Multiple choice

RBI conducts on-site inspection and off-site supervision of Indian banks and based on its finding, RBI rates the banks on important parameters called _____. The letter A of these parameters stands for ____.

  1. CACS, advances

  2. CAMELS, assets

  3. CACS, asset quality

  4. CAMELS, asset quality

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The CAMELS rating system is a recognized international rating system that bank supervisory authorities use in order to rate financial institutions according to six factors represented by the acronym "CAMELS". Supervisory authorities assign each bank a score on a scale, and a rating of one is considered the best and the rating of five is considered the worst for each factor. The components of a bank's condition that are assessed: (C)apital adequacy (A)ssets (M)anagement Capability (E)arnings (L)iquidity (also called asset liability management) (S)ensitivity (sensitivity to market risk, especially interest rate risk)