An Empirical Study to Evaluate CAMELS Rating System on Indian Banks

This paper examines one of the most popular methods for gauging quality of select Indian Bank. In today’s dynamic world trying to cope up with the aftermath of subprime crisis and the euro zone crisis we would like to revisit a technique known as CAMELS Rating System. This technique is applied on 8 listed Indian Banks SBI, Union Bank, IDBI Bank, HDFC Bank, BOB, AXIS Bank, IndusInd Bank, PNB which is a mixture of public sector and private banks. This technique evaluates banks measures banks stability on capital adequacy ratio, asset quality ratio, management quality ratio, earning ratio, liquidity ratios and sensitivity ratio. The results of this study reveal that this technique is critical in not only evaluating stability of bank but could also be used for making preliminary investment decision.