An inquiry into the financial soundness of commercial banks in India using ‘Camel’ approach

Banking in India has been through a long journey. Banking scenario in India has also assumed a total new dimension with the changing times. It has become a different ball game in terms of its service and the array of products. The use of technology has brought about a revolution in the way the bank conducts its business. But, the fundamental dimension of Trust and the confidence of the people on the institution remain. The majority of the banks are till now successful in keeping with the confidence of the stakeholders. However, with the changing dynamics of banking business, banking as an activity has become more than diversified bringing in all sorts of services under its fold. The transition of banks to these new areas of business eventually brings in new kind of risk exposure in the portfolio. Therefore, in order to continue with the faith and the confidence of the general public the regulator have included risk based assessment of banks. The risk based rating of the banks is kept confidential by the Reserve Bank of India due to the sensitive nature of the information. But people must know and understand their banks so that they are in a position to differentiate between the good and not so good. Thus an attempt is made in this study to use the publicly available information and feed the information to the criteria (based on the internationally accepted CAMELS rating system) to arrive at conclusion.