Performance and Financial Soundness of Banks: a Camel Model Approach

Latha Sreeram; Rabindra kumar Singh; Hardik Mehta

Performance and Financial Soundness of Banks: a Camel Model Approach

Author(s)	Dr. Latha Sreeram, Mr. Rabindra kumar Singh, Mr. Hardik Mehta
Country	India
Abstract	This study aims to evaluate a bank in terms of its performance, financial strength using CAMEL framework. CAMEL framework evaluates the bank in five important dimensions. Capital, Asset Quality, Management, Earning Quality and Liquidity etc. These parameters helps to understand the banks ability to create quality assets and generating long lasting earning and robust risk management. The objective of the study is to assess the overall financial health of selected banks and to compare their relative performance over a specified period. Using secondary data collected from annual reports and regulatory publications, key financial ratios under each CAMEL component are computed and analyzed. A composite CAMEL score is constructed to rank banks based on their financial strength and operational efficiency.. The findings provide insights into the stability, risk exposure, profitability, and liquidity position of banks, highlighting variations across ownership structures and market segments. The study contributes to the literature on banking performance evaluation by offering a structured and comprehensive assessment model. The results are expected to assist regulators, investors, and policymakers in understanding the determinants of bank soundness and in strengthening supervisory mechanisms. Overall, the CAMEL model proves to be an effective analytical tool for evaluating bank performance and identifying areas requiring strategic improvement. The findings provide insights into the stability, risk exposure, profitability, and liquidity position of banks, highlighting variations across ownership structures and market segments. The study contributes to the literature on banking performance evaluation by offering a structured and comprehensive assessment model. The results are expected to assist regulators, investors, and policymakers in understanding the determinants of bank soundness and in strengthening supervisory mechanisms. Overall, the CAMEL model proves to be an effective analytical tool for evaluating bank performance and identifying areas requiring strategic improvement.
Keywords	Net Interest margin, Capital Adequacy ratio, Non-performing asset
Field	Sociology > Banking / Finance
Published In	Volume 7, Issue 2, March-April 2026
Published On	2026-03-24

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Performance and Financial Soundness of Banks: a Camel Model Approach

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