2.

STATEMENT OF THE PROBLEM

The banking sector in Nepal is growing competitive due to the presence so many commercial
banks, development banks, finance company and micro credit development banks. As the
numbers of these institutions are increasing the investment is also increasing making all these
activities correlated and complex. General public are investing in these institution with the
expectation of higher return in the form of interest, dividend etc.
In order to meet the expectation of all the stakeholders, BFIs should be able to analyze their
financial performance in regular interval to provide the management, shareholders, investors; the
idea on how is the performance of banking sector is going on?, what is not effective ?, where
should be the banks focus?, and similar questions related to financial performance of BFIs.
This research project aims to apprehend the information contained in the financial statements
with a view to know the strengths and the weaknesses of the bank, explore the relationship
between various CAMEL indicators of bank enabling to make decisions regarding the operation
of, and further investment in. So different tools are used regarding this purpose like financial
statement, CAMEL framework. The study suggests for the critical analysis of the balance sheet
of the bank and presentation of such analysis to provide for internal assessment of the health of
the bank.
Thus, this research project aims to answer the following questions

How is the performance trend and rank of commercial banks?

What is the relationship between various CAMEL components?
Is there significant relationship between bank and their quarterly and yearly CAMEL
ranking?