CAMEL MODEL

CAMEL
• CAMEL model of rating
– first developed in the 1970s
– by the three federal banking supervisors of the U.S.

• CAMEL is a supervisory rating system.

• Developed to classify a bank's overall condition.

• It is applied to every bank and credit union in the U.S.

• The banks were judged on five different components under
the acronym C-A-M-E-L:
C – Capital Adequacy
A – Asset Quality
M – Management Soundness
E – Earnings Capacity
L – Liquidity
C - Capital adequacy -CAR
-Debt – equity ratio
-Advances to total assets ratio

A – Asset quality -Gross NPAs to gross advances

ratio
-Gross NPAs to net advances ratio
-Net NPAs to net advances ratio
-Gross NPAs to total assets ratio
-Net NPAs to total assets ratio
-Total investment to total assets
ratio

M – Management efficiency -Total advances to total deposits

ratio
-Business per employee
-Profit per employee