Review of Regional Rural Banks that use the CAMELS Model to Analyze Performance

Abstract

Purpose: Regional rural banks were created to give banking facilities to the rural and under-banked areas of the country. Unfortunately, despite being in operation for over four decades, these banks have been able to make some significant impact on the rural economy, but there is still scope for improvement in many areas. To identify the areas where RRBs in Karnataka need to improve, a study will be conducted to compare the concert of select RRBs in the state. With the CAMELS model, this exploration compares the achievement and evolution of regional rural banks in Karnataka from literature published over the last two decades. The paper focuses on identifying the most significant gaps in the previous research on regional rural banking in Karnataka and correcting them by posing targeted questions for more study.

Design/Methodology/Approach: The current study used a systematic review of the literature approach to determine the research deficit and research agenda. The study's theoretical underpinnings are explored and considered in several peer-reviewed academic studies. The majority of the data included in the current article comes from secondary sources. Secondary data comes from the government website, while other publications, such as journal papers and official publications, were used as verified sources.

Findings: Adequacy ratios, risk-return analysis, financial adequacy, monetary analysis, and investment psychology are only a few of the major topics covered in the literature study. The research agenda and research gap are next examined using the ABCD method. The CAMELS model is a widely used framework for determining the work of banks and financial institutions. It takes into account six key aspects of a bank's operations, namely, capital, asset quality, management, earnings, liquidity, and sensitivity to market risk.

Originality/Value: RRBs are crucial to the existing bank system in India since they offer banking services to rural and underbanked regions. The usefulness of RRBs and their microfinance programs for rural residents is examined in this research. The contribution of RRBs to national development

Paper Type: Literature Review