Question
Which is incorrect about CAR (Capital Adequacy
Ratio)?Solution
CAR = Capital / Risk weighted assets Capital Adequacy Ratio (CAR) is also known as Capital to Risk (Weighted) Assets Ratio (CRAR) is the ratio of a bank's capital to its risk weighted credit exposures. This ratio is used to protect depositors and promote stability and efficiency. RBI prescribes the CAR requirement for banks and other financial institutions. Current norms under Basel III require banks to maintain a minimum capital adequacy of 9% and a Tier-I ratio of 7%
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