An Empirical Study on Liquidity and Solvency Performance in ICICI Bank

Liquidity and solvency is the life-belt of every business. In Banking business’ liquidity and solvency is prepare for conflict during the economic crisis. Banking Sector-liquidity and solvency is the epicenter in economic crisis. Globally, the liquidity and solvency played a vital role in managing liquidity and solvency issues of commercial banks. This research paper explores the concepts, analysis of liquidity and solvency in the ICICI Bank. Furthermore, this paper focuses on the liquidity aspects of ICICI Banks towards analyzing whether the ownership has any influence on the liquidity and solvency aspects of the banking structure. Besides, it looks into the unpredictability of RBI’s policies on liquidity like Cash Reserve Ratio, Statutory Liquidity Ratio etc.


Introduction
The banking sector is a vital financial intermediary in beating savings and converting them into substantial investments. Such a procedure has need of due carefulness to ensuring commercial funds of such savings, to honour, safeguard and return the savings in due course with appropriate returns thereon. Hence, Liquidity and Solvency are intimate attributes of a successful banking business. The Liquidity of banks depends on the banks' ability to pay off its liabilities and to appropriate release of their obligations. Liquidity crunch arises when the deposits are demanded and the bankers fail to honour their commitments to repay the same. Asset-Liability mismatch in the period of maturity leads to liquidity risk, resulting in solvency.
With the strengthening of prudential norms of Banking Worldwide Reimbursements, Basel, Switzerland, including but limited to Basel-III norms-all features of bank management like liquidity, capital adequacy, solvency and profitability have been dealt with inflexibility towards ensuring that the banks are sufficiently insulated to absorb the global economic shocks like fall of Lehman Bros, US Federal Policy Changes, Brexit or Bremain etc. Hence Basel -III norms focussed more on managing and controlling risk exposure by assigning weights, introducing more rigorous liquidity ratios and laid standards in attaining capital adequacy ratio.
Although Indian banks are heavily insulated from global shocks due to compliance to prudential norms of RBI, as introduced from time to time, the government owned commercial banks.

Review of Literature
Singh and Pandey (2008) studied that, the management of working capital is vital as it has a direct influence on profitability and liquidity. Working capital workings and found a substantial effect of working capital management on profitability for Hidalgo Industries Limited. Of this work and replicates some pivotal indications that sustain its capability, as may be marked here it. Nor has any previous research observed the liquidity position and the presence of liquidity and profitability relationship of private sector steel companies in India.
Ajanthan (2013) studied the relationship between liquidity and profitability of trading companies in Sri Lanka. The study protected 08 listed trading companies in Sri Lanka over a period of past 5 years from 2008 to 2012. Correlation & regression analysis and expressive statistics were used in the analysis and findings suggest that there is an important relationship occurs between liquidity and profitability among the listed trading companies in Sri Lanka.
N. Venkata Ramana, S. MD. Azash and K. Ramakrishnaiah (2011) Profitability analysis measures how a firm will be performing in terms of its ability to generate profits. Profitability of the firm is highly influenced by internal and external variables, i.e., size of organizations, liquidity management, growth of organizations, component of costs and inflation rate. The paper made an attempt to know the profitability and to assess the impact of selected profitability ratios on ROE of the company, for fulfilment of the objectives the data collected from the annual report from 2001-2010. The data is analysed and computed to fit for drawing inferences .in this investigation correlation and multiple regression analysis was used to find out impact of selected profitability ratios (Gross Profit, Operating Profit, Net Profit, Earning Per Share, Return on Total Assets) on ROE. The result reveals that selected profitability ratios are not have significant impact on ROE. Solvency performance: Solvency can also be defined as the capability of an organization to meet its long-term fixed expenditures and to achieve long-term development and progress.

Objectives of the Study
In

Conclusion
It can be concluded that from the above study, the liquidity position and solvency position are not good. There is no correlation between cash deposit ratio, Investment to total Assets, advance to total assets, debt to total assets. Investment, Total assets and Advance are not correlated to each other but all are positive. I also found that there is no impact of liquidity on solvency. The capitalization ratio, interest coverage and EFO to debt are not good and there is no correlation between capitalization ratio, interest coverage and EFO to debt.