An Empirical Study on Capital Adequacy and Financial Performance of Canara Bank

 K. Sathish1, Anuradha Kumari2

1Assistant Professor, Department of Master of Business Administration, CMR Institute of Technology, Medchal, India

2Student of Master of Business Administration, CMR Institute of Technology, Medchal, India.

Email id: sonykumari8688@gmail.com

Abstract:

               This study examines the relationship between Capital Adequacy Ratio (CAR) and the financial performance of Canara Bank during the period 2021–2025. Capital adequacy is an important indicator of a bank’s financial strength and its ability to absorb potential risks and losses. The study aims to analyze the capital adequacy position of the bank and evaluate its impact on profitability indicators such as Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). The research is based on secondary data collected from annual reports of Canara Bank, publications of the Reserve Bank of India, and financial websites. Ratio analysis, trend analysis, and correlation analysis are used as the major tools for interpretation. The findings reveal that the Capital Adequacy Ratio (CAR) of the bank remained above the regulatory norms throughout the study period, indicating strong solvency and financial stability. The study also shows a continuous improvement in ROA, ROE, and NIM, reflecting better profitability, efficient utilization of assets, and improved operational performance. The growth rate analysis of CRAR indicates fluctuations, with significant growth in 2023 followed by a slight decline in 2024 and marginal recovery in 2025.

Keywords: Capital Adequacy Ratio (CAR), Financial Performance, ROA and Return on Equity.