CAMELS Rating System

In banking, CAMELS is a bank-rating system where bank supervisory authorities rate institutions according to six factors. ategic management tool to manage interest rate risk and liquidity risk faced by Banks, other financial services companies and corporations.

The six factors are represented by the acronym "CAMELS." The six factors examined are as follows:

*C - Capital adequacy
*A - Asset quality
*M - Management quality
*E - Earnings
*L - Liquidity
*S - Sensitivity to Market Risk

Bank supervisory authorities assign each bank a score on a scale of one (best) to five (worst) for each factor. If a bank has an average score less than two it is considered to be a high-quality institution, while banks with scores greater than three are considered to be less-than-satisfactory establishments. The system helps the supervisory authority identify banks that are in need of attention.

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