The Capital Adequacy Ratio of a bank is arrived at by comparing the sum of its Tier 1 and Tier 2 capital to its risk. The equation for expressing the Capital adequacy ratio is: CAR=(Tier 1 Capital +Tier2 Capital)/Risk weighted assets.
apital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR), is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss [2] and are complying with their statutory Capital requirement
The main indicators of prudential regulations are capital adequacy, liquidity and risk profile.
capital adequacy management is that the manager must decide the amount of capital that bank should maintain and then acquire the needed capital. By Alamzeb Ahmadzai
Prudential norms relate to income recognition,asset classification,provisioning of NPAs and capital adequacy ratios( capital to risk weighted asset ratio, CRAR)
13.86%
Capital Adequacy Ratio
CAR is Capital Adequacy Ratio.
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C- capital adequacy A- asset quality M- management quality E- earnings quality L- liquidity S- sensitive to market risk
Nestor Espenilla has written: 'Adequacy of existing level of capital implied by the Basel standards relative to the credit risk exposures of banks in the SEACEN region'
A decision based on what constitutes an acceptable level of risk