The banking sector plays a vital role in economic growth. The sound financial well-being of a bank is the assurance not only to its investors but is equally important for the owners, personnel, and the whole economy as well. As a result, efforts have been made from time to time, to gauge the money-related position of every bank and oversee it proficiently and viably. In this paper, an effort has been made to assess the financial distress in the banking sector of Pakistan using three known models that are Bankometer model, Altman Z-score, and the CAMEL model. The main aim of this study is to compare which one is the best model in the case of Pakistan and also analyzed the impact of CAMEL ratios on financial distress. For this purpose 11 years data is used from 2008 to 2018, collected from the annual reports of banks and State bank Evaluation report. The results show that the overall financial soundness of the banking industry in Pakistan is in the safe zone. But it is also evident that the Bankometer score is declining from the average score of 1.79 to 1.17 during the study period. Altman Z-score is rejected due to fact that it shows at least 70% of the banking sector in distress which is against the reality. Comparison of public banks with private banks showed that mean-variance of both types of banks are same and hence there is no difference between financial soundness of public and private banks and both types of banks are performing with financial soundness. Similar is the case with foreign and domestic banks. The regression results show that CAMEL ratios have a significant impact on financial distress. This study can help the public to aware of the investment situation of the banks so that they can determine easily with banks are good to invest in. it is recommended for future study to add the sixth dimension of the CAMELS model which is “Sensitivity”.it is also recommended to use macroeconomic variables like GDP, Real Interest rate, Inflation, etc as these could have improved the results. Supervisor:- Dr Nadeem Ahmad Khan Co- Supervisor:- Dr Jalil Ahmad Malik