EVALUATION OF INDIAN BANKS ON CAMELS RATINGS A

COMPARATIVE STUDY
Prof. Noor Basha Abdul Ph.D
Dept. of Commerce and Business Administration, Acharya Nagarjuna University
G. David Raju MBA, M.Phil., (Ph.D)
Asst. Prof., Dept. of Business Administration, KBN College PG Centre, Vijayawada.


Abstract
Narasimham Committee (set up in 1991 to make recommendations for bringing about the
necessary reforms in the financial sector) appraised and acknowledged the success and
progress of Indian banks since the major banks were nationalized on 19 July 1969.
Unfortunately, the developments were witnessed only in the field of expansion and spread of
bank branches, generation of huge employment and mobilization of savings rather than also
in improvement in efficiency. Besides, corruption, fraud, misutilization in public money,
outdated technology and politicization in policy making were found to be major drawbacks in
the real progress of the banks. The resultant financial repression led to the decline in
productivity and efficiency and erosion of profitability of the banking sector in general. RBI
had set up a working group headed by Sh. S Padmanabhan to take a fresh look at banking
supervision during 1995. It suggested method for on-site and off-site supervision and
subsequent rating banks by RBI rating criteria. The committee suggested that supervision of
banks should focus on defined parameters of soundness, financial, managerial and
operational efficiency. Accordingly, it recommended that the banks should be rated on a 5
point scale of A to E, widely on the lines of international CAMELS (Capital Adequacy, Asset
Quality, Management Capability, Earnings, Liquidity and Sensitivity to Market Risk) rating
model.