What is Capital Adequacy Ratio for banks?
By
Research Desk
about 10 years ago
Capital Adequacy Ratio (CAR), also known as Capital to Risk Weighted Assets Ratio (CRAR), is the measure of a bank's capital and is expressed as a percentage of a bank's risk weighted credit exposures.
CAR = Total Capital / Total Risk weighted assets
Total capital comprises of the bank’s Tier I and Tier II capital
Total risk weighted assets takes into account credit risk, market risk and operational risk.