CAMELS Rating System



CAMELS Rating System

An international bank-rating system where bank supervisory authorities rate institutions according to six factors. 

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.

Composite Ratings

The rating system is designed to take into account and reflect all significant financial and operational factors examiners assess in their evaluation of an institutions performance. Institutions are rated using a combination of specific financial ratios and examiner qualitative judgments.
The following describes some details of the CAMEL system in the context of examining a credit union.

Rating 1

Indicates strong performance and risk management practices that consistently provide for safe and sound operations. Management clearly identifies all risks and employs compensating factors mitigating concerns. The historical trend and projections for key performance measures are consistently positive. Credit unions in this group resist external economic and financial disturbances and withstand the unexpected actions of business conditions more ably than credit unions with a lower composite rating. Any weaknesses are minor and can be handled in a routine manner by the board of directors and management. These credit unions are in substantial compliance with laws and regulations. Such institutions give no cause for supervisory concern.

Rating 2

Reflects satisfactory performance and risk management practices that consistently provide for safe and sound operations. Management identifies most risks and compensates accordingly. Both historical and projected key performance measures should generally be positive with any exceptions being those that do not directly affect safe and sound operations. Credit unions in this group are stable and able to withstand business fluctuations quite well; however, minor areas of weakness may be present which could develop into conditions of greater concern. These weaknesses are well within the board of directors' and management's capabilities and willingness to correct. These credit unions are in substantial compliance with laws and regulations. The supervisory response is limited to the extent that minor adjustments are resolved in the normal course of business and that operations continue to be satisfactory.

Rating 3

Represents performance that is flawed to some degree and is of supervisory concern. Risk management practices may be less than satisfactory relative to the credit union's size, complexity, and risk profile. Management may not identify and provide mitigation of significant risks. Both historical and projected key performance measures may generally be flat or negative to the extent that safe and sound operations may be adversely affected. Credit unions in this group are only nominally resistant to the onset of adverse business conditions and could easily deteriorate if concerted action is not effective in correcting certain identifiable areas of weakness. Overall strength and financial capacity is present so as to make failure only a remote probability. These credit unions may be in significant noncompliance with laws and regulations. Management may lack the ability or willingness to effectively address weaknesses within appropriate time frames. Such credit unions require more than normal supervisory attention to address deficiencies.

Rating 4

Refers to poor performance that is of serious supervisory concern. Risk management practices are generally unacceptable relative to the credit union's size, complexity and risk profile. Key performance measures are likely to be negative. Such performance, if left unchecked, would be expected to lead to conditions that could threaten the viability of the credit union. There may be significant noncompliance with laws and regulations. The board of directors and management are not satisfactorily resolving the weaknesses and problems. A high potential for failure is present but is not yet imminent or pronounced. Credit unions in this group require close supervisory attention.

Rating 5


Considered unsatisfactory performance that is critically deficient and in need of immediate remedial attention. Such performance, by itself or in combination with other weaknesses, directly threatens the viability of the credit union. The volume and severity of problems are beyond management's ability or willingness to control or correct. Credit unions in this group have a high probability of failure and will likely require liquidation and the payoff of shareholders, or some other form of emergency assistance, merger, or acquisition.

Lokpal and Lokayuktas Bill, 2011

The Lokpal and Lokayuktas Bill, 2011 
    

 

The Rajya Sabha passed the Lokpal and Lokayuktas Bill, 2011 on December 17, 2013 and the Bill has been passed by the Lok Sabha today. 
 Some of the important features in the Bill are as below:-
·         Lokpal at the Centre and Lokayukta at the level of the States.
·         The Lokpal will consist of a Chairperson and a maximum of eight Members, of which fifty percent shall be judicial members.
·         Fifty per cent of members of Lokpal shall be from amongst SC/ST/OBCs, Minorities and Women.
·         The selection of Chairperson and Members of Lokpal shall be through a Selection Committee consisting of:-
§  Prime Minister;
§  Speaker of Lok Sabha;
§  Leader of Opposition  in the Lok Sabha;
§  Chief Justice of India or a sitting Supreme Court judge nominated  by CJI;
§  Eminent jurist to be nominated by the President of India on the basis of recommendations of the first four members of the Selection Committee.  
·         Prime Minister has been brought under the purview of the Lokpal.
·         Lokpal’s jurisdiction will cover all categories of public servants.
·         All entities receiving donations from foreign source in the context of the Foreign Contribution Regulation Act (FCRA) in excess of Rs. 10 lakhs per year are brought under the jurisdiction of Lokpal.
·         Provides adequate protection for honest and upright Public Servants.
·         Lokpal will have power of superintendence and direction over any investigation agency including CBI for cases referred to them by Lokpal.
·         A high powered Committee chaired by the Prime Minister will recommend selection of the Director,CBI.
·         Directorate of Prosecution headed by a Director of Prosecution under the overall control of Director;
·         The appointment of the Director of Prosecution, CBI on the recommendation of the Central Vigilance Commission;
·         Transfer of officers of CBI investigating cases referred by Lokpal with the approval of Lokpal;
·         The Bill also incorporates provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending.
·         The Bill lays down clear time lines for Preliminary enquiry & investigation and trial and
towards this end, the Bill provides for setting up of Special Courts.
·         A mandate for setting up of the institution of Lokayukta through enactment of a law by the State Legislature within a period of 365 days from the date of commencement of the Act.

National Forest Policy (NFP) 1988

National Forest Policy (NFP) 1988 envisages that 33% of the geographical area should be under forest or tree cover. Salient features of National Forest Policy are :
  • Maintenance of environmental stability and restoration of ecological balance.
  • Conservation of natural heritage.
  • Checking soil erosion and denudation.
  • Increasing substantially the forest/tree cover.
  • Meeting the requirements of fuelwood, fodder, NTFP and small timber.
  • Increasing productivity of forests.
  • Encouraging efficient utilisation of forest produce and maximising substitution.
  • Creating a massive people’s movement specially with the involvement of women.
Above points clearly indicate that NFP envisages overriding consideration for environmental concerns against commercial priorities.

The National Forest Policy 1988 (NFP) envisages that 33% of the geographical area should be under forest or tree cover. The objectives include maintenance of environmental stability, conserving natural heritage of the country, checking soil erosion and desertification, enhancing

forest cover, meeting fuelwood, fodder small timber and Non Timber Forest Product (NTFP) demands of local people and efficient utilisation of forest produce.
In order to attain the aforesaid objectives massive people's participation in the management of the forest resources has been envisaged in the NFP. Keeping above objectives in view the SFAP exercise has been undertaken.
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