comparative evaluation, and hypothesis testing (ANOVA and t-tests) to examine inter-bank differences and temporal trends. Findings indicate that private banks maintain higher liquidity and solvency ratios than public banks, with overall improvement in financial health across the decade. The results confirm statistically significant differences among banks and underscore the importance of effective liquidity and capital management for long-term financial stability. The study provides insights for policymakers and bank management to strengthen regulatory compliance and risk management strategies in the Indian banking sector.