PRESENTATION ON

CAMALS

Presented to All

Presented By:- Amit Kumar

Sachin Sharma
CAMELS is working on 6 parameters that are

 Capital Adequacy
 Asset Quality

 Management

 Earnings

 Liquidity

 Sensitivity to Market Risk

INTRODUCTION
 The CAMELS rating is a US supervisory rating system for
the banks

 This rating system is based on Ratio Analysis of Financial

Statements of the Banks combined with on-site
examinations made by a designated supervisory regulator.
In the U.S. these supervisory regulators include
the Federal Reserve , the Office of the Comptroller of the
Currency, the National Credit Union Administration,
the Farm Credit Administration, and the Federal Deposit
Insurance Corporation.
BACKGROUND
 In 1979, UFIRS was implemented in US banking System,
later Globally ,it is known By CAMEL.

 In 1995, it is added by S that is Sensitivity And called

CAMELS by Federal Reserve.

 In India, RBI had set up group in 1995 and inspection cycle

commenced from July,1998.
PURPOSE
 To determines the banks overall conditions and
to identifying the Strengths and Weaknesses

 Managerial
 Financial

 Operational
RATING SCALE
 This system gives rating like Likert Scale
from 1 to 5 i.e;
1 for strongest position
2 for good position
3 for average &
4 and 5 for weakest which means close
monitoring is needed to that particular bank
COMPOSITE RATING
CAMELS gives rating to banks on the basis of its
components like

 Capital Adequacy 20%

 Asset Quality 20%

 Management 25%

 Earnings15%

 Liquidity 10%

 Sensitivity to Market Risk10%

CAPITAL ADEQUACY
It is measured by Ratio of Capital to risk weighted Assets.
A sound capital base Strengthens confidence of Depositors.

The Examiner take some areas to check capital Adequacy are

 Capital level and trend analysis

 Composition of capital
 Interest and dividend policies and practices
 Growth plans
 Volume and risk characteristics of new business initiatives
 Extent of contingent liabilities and existence of pending
litigation
ASSET QUALITY
 It is the function of present conditions and the
likelihood of future deterioration or improvement
based on economic conditions, current practices
and trends.

 One of the indicator for this is the ratio of non

performing Assets to total assets.
FACTORS

Asset quality factors based on some consideration:

 Volume of problem of all assets

 Volume of overdue and reschedule of loan
 Ability of management to administrate all the assets and to
collect problem loans
 Loan portfolio management and growth of loans volume in
banks
MANAGEMENT
 It includes all the key managers and Board of
Directors.
 Examiner Evaluate management on the basis of

Business Strategy and Financial Performance, internal

control
EARNING
 All income from operations and non traditional
sources, extra ordinary items
 It can be measured through return on Assets
ratio

 Also can be measured through some factors are

• sufficient earning to bear potential losses
• level of Adequacy
LIQUIDITY
Cash maintained by the banks and balances with
central banks to total assets ratios is an indicator
of banks liquidity

Some factors are:-

 availability of funds to meet short term Obligations
 Access to money market and other sources of funds
 Volatility of deposits and loan demand
SENSITIVITY
Sensitivity is not considered by Reserve bank of
India.

Because it is complex and evolving measurement

area.