RISK ANALYSIS TOOL FOR BANKING  - CAMELS RATING SYSTEM

Dr.Rachanaa Datey Dr. Kavita Tiwari ,

Authors

Dr.Rachanaa Datey Dr. Kavita Tiwari , Institute of Business Management & Research, IPS Academy , Indore (India). Birla Institute of Technology , CORE International , Ras- Al -Khaimah , UAE .

Keywords:

CAMELS, Risk, Banking, Supervision, Ratings

Abstract

The banking sector has been undergoing a complex, but comprehensive phase of reststructuring since 1991, with a view to make it sound, efficient, and at the same time forging its links firmly with the real sector for promotion of savings, investment and growth. CAMELS ratings are primarily a point-in-time assessment of its component factors .These are the internal rating system used by regulators for assessing financial institutions on a standardized basis and identifying those institutions which requires extraordinary supervisory attention. Two banks are studied on this basis Bank of Baroda and ICICI Bank .The components studied are Capital Adequacy,Asset QualityManagement SoundnessEarningsLiquiditySensitivity towards market risk. This research aims to study the basic knowledge about banking supervision, of which the CAMEL framework is the main measure to evaluate the overall safety and soundness of a bank.. The research paper also provides the significance of the CAMEL rating system in banking.The researchers also finds out certain drawbacks of the system and provides recommendations for further research.

References

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