Study Of CAMELS Approach On PSU Banks
Study of CAMELS approach on PSU Banks
Submitted by:
Sumeet Gaikwad -62
Aditya Gulwelkar-64
Rajendra Nalbalwar-79
Swapneel Raut-83
Abstract
In the economic progress banks play very important role in stimulation of capital formation, innovation and monetization in addition to facilitation of monetary policy. This paper examines one of the most popular methods to gauge the performance of the Indian PSU banks. In the light of recent global economic crisis the bank system failed miserable so we want to revisit a technique called CAMELS Rating System. We applied this technique to India’s 12 public sector banks PNB, Canara Bank, Andhra Bank, Indian Bank, SBI, UCO, Bank of Baroda, Syndicate Bank, Oriental Bank, Vijaya Bank, Dena Bank, Union Bank of India to rate them on different parameters. The CAMELS technique evaluates and measures bank’s stability on capital adequacy ratio, asset quality, management quality, earning quality liquidity ratio and sensitivity ratio. The results of this research will help banks to manage its resources and making investing decisions.
Introduction:
CAMELS rating system is used to assess the banks by the regulators like RBI, research centres, Government policy makers. The system was first adopted by North American Commercial Bank regulators and it covered the five key performance areas, viz., Capital Adequacy, Asset quality, Management quality, Earning quality and Liquidity. In the 1970s; US federal regulators developed the CAMEL rating system to analyse the performance of commercial banks and later in 1979, the uniform rating system was adopted to give a framework to federal regulatory agencies for rating financial condition and banks. Since then, the use of CAMEL rating system has spread dramatically in assessing the commercial banks. In this connection, Piyu rightly observed:
Submitted by:
Sumeet Gaikwad -62
Aditya Gulwelkar-64
Rajendra Nalbalwar-79
Swapneel Raut-83
Abstract
In the economic progress banks play very important role in stimulation of capital formation, innovation and monetization in addition to facilitation of monetary policy. This paper examines one of the most popular methods to gauge the performance of the Indian PSU banks. In the light of recent global economic crisis the bank system failed miserable so we want to revisit a technique called CAMELS Rating System. We applied this technique to India’s 12 public sector banks PNB, Canara Bank, Andhra Bank, Indian Bank, SBI, UCO, Bank of Baroda, Syndicate Bank, Oriental Bank, Vijaya Bank, Dena Bank, Union Bank of India to rate them on different parameters. The CAMELS technique evaluates and measures bank’s stability on capital adequacy ratio, asset quality, management quality, earning quality liquidity ratio and sensitivity ratio. The results of this research will help banks to manage its resources and making investing decisions.
Introduction:
CAMELS rating system is used to assess the banks by the regulators like RBI, research centres, Government policy makers. The system was first adopted by North American Commercial Bank regulators and it covered the five key performance areas, viz., Capital Adequacy, Asset quality, Management quality, Earning quality and Liquidity. In the 1970s; US federal regulators developed the CAMEL rating system to analyse the performance of commercial banks and later in 1979, the uniform rating system was adopted to give a framework to federal regulatory agencies for rating financial condition and banks. Since then, the use of CAMEL rating system has spread dramatically in assessing the commercial banks. In this connection, Piyu rightly observed:
References: Research papers- 1. Analyzing Soundness in Indian Banking: A CAMEL Approach by Mishra Aswini Kumar, G. Sri Harsha, Shivi Anand and Neil Rajesh Dhruva. 2. An Analysis of Indian Public Sector Banks Using Camel Approach by CA Ruchi Gupta. 3. The CAMEL rating system in banking supervision. A case study by UYEN Dang. Websites- https://www.aceanalyser.com http://www.equitymaster.com/ http://www.moneycontrol.com/ http://shodhganga.inflibnet.ac.in/bitstream/10603/2875/14/14_chapter%206.pdf