What is Capital Adequacy Ratio for banks?
By
Research Desk
about 9 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.